Qatar unveils $2 billion push for startups as Web Summit opens

Qatar committed $2 billion to support startups as its banner tech gathering opened to sold-out crowds, drawing more than 30,000 people.

The Qatar Investment Authority is planning to invest in five new venture capital funds, expanding an earlier created Fund of Funds and and taking its total commitment for startups to $3 billion. 

The funds newly included – Greycroft, Ion Pacific, Liberty City Ventures, Shorooq and Speedinvest – will open offices in Doha to help develop the city as a hub for tech entrepreneurs. 

“This year, we move from momentum to scale,” Sheikh Mohammed bin Abdulrahman Al ⁠Thani, Qatar’s Prime Minister and Minister of Foreign Affairs, said in a keynote address on Sunday at the opening of Web Summit Qatar, where he announced a raft of incentives, including a 10-year residency program for entrepreneurs, founders, investors, and senior executives.

“We invite you to put down roots and grow alongside a nation that invests in your future,” he said. 

Now in its third year, the Middle East’s franchise of the famed Web Summit in Lisbon drew a record 1,600 startups, 85% of which came from outside of Qatar. 

Mideast venture capital funding jumps to record $3.8 billion

Venture capital funding in the Middle East jumped 74% last year, hitting a record as startups raised about $3.8 billion across nearly 700 deals.

Much of the growth came from foreign investors, with Saudi Arabia and the UAE drawing the largest share of the money, Bloomberg reports, citing data from Magnitt.

The surge came even as venture funding stayed weak or slowed in many other regions.

Investors have been drawn by government-backed tech pushes, large domestic markets and a growing pipeline of local startups.

8VC’s Alex Moore scouts Mideast ahead of Saudi leader’s White House visit

As Saudi Crown Prince Mohammed bin Salman heads to Washington next week, venture capital investor Alex Moore is exploring laser warfare startups and sea-cruising drone technology that could capture a portion of the hundreds of billions of dollars the Gulf ruler promises to spend in the U.S.

Moore, an early protégé of Palantir co-founder Peter Thiel, heads the defense portfolio at Austin, Texas-based 8VC and traveled to Israel last week to assess new investment prospects for the $8 billion firm. Other partners have been scouting companies in the UAE and neighboring countries for 8VC, which counts Abu Dhabi’s Mubadala sovereign wealth fund as an investor.

The Saudi Crown Prince, known widely as MBS, is scheduled to visit the White House on Nov. 18, where he will follow up on the $148 billion arms agreement he signed in May when U.S. President Donald Trump met him in Riyadh. The meeting in Washington will also take up Saudi Arabia’s longstanding request for a comprehensive defense pact similar to one with Qatar and may determine the disposition of some $450 billion more in Saudi funding commitments to the U.S. 

“We’re very interested in this new possible agreement with the Saudis,” Moore, 43, said in an interview with The Circuit in Tel Aviv, predicting it will “unleash innovation.” 

Trump says he will press MBS again next week to normalize relations with Israel by joining the Abraham Accords, the U.S.-brokered pact from 2020 that was signed by the UAE, Bahrain and Morocco. Many Israeli-founded startups establish headquarters in the U.S. and some of their technology could be attractive to the Saudis.

Among the firms Moore visited during his week in Israel was Particle Lab, which is developing anti-missile systems using supercharged, subatomic particle beams; and LiteVision, the maker of a wide-angle camera mounted on airborne drones to identify threats such as rocket launchers on the battlefield.

“Israel has the talent to actually leapfrog the U.S. ecosystem in a few categories,” Moore said, citing lasers and other directed-energy technologies as an area where Israel is “radically ahead.”

Escorting Moore through his meetings was Isaac “Yitz” Applbaum, a longtime San Francisco-based VC investor who – together with his son Aaron Applbaum and partners Frederic Landau and Yoav Knoll – recently founded Kinetica, an Israeli venture capital firm specializing in defense startups. Moore also notched a meeting with Isaac Herzog at the Israeli President’s Modernist-style residence in Jerusalem’s Talbiyeh neighborhood.

The Kinetica team includes Saar Tzur, a Major General in the Israeli Defense Forces reserves and adviser to drone maker Heven Aerotech, and Amit Kunik, a reserve Brigadier General in military intelligence.

On the relationship with 8VC, Yitz Applbaum says: “We are their eyes and ears in Israel.”

Moore’s visit is an indication that Israel is starting to emerge from the two years of the Gaza war, when foreign investors refrained from visiting the country even if they “stayed engaged quietly,” said Avi Hasson, CEO of Startup Nation Central, which tracks Israel’s tech industry. “What we are seeing now is an acceleration – senior partners are back on the ground, activity is picking up, and the ecosystem is moving from quiet maintenance to renewed growth.”

A 2005 graduate of Stanford University in economics who stands 6-foot-5 (196 centimeters), Moore was the first employee hired by Palantir, the data-mining powerhouse that bridges Silicon Valley and the Washington national-security world, where he became Director of Operations.

Working while in his twenties with Thiel and co-founder Alex Karp – both legends in the software industry – was an education in broadly divergent styles of management, he recalls, particularly in the take-no-prisoners world of young software engineers.

Running an engineering organization is like “taming a wild animal,” Moore said. “We had kind of a motley crew of these super-genius engineers… and the smarter the people are, the more rebellious they get, and they don’t want to agree on things. Like, ‘My architecture idea is better than yours. Why would we build the product your way?’ You have to get them on the same page.”

Part of Palantir’s success was the way that Thiel and Karp played off each other, Moore said. “Peter is this big vision, world-level type of problem solver. So I think from him, we basically got this confidence of just being extremely bold, even as young people. Like, ‘Why don’t we build the best software company in the world?’ So you kind of start believing it. You get a lot of that strength from Peter, that level of extremity, of extreme thinking.”

Karp, on the other hand, was more of a philosopher and an artist. “He is a genius at understanding the mood of the team – adding a sense of humor here, adding some tough love here, and conducting the orchestra in a way that feels very seamless. He kind of pulls the genius engineer out of his own head.”

After leaving Palantir in 2010 and founding two businesses himself, Moore joined 8VC, a fund started by Palantir co-founder Joe Lonsdale, and headed its startup incubator program. One of the young companies he mentored was Saronic, a maker of maritime drones for the U.S. Navy, which is now valued at $4 billion. Working with Saronic from the ground up kindled an interest in maritime technology that he found in Israel at startups Orca AI and Metacentric Systems.

Sitting at dusk in the courtyard at Tel Aviv’s fashionable Norman Hotel, Moore says drones should be used to address conflicts such as the attacks on ships by Yemen’s Houthi rebels that have paralyzed traffic in the Red Sea – a body of water bordered both by Saudi Arabia and Israel.

“I think we will end up with a mostly autonomous, or entirely autonomous, policing force of boats that follow around oil tankers and have interdiction capabilities. One will have drones, one will have directed-energy, others will have guns, another will have warheads,” Moore said, spinning out battle scenarios as he leaned back in an Adirondack chair.

“If you’re going into dangerous areas, I think that’s the future,” he said.

As for winning some of the Saudi contracts MBS will be offering in Washington this week, and others pledged by the UAE and Qatar during Trump’s Middle East swing in May, Moore said several companies in 8VC’s portfolio are primed to compete.

“Where we are at now is we have industrial-grade startups that are ready and capable of setting up factories and facilities and building products in the Middle East,” Moore said. 

“It’s really about knowing that the companies we do send over to do those deals can deliver,” he said. “I’m more optimistic than ever.”

Oryx invests Gulf sovereign cash in early-stage MENA startups

When London-based Salica Investments launched its Oryx Fund four years ago, the central strategy was to nurture early-stage startups in the Middle East and North Africa, preparing them to take calculated risks and reap higher returns.

Backed by Saudi Arabia’s Jada Fund of Funds, the Saudi Venture Capital Company, UAE-based Mubadala and state-owned investors in Oman and Jordan, the $50 million fund now operates from offices in Dubai, Abu Dhabi, Riyadh and Muscat, Oman.

Some of the standout companies in Oryx’s portfolio are digital mortgage platform Holo, quick delivery service Barq and Grubtech, which modernizes restaurant operations.

In an interview with The Circuit, Ivo Detelinov, a General Partner in both Salica and Oryx, said the fund looks for startups that address “big themes,” such as digital economics, construction technologies and connected communities. Detelinov is a Board Member of the Middle East Venture Capital Association.

Sara Enan, a Principal at Oryx who also joined the interview, said she’s “magnetized by founders who see blind spots in complex markets. Some of my most exciting finds have been women entrepreneurs in rigid sectors.”

Among Oryx’s successes was co-leading last July’s Series A funding round for 44.01, a climate tech startup based in Oman, which raised $37 million. In October, the fund participated in a $3.7 million pre-seed round for Neuphonic, a text-to-speech AI startup based in London that is seeking to expand in the GCC market. The interview has been edited for length and clarity.

What trends do you see in the Middle East that are driving Oryx’s investment strategy?

Sara Enan: As we enter 2025, we see four key trends shaping MENA’s venture landscape: the continued growth in Embedded FinTech, ConstructionTech, FoodTech, and Real Estate Tech; increasing AI integration across regional technology solutions; the return of mega deals fueled by international investor interest; and the emergence of regional technology IPOs.

Are there specific sectors or industries that Oryx Fund is particularly interested in when making investments?

Ivo Detelinov: We have witnessed the MENA VC ecosystem reach its third iteration – MENA 3.0. – whereby the MENA region emerges as a hub for globally innovative startups. When evaluating sectors, we first look at “big themes”, such as digital economics, construction technology and connected communities. Within these broad themes, we particularly like technology verticals that drive consumers and businesses through access to embedded finance, improved productivity, or those that enable individuals through innovative technologies to receive better, faster and more cost-efficient delivery of healthcare or education.

What are the most exciting aspects as a VC investor of identifying startups that show real promise?

Sara Enan: When I scout for investments, I’m magnetized by founders who see blind spots in complex markets. Some of my most exciting finds have been women entrepreneurs in rigid sectors who showed me a completely different way of looking at old industry problems.

How does Oryx approach risk when evaluating new opportunities in the Middle East?

Ivo Detelinov: We are particularly focused on understanding the regulatory/licensing process in industries that are subject to regulation in our region. Our team works extensively with regulators in our main geographical markets in a continuous effort to keep current with not only what the current regulation is, but also with where the direction of future regulation may be going next. Other risks inherent in our industry are assessing the competition and the risk that the technology we invest in becomes obsolete in the future. Our extensive due diligence process and collaborating with our colleagues in Europe help us understand and manage these risks well.

What key principles or values guide your investment decisions?

Sara Enan: We focus on three core areas: First, we identify technology verticals with accelerating momentum that create tangible value for clients across B2B, B2G, and B2C sectors. Second, we seek founders who combine a growth mindset with the ability to build empowering cultures. Third, we bring a mission-driven approach, aligning with our portfolio companies on value creation while maintaining transparent relationships throughout our journey together.

How do geopolitical factors, such as regulatory changes or regional instability, influence your investment decisions?I

Ivo Detelinov: Our decade-long experience in MENA venture capital has been marked by stability and growth, supported by forward-thinking regional policies. We maintain close relationships with regulatory bodies across financial services, healthcare, and other key sectors. This stability, combined with visionary economic policies, continues to drive the region’s robust growth trajectory.

Aramco’s VC Unit, Sumitomo finance electronics startup

Wa’ed Ventures, Aramco’s venture capital unit, is teaming up with Japan’s Sumitomo conglomerate, to fund a Saudi consumer electronics startup.

The two companies joined Dubai-based Global Ventures in a $30 million financing round for Zension Technologies, which provides warranties, buy-back services and upgrades for mobile phones, Bloomberg reports.

Middle East startups raised $1.5 billion last year, a 29% decline compared to the previous year, according to a Magnitt report

Saudi Arabia attracted almost half of the region’s VC investing in 2024.

The Gulf’s Startup Ecosystem: Status, Stars and Support

The Gulf has emerged as a dynamic hub for startups, attracting global attention with its investments, government-backed initiatives and an increasing number of venture capital funds. 

Here’s a glance at the region’s early-stage startup ecosystem, highlighting its growth over the past decade and the supportive frameworks fueling entrepreneurial growth.

In 2023, early-stage funding across pre-seed, seed, and Series A rounds surpassed $500 million across the region, a 12-fold increase from 10 years ago. Overall, VC funding in the Gulf rose in 2023 – despite a global decline – with Saudi Arabia overtaking the UAE as the region’s top recipient of VC investments.

Historically, the UAE and Saudi Arabia dominate these investments, with the UAE’s fintech and healthtech startups leading recipients of VC funds. Alma Health’s $10 million Series A exemplifies the momentum, alongside seed success stories like Ejari closing a $14.7 million seed round in October.  

The region now boasts around 60 to 80 active VC funds, including heavyweights like Mubadala Ventures in the UAE and STV in Saudi Arabia. Qatar and Oman are also fostering growth with targeted initiatives such as Qatar’s QBIC and Oman’s Innovation Hub.

Notable Exits and Milestones

Growth opportunities and the burgeoning vigor of the ecosystem can be traced through the increasing number of milestone moments for homegrown startups. 

Careem: Acquired by Uber for $3.1 billion in 2019, becoming a benchmark for regional unicorns.

Souq.com: Amazon’s $580 million acquisition of this e-commerce giant was pivotal in connecting global investors with the region.

Jahez: The Saudi food delivery app made headlines with its $2.4 billion IPO in 2021.

Floward: online flower and gift delivery platform, raised $156 million in a 2023 pre-IPO Series C round led by Aljazira Capital, Rainwater Partners, and STV marking the largest deal in Kuwait in 5-years. 

Government-Backed Initiatives

The GCC owes much of its startup boom to forward-thinking government initiatives. These programs combine entrepreneurship training with access to resources, capital, and world-class expertise among other benefits for founders 

Each country has unique offerings and accelerator programs. Here is a brief list of some of the programs 

Hub71 in Abu Dhabi is a cornerstone of the UAE’s Ghadan 21 program. The technology park provides startups with office space, visa assistance, access to investors, and industry-specific accelerator programming making it a magnet for global tech talent​.  

Dubai Silicon Oasis: This Free Trade Zone supports digital transformation startups, offering 100% foreign ownership and tax incentives​. It also hosts the Dubai Technology Entrepreneur Campus which is home to over a thousand startups from 90 countries.

Public Investment Fund: Saudi Arabia’s PIF, through programs like Aramco’s Wa’ed Ventures – supports the government’s Vision 2030 goals by investing heavily in accelerators and incubators​ and fostering technological innovation.

University-Led Programs:

King Abdullah University of Science and Technology (Saudi Arabia): Known for fostering sustainability-focused ventures.

Khalifa University (UAE): Offers seed funding and mentorship via its innovation center.

Qatar University: Promotes entrepreneurial activity through workshops and funding.

Sultan Qaboos University (Oman): Aligns its programs with the Omani government’s Vision 2040 program to emphasize sustainable development​.

These initiatives combine regulatory easing, financial incentives and innovation hubs to nurture startups. Governments are aggressively rolling out startup visas to attract talent, with the UAE leading the way through its “Golden Visa” program. Saudi Arabia’s Entrepreneurship License simplifies startup formation, further demonstrating the region’s commitment to economic diversification.

Despite remarkable growth, the GCC faces the same challenges as other developing ecosystems. Though there have been overall increases in early-stage VC funds, there is still limited access to growth capital in the region and cross-border expansion can be logistically complicated for startups.

The Daily Circuit: Neom faces budget cuts + Jordan’s tech startups

👋 Hello from the Middle East!

Today in The Daily Circuit, we’re looking at fresh venture capital funding for Jordanian tech startups, new scrutiny by Republicans in Congress of Microsoft’s $1.5 billion AI deal with UAE-based G42, China’s efforts to stoke trade with Saudi Arabia and the arrival of Lebron James and Team USA in Abu Dhabi on their way to the Paris Olympics. But first, Neom’s builders confront the reality of lower oil prices.

Neom, the flagship mega-project of Saudi Crown Prince Mohammed bin Salman’s Vision 2030 economic roadmap, is facing budget cuts. The development along the Red Sea coast is expected to be allocated 20% less than its targeted budget for this year, Bloomberg reports. The revision comes as the kingdom reconciles lower-than-expected oil prices and foreign investment that has it on track for at least three more years of projected national budget deficits.

Saudi Finance Minister Mohammed Al-Jadaan has previously said the eight-year-old Vision 2030 plan may face delays because the kingdom needs to be careful about “overheating” the economy – which may cause inflation to rise. 

“If you don’t allow your economy to catch up with your projects, basically what will happen is you’ll import a lot more,” Al-Jadaan said at the Qatar Economic Forum in May. As a result, Saudi Arabia could lack the factories and other capacity needed to support its plans. “So giving it more time is actually wise,” he said.

Modifying the vision is not necessarily a bad sign, analysts told Bloomberg, echoing the Finance Minister’s comments. The “rightsizing” of projects is a sign the kingdom is maturing, according to Goldman Sachs’ MENA Economist, Farouk Soussa. 

“What they’re doing in terms of adjusting these projects gives us a lot of comfort,” Soussa said. “They’re basically saying they’re not going to go for broke or bet the house on any one particular thing. If it’s possible, they’ll do it. If not, they won’t. They’re being quite sensible.”

📈 Rights Issue: Saudi Arabia’s Ayyan Investment Co. will launch a new share offering next week, seeking to raise $53 million in a rights issue representing 24.8% of its capital.

🕌 Islamic Bond: A $500 million sukuk, or Islamic bond, issued by the UAE’s Sharjah Islamic Bank and traded on the Nasdaq Dubai exchange, was oversubscribed threefold with orders totaling $1.5 billion.

🏗️ Construction Errors: Buildots, an Israeli startup that enables construction companies to overcome inefficiencies and prevent errors through AI technology, secured $15 million in funding led by Intel Capital.

Sheikh Mohammed bin Rashid, UAE Vice President, Prime Minister and Ruler of Dubai, met with local dignitaries, business people, investors, senior officials, and heads of private sector entities at the Union House in Dubai on Thursday. The meeting was attended by Sheikh Ahmed bin Mohammed bin Rashid, Second Deputy Ruler of Dubai and Sheikh Ahmed bin Saeed, President of Dubai Civil Aviation Authority and Chairman and Chief Executive of Emirates Airline. 

July 2-Aug. 25, Riyadh, Saudi Arabia: Esports World Cup. An international competition for professional gamers with a $60 million prize pot. Boulevard City.

July 9-13, Sun Valley, Idaho: Sun Valley Conference. Sponsored by Allen & Co., the annual “summer camp for billionaires” brings together some of the world’s most influential leaders in finance, tech, entertainment and politics. Sun Valley Resort.

July 15-17, Abu Dhabi, UAE: USA Basketball Showcase. The 2024 USA Basketball Men’s National Team will host the national teams of Australia and Serbia for three matches. Etihad Arena. 

July 15-26, Granada, Spain: ADIA Lab International Summer School. A course of lectures and case studies to explore the critical role of trust and safety in AI, examining the ethical, technical and societal implications of AI applications. University of Granada. 

July 16-19, Aspen, Colo.: Aspen Security Forum. Pentagon leaders, defense contractors and security officials from around the world meet for a four-day conference. Aspen Institute.

July 27-Aug. 4, Washington D.C. Mubadala Citi DC Open. Tennis tournament featuring nine of the world’s top 20 players. Rock Creek Park.

Aug. 12-15, Riyadh, Saudi Arabia: Saudi Food Expo. One of the kingdom’s largest trade shows for the food & beverage industry. Riyadh Front Exhibitions. 

Sep. 30-Oct. 2, Dubai, UAE: Future Hospitality Summit. The global conference for leaders in the hospitality industry expands this year at a new location with dedicated space for ESG planning, country pavilions and a larger exhibition area. Madinat Jumeirah.  

The Weekly Circuit: EVs ply Saudi summit + Delta embraces Riyadh Air

👋 Hello from the Middle East! 

This week we’re looking at Delta’s early embrace of Riyadh Air, prospects for a recovery by MENA venture capital firms, the UAE’s use of satellites and artificial intelligence to safeguard the seas and Saudi royal palaces transformed into super-luxury hotels. But first, we plug into the EV makers roaming Riyadh.

Saudi Arabia’s drive to establish an electric vehicle industry in the kingdom – clinching deals over the past year with the U.S., China and Europe – is on display this week during the Global EV and Mobility Technology Forum in Riyadh.

The two-day conference at the Riyadh International Convention and Exhibition Center, brings together senior government officials, financiers and car company executives – led by Faisal Sultan, Managing Director and Vice President of Lucid, the California EV-maker backed by the Saudi Public Investment Fund.

Lucid shares jumped as much as 10% in Nasdaq trading this week after the company reported that second-quarter car deliveries grew 70% from the same period in 2023. The PIF, which has a 60% stake in Lucid, opened a factory in the kingdom last year and has poured billions into the U.S. company as it looks to become a significant regional manufacturer.

Meanwhile, Riyadh Air has yet to embark on its maiden voyage — that’s scheduled to depart sometime in 2025 — but it’s already changing the air space over Saudi Arabia. The startup carrier, marketed to the business class crowd flocking to the Gulf these days in search of deals, inked its own agreement on Tuesday with Delta Air Lines. 

The partnership deal will introduce the only non-stop service on an American airline between the U.S. and King Khalid International Airport in Riyadh, and marks Delta’s first foray into the Middle East market. 

Signed at Delta’s headquarters in Atlanta, Ga., the partnership makes Riyadh Air Delta’s exclusive partner in Riyadh while offering hundreds of destinations in the U.S. to Riyadh Air’s customers. The partnership, still subject to regulatory approvals, will also allow coordination on flight times and routes while enabling passengers to book tickets on both carriers’ flights.

Delta, the world’s largest publicly traded airline by revenue, is getting in at a good time: airlines in the Middle East recorded a 33% increase in air passenger traffic in 2023 compared to 2022, according to the International Air Transport Association. 

Riyadh Air, which is owned by the Public Investment Fund, aims to fly to more than 100 destinations worldwide by 2030. Meanwhile, on Tuesday, Abu Dhabi’s Etihad Airways said it will run daily nonstop flights between Boston and the UAE capital starting in October in response to the route’s strong performance flying four times weekly.

Welcome to The Weekly Circuit. Read on for the stories, deals and players at the top of the news across the MENA business landscape. Please send comments and story tips to [email protected].

BOTTOMING OUT

VC funding drop spawns acquisition prospects for Mideast startups

The steep decline in venture capital investment across the Middle East and North Africa has turned many tech startups into ripe candidates for acquisition, Nour El-Shaeri reports for The Circuit.

Rebound in Sight: Watching the industry slide for the 16th month in a row, Philip Bahoshy, CEO of Dubai-based fund-tracking platform MAGNiTT says there are some signs a bottom may be in sight.

Buying Time: “This is a great opportunity for potential M&A activity where international investors may encourage their portfolio companies to acquire companies in the region for expansion, or startups and corporates acquiring for market share,” Bahoshy said. “Valuations are beginning to come down, making it a lot more appealing for investors, especially those that have dry capital.”

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Eyes in The Sky

UAE to use satellites and AI to avert maritime troubles

The UAE is aiming to use its advances in space to prevent chaos at sea, The Circuit’s Jonathan Ferziger reports.

AI AI Captain: Launching its new Satgate project, in collaboration with the Mohammed bin Rashid Space Centre in Dubai, the Ministry of Energy and Infrastructure said it will employ satellites and artificial intelligence to locate ships, monitor sea conditions and forecast the weather, according to a statement issued on Monday.

Securing the Sea: At a time when oil tankers and cargo vessels are being attacked in both the Red Sea and the Gulf, the satellite project has the potential to make commercial sea traffic in the region more secure and financially competitive.

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🤖 AI Interest: DAMAC Group, one of the UAE’s largest conglomerates with activities ranging from real estate to technology, announced it will invest $50 million in San Francisco-based startup Anthropic to develop its interests in artificial intelligence.

🇪🇬 Egyptian Horizon: Saudi Arabia-based Adeer International is planning to invest $400 million in the Egyptian real estate market within five years, CEO Bassel El-Serafy told Asharq Business.

💰 Expansion Plans: Dubai-based Gulf Islamic Investments has raised $100 million from investors including Saudi ​​Arabia’s Al Nahdi Family Office to expand its private equity business across the Middle East and India.

💸 Crypto Property: Mantra Chain, a Hong Kong-based blockchain developer, will tokenize $500 million worth of assets of Dubai real estate developer MAG Group.

🇲🇦 Orbital Surveillance: Israel Aerospace Industries signed a $1 billion deal to furnish Morocco with an intelligence satellite, Calcalist reports, citing La Tribune in France.

VC funding drop spawns acquisition prospects for Mideast startups

The steep decline in venture capital investment across the Middle East and North Africa has turned many tech startups into ripe candidates for acquisition, the head of fund-tracking platform MAGNiTT says.

Watching the industry slide for the 16th month in a row, Philip Bahoshy, CEO of Dubai-based MAGNiTT, tells The Circuit that the bottom may be in sight.

“This is a great opportunity for potential M&A activity where international investors may encourage their portfolio companies to acquire companies in the region for expansion, or startups and corporates acquiring for market share,” Bahoshy said. 

“Valuations are beginning to come down, making it a lot more appealing for investors, especially those that have dry capital.”

Emerging venture markets – a group of territories that includes Africa, the Middle East, Turkey, Pakistan and Southeast Asia – raised $3.5 billion in the first six months of 2024, marking a 34% decline compared to the first half of last year, according to MAGNiTT’s Emerging Venture Markets Venture Investment Summary.   

Saudi Arabia led the region in VC funding, coming second only to Singapore in emerging markets and raising $412 million, a 7% drop compared to the same period last year.  

Despite a decline in almost all VC metrics in the first half of 2024 – funding, deal count and exits – Bahoshy said he has noticed some signs that may signal a turnaround is near. 

The overall decrease in venture investing has tracked alongside a growing preference for early-stage rounds, indicating a trend that mimics more developed markets, Bahoshy tells The Circuit.

“Investors globally continue to look for opportunities in venture as things potentially look to pick up, especially at [the] early stage,” Bahoshy said, adding that the number of active investors in MENA is on the rise. 

MENA funding rounds fetching check sizes of $1 million to $5 million have tripled in the last several years, rising from 15% in 2020 to 45% in the first half of 2024.  

This shift indicates a growing focus on nurturing emerging startups. Bahoshy suggests that if this pattern holds, “funding is likely to pick up and hence the inflection that we may be bottoming out in the next two quarters.” 

He points to relatively low deal counts in the wider MENA region, but says Saudi Arabia and the UAE will continue to attract deals.  

The kingdom saw a 3% drop in funding rounds to settle at 63 in the first half of the year compared to the same period last year. The UAE saw an 11% increase and 83 transactions. 

Bahoshy expects more of the same as the year goes on, with room for growth if – and it’s a big if – interest rates come down.

As the focus shifts to early-stage ventures, valuations will become more realistic and based on fundamentals like profitability, he added.  

Investors are now focused on deals with strong foundations, good product-market fit and productive founding teams. Unlike a few years ago when investments were made with less due diligence due to FOMO and technology hype cycles, investors are now making targeted bets, particularly at early stages, according to Bahoshy.

The willingness of Gulf sovereign wealth funds to back venture capital firms looking to invest in the region is another potentially crucial factor in venture funding’s turnaround.  

Bahoshy notes investor appetite remains cautious. “People are still concerned about the economic environment. A lot of people are looking at the geopolitical situation. Many are looking at what the political situation is globally, whether it’s in the U.S., Europe, where we’ve just seen two elections take place,” he explained. 

He believes that a reduction in interest rates, which would lower the cost of capital, might stimulate late-stage funding.  

“If things begin to pick up in the wider economy, globally and here in the region, we’ll see similar to what’s happening in the U.S., at least quarter on quarter growth in funding,” he said. 

While transaction numbers might not rise, Bahoshy has found his silver lining: he expects investors to “place bigger bets” on newer startups – creating a larger pipeline of companies on the rise. 

Global Ventures’ Sweid says portfolio firms are pivoting to AI

The state of the venture capital market — and how it is being reshaped by artificial intelligence — was top of the agenda on Thursday, the final day of the Qatar Economic Forum in Doha, with partners from Global Ventures, Golden Gate Ventures and Alpha Wave Global sounding off on a panel.

“Our founders, they’ve struggled the same amount they’ve always struggled,” Noor Sweid, Co-Founder and Managing Partner of Global Ventures, said with a laugh.

The Dubai venture capitalist was commenting on the state of venture funding that has seen deal activity and check sizes plunge globally, as she emphasized that the region’s start-ups — for whom she is a vocal champion — are no strangers to dealing with challenges. Startups tend to be cash flow positive faster and demonstrate good business fundamentals because they are used to being in a cash-constrained funding environment, Sweid said.

Sweid also noted a trend toward Global Ventures’ portfolio companies pivoting to integrate AI tools, adding that of the more than 60 startups the six-year-old Dubai VC has backed, 40% of them could be considered AI firms today.  

Golden Gate Ventures Founder Vinnie Lauria, speaking alongside Sweid, said the Singaporean fund is eyeing B2B AI investments and said there is a strengthening corridor between his portfolio companies from Southeast Asia and the Gulf, as they find a foothold in cities like Abu Dhabi and Riyadh to access the regional market.  

Golden Gate, founded by Silicon Valley natives, announced its first $100 million MENA fund on Wednesday with $20 million in commitments from Al Khor Holding, Al Attiya Group and Sheikh Jassim Bin Jabor Al Thani. 

Rick Gerson, Co-Founder and Chairman of U.S. asset manager Alpha Wave Global, noted the $1.5 billion Microsoft investment in Abu Dhabi AI firm G42 as the “first large-scale demonstration of AI’s success in the region.” In 2022, the Miami Beach-based firm took on the co-management of a $10 billion VC fund with Abu Dhabi’s Chimera Capital. Gerson also noted the significant amount of exposure Alpha Wave has in India, adding that the Middle East represents a massive, largely untapped opportunity for the firm’s portfolio.