#UAE #venturecapital - AI and AI-enabled companies captured $678 million, or 50 percent of all MENA venture capital funding in H1 2026, up from 22 percent a year earlier. AI funding rose even as the number of AI deals fell 56 percent year-on-year to represent just 25 percent of regional deal flow, according to MAGNiTT’s MENA AI Venture Capital: The H1 2026 Review. The UAE captured 93 percent of that AI funding, with FinTech and Transport & Logistics attracting the largest share of capital.
SO WHAT? - The headline growth figure masks a narrowing market. Deals worth $20 million or more made up just 9 percent of AI transactions but captured 82 percent of all AI funding. This means MENA’s AI capital is increasingly concentrated in a small number of large late-stage rounds rather than spreading across a growing pool of startups. Whether that capital eventually broadens into more early-stage activity, or keeps concentrating into fewer, bigger deals, is the real question for the second half of the year. However, the big positive take-away from the data is that there is a flow of MENA AI companies that are considered worthy of seven-figure investments.
KEY POINTS:
UAE-based private capital data platform MAGNiTT has released its MENA AI Venture Capital: The H1 2026 Review.
According to the review, AI deal activity fell from 121 transactions in H1 2025 to 53 in H1 2026, even as AI’s share of total MENA funding more than doubled over the same period.
Funds with a 2026 vintage had deployed $60 million by H1 2026, with 55% ($33 million) going to Saudi-based startups, $7 million to the UAE, and $20 million spread across other MENA markets.
Saudi Arabia has consistently attracted the largest share of capital from MENA-focused venture funds since 2024, receiving $30 million of $42 million deployed by 2024-vintage funds and $53 million of $95 million by 2025-vintage funds.
Across 17 identified MENA-focused venture funds targeting $1.65 billion in total fund size since 2024, only 12% ($197 million) had been deployed by H1 2026, leaving an estimated $1.45 billion, or 88%, as dry powder.
Committed capital across these funds grew at a 97% compound annual growth rate over the period, with the sharpest increase, $705 million, occurring between 2024 and 2025.
The largest MENA-focused funds by target size included BECO Booster Growth Fund I ($250 million), Shorooq Partners’ Late Stage Growth Fund ($200 million) and Jasoor Fund ($180 million), with four dedicated AI-focused venture funds launched across the period.
Early-stage companies accounted for most AI funding during H1 2026, even as overall deal activity declined, suggesting continued investor appetite for backing new AI ventures despite the drop in total transaction volume.
[Written and edited with the assistance of AI]
Source: MAGNITT
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