Startup funding in the Middle East and North Africa (MENA) fell to $941 million in the first quarter of 2026, marking a 21.5% quarter-on-quarter decline and a 37% drop year-on-year, as escalating geopolitical tensions weighed on investor activity across the region.
The year opened on a relatively strong note, with nearly half a billion dollars deployed across 59 deals in January. By mid-February, however, escalating tensions between the US, Israel, and Iran began to weigh on investor sentiment. As the conflict intensified, investment activity slowed, with February closing at $326.6 million.
Beyond sentiment, the war had tangible economic consequences. Disruptions to seaborne logistics, particularly following Iran’s blockade of the Strait of Hormuz, one of the world’s most critical oil transit chokepoints, heightened global risk exposure and reinforced investor caution across the region.
With uncertainty persisting and only a fragile truce in place, March recorded one of the weakest funding months in recent years. Just 17 startups raised less than $50 million in total, reflecting a near standstill in deal activity.
A brief window of optimism emerged as global attention turned to anticipated negotiations in Islamabad. However, the collapse of talks by the end of the week quickly reversed sentiment, reinforcing expectations of a challenging second quarter and a longer recovery cycle for both startups and investors.
