Q2 2025 unfolded as a recalibration phase for the Saudi and broader MENA startup ecosystem. After a record-breaking first quarter, the second quarter brought a significant contraction in total funding, dropping to $569 million across 107 deals compared to $1.49 billion in Q1. This shift signals not just a correction in capital deployment, but a deeper adjustment in investor behavior amid persistent global macroeconomic headwinds.

What distinguishes Q2 is the growing bifurcation between early-stage momentum and late-stage hesitation. Investors continued to back pre-seed and seed-stage startups with conviction, particularly in fintech and proptech.  

Saudi Arabia remained a dominant force, leading the region in April with over $150 million in funding, fueled by large pre-IPO rounds and Vision 2030-aligned sector investments. Yet, as the quarter progressed, funding activity slowed sharply, and the UAE reclaimed the top spot in June, with Egypt emerging as the surprise leader in May on the strength of a few outsized deals.

While investor appetite cooled, the nature of deals suggests growing discipline and ecosystem resilience. Debt financing re-emerged in late Q2, accounting for 40% of June’s capital, a potential hedge against valuation uncertainty. At the same time, cross-border M&A activity continued at a steady pace, validating the region’s attractiveness for both strategic consolidation and international interest.

This report provides a detailed analysis of Q2’s funding and exit activity across MENA, with a focus on sector trends, stage distribution, and country-level dynamics.