Start-ups in the Mena region raised $105 million from 44 deals in July, the lowest amount of monthly funding so far this year as global macroeconomic trends dampened investor sentiment, according to venture capital platform Wamda.
The investment value of the deals represents an annual drop of 84 per cent and a monthly decline of 68 per cent, Wamda said in a statement on Thursday.
In terms of volume, the number of deals that Mena start-ups sealed in July almost halved annually and fell by about a third from June, the data showed.
“Investment announcements typically fall during the summer months, but it seems like this slowdown is reflective of wider global trends that have impacted investor sentiment,” Wamda said.
Investment in start-ups around the world fell by 23 per cent in the second quarter of this year to $108.5 billion, which was raised from 7,651 deals, CB Insights said in its State of Venture report.
This is the biggest quarterly percentage drop in deals and the second-largest drop in funding in a decade.
Growing economic uncertainty, rising inflation, the Russia-Ukraine war and a decline in technology stock prices have dented investor sentiment.
Egypt was the only country in the Mena region where start-ups recorded a rise in investments, with a 72 per cent increase in investment value, Wamda said.
This was mainly due to business-to-business platform Cartona raising $12m to expand across the country, explore new verticals and further integrate financial services.
Egypt raised $156m in venture capital funding in the first quarter of 2022, including big-ticket funding rounds such as digital payment app Khazna’s $38m and social e-commerce app Brimore’s $25m, according to Magnitt.
Most of the investment in July was concentrated in the FinTech sector, primarily due to UAE-based Yap’s $41m growth round, Wamda said. This deal accounted for more than half of the amount raised in the UAE alone.
Start-ups in Saudi Arabia recorded a 55 per cent drop in investment value in July, compared with June, while investments in UAE start-ups declined 73 per cent during the period, the report showed.
Activity in crisis-hit Lebanon also picked up, due to the Energy Innovation Hub’s accelerator programme, through which 13 start-ups received a grant of $12,000 each, mainly in the clean technology and sustainability sectors.
Yap’s large fund-raising round propelled FinTech to the top of the rankings in terms of investment value, with $53m raised across eight deals, Wamda said.
Only 12 of the start-ups that raised investment in July attracted foreign investment, of which US investors participated in eight of the deals.
Regionally, Lebanon’s Innovation Hub was the most active investor in terms of number of deals, followed by UAE investors with 11 deals and Saudi investors who participated in eight deals.
From a gender perspective, start-ups founded by women raised only 0.1 per cent of the $105m, the lowest so far this year.
Start-ups founded by men raised $95m, or slightly under 91 per cent, while those with male and female co-founders raised $9.6m, or 9 per cent of the total.
Last month, six start-ups did not disclose the amount they raised. These include Lun Startup Studio, Modesta, Orisdi, Paymee, Sol, Stllr Network.
Wamda has assigned them a conservative amount of $100,000 each, it said.
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Three tips from La Perle's performers
1 The kind of water athletes drink is important. Gwilym Hooson, a 28-year-old British performer who is currently recovering from knee surgery, found that out when the company was still in Studio City, training for 12 hours a day. “The physio team was like: ‘Why is everyone getting cramps?’ And then they realised we had to add salt and sugar to the water,” he says.
2 A little chocolate is a good thing. “It’s emergency energy,” says Craig Paul Smith, La Perle’s head coach and former Cirque du Soleil performer, gesturing to an almost-empty open box of mini chocolate bars on his desk backstage.
3 Take chances, says Young, who has worked all over the world, including most recently at Dragone’s show in China. “Every time we go out of our comfort zone, we learn a lot about ourselves,” she says.
