Startup funding across the Middle East and North Africa declined in February, with companies raising a combined $326.6 million across 62 deals, marking a slowdown after a stronger start to the year.

The total reflects a 42% month-on-month drop and a 38% decline compared to February 2025.

Despite the fall in overall funding, the composition of investment remained relatively stable. Debt financing accounted for 16% of total capital deployed, underscoring continued investor preference for equity-led growth.

The UAE retained its position as the region’s most active market, with 23 startups raising $162.8 million—nearly half of total funding. Saudi Arabia followed, with 25 startups securing $87.7 million, while Egypt ranked third with $64 million across six deals, largely driven by a single late-stage transaction.

Fintech remained the leading sector, attracting $94.7 million across 14 deals, supported by sustained investor interest in digital payments, lending platforms and financial services. E-commerce ranked second, raising $52 million across three deals, primarily driven by Breadfast’s $50 million pre-Series C round, while deeptech placed third with $51 million across two transactions.

Notably, February saw an absence of mega deals. Only two late-stage transactions were recorded during the month, including rounds by Breadfast and Stake.

Early-stage startups accounted for the majority of activity, with 49 companies raising a combined $136.4 million, indicating continued investor engagement at earlier stages even as larger deals remain limited.

Business-focused startups captured the largest share of funding, with B2B ventures raising $137 million across 38 deals. In comparison, 18 B2C startups secured $62 million, with the remainder allocated to hybrid models.

Gender disparities persisted, with no funding recorded for female-founded startups during the month. Mixed-gender founding teams raised a combined $14 million across three deals.

The decline in funding appears largely structural, driven primarily by the absence of large transactions rather than a broad pullback in investor activity.

Geopolitical tensions escalated at the end of February following US-Israeli strikes on Iran. While these developments are unlikely to have impacted deals closed during the month, they may begin to weigh on activity in the near term, with a potential slowdown in March as investors reassess regional risk and delay deal closures or announcements.