As we head into 2025, I believe that the MENA region’s venture capital ecosystem is going to benefit from declining global interest rates and a renewed global interest in risk assets. This shift is going to present a clear opportunity for startups and funds across the region. I just hope that we have collectively learned our lessons from the past and continue to highlight the importance of measured disciplined growth. I hope that the days of irrational exuberance, growth at all costs and sky-high valuations don’t make a comeback.

The Return of Risk Assets
The signs we are seeing in the US, with several rate cuts already and a new administration likely to support the continued decline of interest rates closer to the days of ZIRP, are that risk assets are likely to be where exposure will shift towards. We’ve already seen all time highs in the crypto markets, continuing advances in the stock market, and with that, an IPO window likely to open up again and reset benchmarks for exits in the private markets. Private credit, which was all the vogue over the past few years, is already seeing declines and stresses as benchmark rates go down.

All this means good times are likely ahead for the global VC ecosystem. And that usually translates into good times for the MENA VC ecosystem. We’re already seeing global funds at the growth stage invest in startups in MENA, such as General Catalysts’ investment into Lean and General Atlantic’s investment in Eyewa, and I expect this trend to continue. Both the pull factors of funding coming to these global funds from the MENA region, expecting investments in our region in return, as well as the push factors where our startups are more attractive when things get overheated in the US, will play a role in the next cycle.

MENA’s performance in 2024 underscores its ability to capitalize on these trends. Despite a 13% decline in total funding to $1.3 billion, non-mega deal funding grew by 7%, indicating a healthy appetite for early-stage investments. International investor participation doubled to 34%, and with over 30% growth in active investors year-on-year, the region has already laid the groundwork for a strong rebound in 2025 based on data compiled by Magnitt.

As we look ahead, this influx of capital is going to accelerate. With early-stage startups and growth stage companies alike poised to attract funding, 2025 could see a 15%-20% increase in deal volumes across MENA. However, the challenge remains to ensure this growth is grounded in reality rather than hype.

One thing has become worrisome to note – our cycles, across all the investment landscape, have become shorter than at any time in the past. This could result in the dangerous game of investors in long-term assets, like Venture Capital, trying to time the market, which is absurd. Our investment cycles extend beyond any short-term market moves and should remain so – as our investment horizons are 5-7 years.

AI: Table Stakes, Not a Differentiator
For many startups entering 2025, AI has become a foundational tool, not a unique advantage. This echoes the transitions seen in previous tech revolutions:

• In the 2010s, cloud computing went from being a differentiator to a baseline necessity for scalability and efficiency.
• Similarly, mobile-first strategies transformed from innovative ideas to industry standards as smartphones became ubiquitous.

Today, AI is following the same trajectory. While its potential is vast – improving efficiency, enabling personalization, and unlocking new business models – it is no longer sufficient to stand out solely by leveraging AI. When a startup thinks just throwing the word AI into their pitch is enough, that just doesn’t cut it. Tell me how AI is being used to offer a better experience, a better product, a cheaper operations system compared to what is already out there. Just integrating ChatGPT into a chatbot in your site or app to talk to customers does not make you an AI startup.

Investors and customers alike now expect startups to integrate AI into their offerings. What truly sets companies apart in 2025 will be how they use AI to solve specific problems, enhance customer experiences, and drive measurable impact.

For MENA startups, this means focusing on practical applications of AI tailored to local and global challenges. Whether it’s using AI to optimize logistics in densely populated cities or enabling more efficient financial inclusion, the emphasis must shift from adopting technology to innovating with it.

Learning from the Past
The 2021 funding boom offers a critical lesson for 2025: unchecked exuberance can lead to unsustainable outcomes. During that period, record-breaking funding rounds and inflated valuations created a landscape where “growth at all costs” overshadowed sustainable business models. As economic conditions tightened, many startups faced challenges, including down rounds, layoffs, and closures.

To avoid repeating these mistakes, the MENA ecosystem must prioritize:

Disciplined Valuations
Startups should focus on creating value, not chasing inflated metrics. You should be building a real business – your objective is not to raise funds or chase a high valuation, but to build something real. Investors, in turn, must stay realistic and resist the temptation to overpay for deals. The mentality that it doesn’t matter what price you enter into a deal as long as it becomes a unicorn is so wrong on so many levels. Paying $20m for a deal that is worth $10m reduces your potential outcome. if it was going to return you 50x at $10m, it’ll return you 25x at a $20m valuation. Still good, but a lot of upside lost. Valuations rooted in fundamentals like unit economics, market fit, and scalability are essential for long-term success.

Responsible Scaling – Positive Unit Economics are key
I hope that we have all collectively learnt our lesson about scale at all cost and growing a business with negative unit economics. Instead of chasing hypergrowth, startups should adopt a balanced approach, scaling in line with their resources and market demand, while maintaining a close eye on their unit economics.

Support for Exits
Although liquidity may remain a key challenge for MENA, we have seen this change in the past few years. We’ve seen the successful IPOs of Jahez, Fawri, Rasan and, most recently, Talabat. I also see many scale-ups targeting a listing in the next year or 2 just from our previous portfolio. If you had asked me when I started investing in startups in the MENA region in 2010 if IPOs were a valid exit path I would have said no chance. Now, we’re seeing more and more viable startups get to the level where they can IPO, with the right support from the leadership in countries in the region. I believe that liquidity will develop as our ecosystem develops and matures and should not be a concern for investors. In addition, we see a lot of healthy secondary activity in startups once they are raising their Series B+ and are at $100m+ in valuation in the region, making it relatively easier for seed investors like us to exit. The only exit path we don’t see as much in our region is strategic M&A, but with time, that too will change.

Avoiding FOMO Investing
Fear of missing out drove much of the 2021 frenzy. In 2025, let’s not fall into that trap again?

2025 will be a good year for VC in MENA
The venture capital landscape in MENA is set for a good year, supported by positive macroeconomic trends and a maturing ecosystem, and positive global economic tailwinds. We’ll see more funds close in the next year, more deals and more funding, and we may even see an increase of global investors coming back to the region at the later stages.

As an early and nascent ecosystem, we must learn from the past, and the global mistakes of others, and chart a positive and sustainable path for startups and VC in the MENA region in 2025!

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Organised by Dubai Centre for Artificial Intelligence (DCAI) the event saw startups and government entities sign agreements to co-develop AI applications and solutions in Dubai.

AI Connect is part of DCAI’s mission to align startups with the Dubai Universal Blueprint for Artificial Intelligence, supporting its strategic goal and reinforcing the emirate’s position as a global hub for AI innovation.

At the event, startups had the opportunity to share their work and engage with stakeholders in public and private sectors. Saeed Al Falasi, Director of DCAI,  highlighted some of the innovative projects and AI use cases in Dubai’s government that are addressing critical challenges and improving operations.

Startups and government entities, including Musafir, AI Camp, Pixonal, Enterprise Bot, and Aqtab, participated in a panel discussion, where they shared success stories and emphasised the importance of government support in turning ideas into reality.

Delegates were also briefed on Dubai Universal Blueprint for Artificial Intelligence launched by His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai, Deputy Prime Minister and Minister of Defence, and Chairman of the Board of Trustees of Dubai Future Foundation. The plan outlines a roadmap for enhancing quality of life in Dubai through various AI applications.

Overseen by DCAI, the plan focuses on creating an ideal environment for AI startups and for attracting global talent. Such an environment is founded on ease-of-doing-business, advanced digital infrastructure and agile regulatory frameworks.

AI Connect also discussed the need to increase the number of women working in the field of AI as well as strategies to address challenges around AI development and integration.

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Y Combinator (YC) and its community of startup innovators will be the first to access this offering in private preview to a limited cohort. YC has an unmatched reputation as a pioneering startup accelerator helping launch transformative companies including Airbnb, Coinbase and Stripe. Now YC startups will have the technical resources they need to quickly prototype and bring to market cutting-edge AI innovations. Our close collaboration with YC provides valuable insights into the infrastructure needs of early-stage AI companies, ensuring our offering delivers optimal value to additional startups going forward.

“With the overwhelming infrastructure requirements needed to do AI at scale, we believe that providing startups with high-performance capabilities tailored for demanding AI workloads will empower our startups to ship faster,” said Michael Seibel, Managing Director of Y Combinator.

We are also working with M12, Microsoft’s venture fund, and the startups in M12’s portfolio which will gain access to these dedicated supercomputing resources to further empower their AI innovations.  Over time, our vision is to partner with additional startup investors and accelerators, with a goal of working with the ecosystem to lower the barrier to training and running AI models for any promising startup.

Microsoft Azure offers cloud-based scalable AI infrastructure, built for and with the world’s most sophisticated AI workloads, from delivering the largest and most complex AI models including GPT-4 and ChatGPT through Azure OpenAI Service to developers to infuse AI capabilities into many apps. Azure AI infrastructure is fueling groundbreaking innovations. Infrastructure requirements to do AI at scale are often overwhelming, but with Azure’s global infrastructure of AI-accelerated server offerings with networked graphics processing units (GPUs), startups building advanced AI systems will be able to leverage these high-performance capabilities to accelerate innovation.

On top of world-class infrastructure, we will also provide tools to simplify deployment and management through Azure Machine Learning. This enables easy low-code or code-based training of custom models and fine-tuning of frontier and open-source models, simplified deployment and optimizations like Low Rank Adaptation, DeepSpeed and ONNX Runtime (ORT).  Further, startups can deploy AI solutions with peace of mind knowing all deployments are secure and backed by Microsoft’s principles for Responsible AI.

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The UAE Tech space is the second highest-funded sector in the Middle East and North Africa (MENA) region, followed by Saudi Arabia and Egypt. Funding in this space saw a peak in 2021 after which it has observed a decline in quarterly funding since Q4 2022.

UAE Tech startups witnessed total funding of $112 million in the third quarter of 2023, a decline of 23% from $145 million raised in Q2 2023 and a decline of 49% compared with $219 million raised in Q3 2022. This decline is largely due to a drop in late-stage funding to $25 million in Q3 2023, a 75% plunge from $100 million raised in the corresponding quarter last year (Q3 2022). There was no late-stage funding in the previous quarter (Q2 2023) in this sector.

A downward trend was observed in seed-stage funding as well. In Q3 2023, seed-stage funding worth $26.6 million was recorded, a drop of 57% and 66% compared with Q2 2023 and Q3 2022 respectively. Early-stage funding worth $60 million was observed in Q3 2023, 28% lower than the amount raised in Q2 2023, but a growth of 50% from Q3 2022.

FinTech, Enterprise Applications, and HealthTech were the top funded segments in Q3 2023. Startups in the FinTech space secured investments worth $78 million in Q3 2023, a sharp spike of 358% from the previous quarter, but 12% lower than the funds raised during the corresponding quarter last year.

No IPOs have taken place in 2023 so far in the UAE Tech startup ecosystem. Further, no new Unicorns emerged in the third quarter of this year. However, four acquisitions have taken place, a dip from six in Q2 2023 and 10 in Q3 2022.

Among UAE cities, Dubai took the lead in terms of funding. Companies headquartered in Dubai raised $82.7 million, accounting for 71% of the total funds raised in the UAE Tech space.

Wamda Capital, 500 Global and Hub71 are the most active investors in the region. Global Founders Capital, B&Y Venture Partners and Preface Ventures were the top seed-stage investors in Q3 2023, while SC Ventures, S3 Ventures and e& are the top early-stage Investors in Q3 2023. Bankai Ventures was the top late-stage investor in the region in Q3 2023

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H.E. Abdullah Al Saleh, Undersecretary of the Ministry of Economy, said “The UAE is keen to enhance and develop the national entrepreneurship environment, and adopt innovative projects that drive sustainable economic growth. We strive to provide all necessary enablers for the growth of SMEs in general and Emirati SMEs in particular, through providing training, financing, guidance and reducing costs, to help them focus on their core businesses.”

The Undersecretary explained that the Ministry of Economy continues to work on ensuring all kinds of support for the growth of the entrepreneurial sector in the country, in cooperation with its strategic partners in the government and private sectors. These efforts are aimed at creating a more flexible and competitive business environment that contributes to enhancing the growth and expansion of UAE startups and solidifying the country’s position as a destination of choice for entrepreneurs and startups from around the world.

The Ministry of Economy offers templates for 19 contracts, which include joint ventures, consultancy services, agency agreement, assignment agreement, intellectual property rights assignment document, exclusive and non-exclusive distribution agreement, restaurant franchise agreement, management agreement, limited liability company incorporation contract, sole proprietorship incorporation contract, service agreement, settlement agreement, shareholders agreement, share purchase agreement, facilities agreement, trademark assignment agreement, trademark licensing.

MoEc said that company owners, entrepreneurs, and concerned parties can use these templates free of charge, through its website: https://www.moec.gov.ae/web/guest/common-contracts-projects

Furthermore, it clarified that these templates are generic and therefore, the Ministry of Economy, Al Tamimi & Company, their advisors, employees, agents, or representatives do not bear any responsibility towards anyone who downloads or uses them. Additionally, all copyrights and other intellectual property rights related to these templates belong to the Ministry of Economy and Al Tamimi & Company.

The initiative will contribute to facilitating trade, establishment of businesses, reducing financial burdens on startups, organizing relevant legal and procedural frameworks, supporting contract strength, and effectively implementing their objectives. This will lead to a rise in the number of startups in the country and maximize their contribution to GDP growth, thus promoting sustainable national economic growth and enhancing its flexibility and global competitiveness in line with the “We the UAE 2031” vision.

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In the latest cohort, 67 per cent of the selected startups are headquartered outside the UAE. The 15 startups originate from the UAE, USA, New Zealand, Egypt, the Netherlands, and the UK.

Among the startups joining Hub71 are two HealthTech startups making a significant impact in healthcare, Exsurgo, and Ovasave. Exsurgo raised $10.5 million (AED 38.6 million) and delivers non-pharmaceutical treatments for neurological conditions using neuroscience and data analytics. Meanwhile, Ovasave leverages innovative solutions to provide women with seamless access to fertility and egg-freezing services through a vetted network. The cohort also includes FinTech startups such as Subsbase, backed by notable investors including Global Ventures and Plug and Play, who are simplifying recurring payments for businesses and Inovat, which offers a digital VAT refund solution, enabling travelers to save over 20% on shopping without paperwork or airport queues.

Ahmad Ali Alwan, Deputy CEO of Hub71, said: “Each startup has undergone a rigorous selection process, having been selected based on their unique capabilities and potential to grow as a global tech company out of Abu Dhabi. Our first cohort of 2023 is comprised of companies that have showcased a competitive edge in building differentiated tech platforms and products. By attracting and scaling startups with solutions that make a difference in people’s lives, we aim to make an impact on Abu Dhabi’s economy and society and continue bolstering its position as a leading global innovation hub.”

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Plug and Play is in talks with Jada, a $1 billion fund of funds established by the Saudi wealth fund to help kick-start the domestic venture capital industry, Saeed Amidi, the firm’s founder and CEO, said in an interview in Riyadh.

According to Amidi, the fund is set to be launched by January, with Plug and Play contributing as much as 10% of the total and the rest raised from Saudi funds and family offices, Plug and Play manages a portfolio of five funds, totalling $500 million, and has plans to establish five more.

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The event took place amidst a grand gathering of prominent figures, including H.E Abdulaziz Al Nuaimi, Assistant Undersecretary of the Commercial and Regulatory Affairs Sector, and Khalid Kalbat, Director of the Small and Medium Enterprises Development Department at the Ministry of Economy; where the winners were announced, highlighting their exceptional achievements during this esteemed occasion.

The Hello Business Pitch 3 provided a unique platform for aspiring startups and disruptive ideators to showcase their business ideas and models. The event attracted startups and entrepreneurs who were equipped with innovative frameworks, concepts, and business models who competed for recognition and a chance to win cash prizes worth AED 350,000.

A jury panel of nine subject matter experts meticulously evaluated the business pitches, considering factors such as the strength of the application, problem-solving capabilities, the ability to communicate their unique value proposition, and the potential for scalability.

The Hello Business Pitch 3 Awards Ceremony celebrated the outstanding achievements of winners in two categories: Ambitious Startups and Disruptive Ideators. FortyGuard emerged as the winner in the Ambitious Startups category, securing the prestigious first prize of AED 120,000. Revent claimed the second prize of AED 80,000, while ImInclusive won the third prize of AED 60,000. In the Disruptive Ideators category, Mohammed Alam (Story Box), stood out as the winner, earning the first prize, worth AED 40,000 in cash, Nitin Agarwal (QReceipts), secured the second prize of AED 30,000 cash, and Sara AlMahri (Sensy) was awarded the third prize of AED 20,000 cash.

Esam Mahmoud, Senior Vice President, SMB, etisalat by e& said: “We are thrilled to witness the remarkable talent and potential within the UAE’s entrepreneurial ecosystem at the Hello Business Pitch 3 Awards. These exceptional individuals and their groundbreaking ideas are driving innovation and shaping the future of business in our nation. We are proud to support and celebrate their achievements, and we look forward to their continued success as they contribute to UAE’s growth and prosperity.””

The talented individuals and startups showcased extraordinary innovation, vision, and the potential to significantly impact the business landscape of the UAE. The prizes they receive will support further developing their ventures and contributing to the nation’s economic growth.

Mahmoud thanked the UAE government for their continued support, he said: “The Hello Business Pitch 3 Awards is a testament to the UAE’s commitment to fostering entrepreneurship and fuelling innovation. By providing a platform for aspiring entrepreneurs and startups to showcase their ideas, we enable them to access the resources and capital they need to turn their visions into reality. We congratulate the winners and commend all participants for their dedication and ingenuity. Together, we are shaping a vibrant and thriving business landscape in the UAE.”

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Zealous is purposefully designed to empower goal-driven individuals in the tech community, providing them with the tools to find, meet, and stay connected at their preferred time and place. By leveraging thoughtful technology and human-centric design principles, Zealous eliminates the ambiguity, awkwardness, and hassle commonly associated with traditional networking.

Through the partnership with Creative Zone, Zealous will provide entrepreneurs and startups affiliated with Creative Zone a unique and unparalleled networking experience. The collaboration aims to encourage and promote tech networking, ensuring that it is intentional, effortless, and rewarding. By utilizing the Zealous mobile application, Creative Zone members will gain access to a comprehensive suite of features that enhance their networking opportunities, allowing them to optimize their time, forge valuable connections, and remain engaged long after events and programs have concluded.

With Zealous, members can network and nurture connections on the go, receiving personalized connection suggestions based on their location and meeting preferences. The app automates administrative tasks, such as scheduling meetings and managing referrals, effectively freeing up valuable time and making networking a more efficient and enjoyable process.

Maryam Ahmed Hassani, the co-founder and CEO of Zealous, expressed her enthusiasm about the partnership with Creative Zone, stating, “At Zealous, we are on a mission to reimagine the networking experience to be intentional, easy and meaningful. In today’s digital landscape, networking often feels overwhelming and impersonal. Zealous is committed to restoring the human touch, enabling our members to connect, collaborate, and thrive within their tech communities, at their convenience. We are delighted to partner with Creative Zone, who shares our vision of unlocking the true potential of tech networking.”

Lorenzo Jooris, CEO of Creative Zone, also shared his thoughts on the collaboration: “We are excited to join forces with Zealous to enhance the networking experiences of our entrepreneurs and startups. We believe that meaningful connections are vital for business growth and success. Through this partnership, we will provide our members with an innovative and user-friendly platform that amplifies their networking capabilities, propelling them towards new opportunities and long-term relationships within the vibrant UAE entrepreneurial ecosystem.”

Zealous is available on the App Store and Google Play store.

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Participating startups have been recognized for their innovative solutions in various challenges set by Hub71’s strategic partners as part of The Outliers. Telr won the challenge by Cars24 to create a virtual and seamless customer experience for buying used cars, while Abstractive Health won the Department of Health – Abu Dhabi’s challenge by implementing smart tools to enhance the patient experience. Tagspace and Shaffra won The Department of Culture and Tourism – Abu Dhabi’s challenge by deploying Web3 technologies to gain real-time insights into tourist behavior. Meanwhile, Hub71 startup Archireef offered Aldar a sustainable solution to enhance Abu Dhabi’s urban architecture, and AstraUTM won the Thales challenge by developing a data fusion module for low airspace management & security applications.

406 startups participated in The Outliers. The winning startups were successful for the companies’ ability to implement innovative products and services that can have a positive impact on the way corporates, government and broader industries operate.

Ahmad Ali Alwan, Deputy CEO of Hub71, said: “The Outliers program enables idea generation and meaningful collaboration between tech startups and industry leaders seeking to drive innovation and maintain a competitive edge. The winning startups delivered exceptional products and services that are set to impact multiple sectors and contribute substantially to the founders’ businesses. We are proud to play a role in the success of each startup and congratulate the founders on their achievements.”

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