2025 is predicted to be a break-out year for startup funding in the UAE, poised to soar several notches up from the estimated $2 billion last year – which itself is estimated to have tripled from the previous year’s level, on the back rising investor confidence amidst stability and growth in the sector in the region.
Artificial intelligence, fintech, climate tech and health tech are expected to dominate the funding landscape in the region in the current year, with AI, especially generative AI, expected to draw massive investor attention due to its transformative potential across industries in the region, a sector expert said.
The startup sector is also expected to witness new trends such as revenue-based financing and venture debt gaining more traction this year, offering alternatives to traditional equity dilution.
“In regions like the UAE and GCC, investor confidence is on the rise, reflecting the growing potential of Middle Eastern markets. This upward trend underscores the resilience of these markets and the continued opportunities for startups to expand and thrive in 2025,” Deepak Ahuja, CEO and Co-founder of iAccel Gulf Business Incubator (iAccel GBI), the leading go-to-market accelerator partner supported by Dubai SME, told Arabian Business.
“While 2024 saw a recalibration in startup funding, 2025 is expected to bring more stability and growth,” he predicted.
Ahuja said both global and MENA funding are projected to increase, with a strong emphasis on later-stage investments in the current year.
Impact-driven investing to gain more currency in 2025
The top honcho of iAccel GBI, which helps early-stage tech startups grow in the Middle East, said 2025 is also expected to witness major changes in investor preferences, with impact-driven investing, particularly in climate and inclusion-focused startups, gaining more traction this year.
Investors will also be favouring startups with strong unit economics over growth at all costs, he added.
“In essence, 2025 will reward startups that align with regional opportunities, exhibit profitability, and solve pressing problems,” said the Founder of iAccel GBI, which works with a network of 235 angel investors, five venture capital firms, and 12 high-net-worth individuals (HNWIs) and family offices in the region.
Ahuja said the UAE’s startup ecosystem is soaring, estimated to have tripled funding to $2 billion by the end of 2024, solidifying its status as a global innovation hub.
Attracting startups from over 70 nationalities, the UAE thrives on world-class infrastructure, investor-friendly policies, and strategic market access, he said.
UAE ideal base for businesses from Europe, Asia and Africa to scale up operations in MENA
Ahuja, whose iAccel GBI has been instrumental in positioning the UAE as a global gateway, fostering growth in transformative sectors like AI, sustainability, and fintech, said the UAE’s transformation into a global hub for startups is evident not only in the diversity of its entrepreneurial base, but also in its ability to attract businesses from Europe, Asia, and Africa seeking to establish and scale operations in the MENA region.
Beyond being a funding magnet, the UAE provides unmatched infrastructure, strategic market access, and regulatory support, making it the destination of choice for startups targeting global expansion, he said.
“As we look ahead, we foresee continued momentum in high-impact sectors like AI, sustainability, and fintech, aligning with the UAE’s vision for innovation and economic diversification,” Ahuja said.
He said startup funding depends on multiple factors, especially when it comes to sectors that have seen lots of surprises in the recent past.
“We believe in 2025, AI, fintech, climate tech, and health tech are expected to dominate funding landscapes. The recent IPO of Talabat has showcased the MENA region’s ability to create scalable, globally competitive tech companies. Such success stories will catalyse interest in startups catering to evolving regional markets,” he said.
Ahuja said fintech will see growth in embedded finance, cross-border payments, and regtech solutions as regulatory compliance and seamless transactions become critical for businesses, while climate tech will grow as sustainability becomes a priority for governments and many large corporations.
Health tech will continue to attract funding, given the gaps to be addressed, particularly digital health solutions targeting efficiency and access, the iAccel GBI top executive said.
Ahuja said the UAE – as also the wider region, is currently seeing the emergence of several new trends in terms of funding models, investor preferences or regional focus areas, with a notable pivot to markets with high-growth potential.
“The MENA region, bolstered by regulatory reforms and government-backed initiatives, is now a launchpad for startups,” he said, adding that players like iACCEL GBI are playing a significant role in building awareness through their network of angels and HNWIs.
