This year is predicted to be a break-out year for start-up funding in the UAE, which expected to easily outstrip the estimated $2 billion raised by the sector in 2024 – which itself is estimated to have tripled from the previous year’s figure.
Experts say that 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. AI, especially generative AI, is expected to be hugely attractive to investors.
“In regions like the UAE and GCC (Gulf Cooperation Council), 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 start-ups to expand and thrive in 2025,” said Deepak Ahuja, CEO and Co-founder of iAccel Gulf Business Incubator (iAccel GBI), which helps early-stage tech start-ups grow in the Middle East. The firm is a partner of Dubai SME.
“While 2024 saw a recalibration in start-up funding, 2025 is expected to bring more stability and growth,” he predicted.
Ahuja told the Arabian Business website that both global and MENA funding are projected to increase, with a strong emphasis on later-stage investments in the current year.
He added that 2025 is also expected to witness major changes in investor preferences, with impact-driven investing – particularly in climate and inclusion-focused start-ups – gaining more traction this year.
Ahuja said the UAE’s start-up ecosystem is soaring, attracting start-ups from over 70 nationalities. “The UAE thrives on world-class infrastructure, investor-friendly policies, and strategic market access,” he said.
Ahuja, whose iAccel GBI has been instrumental in positioning the UAE as a global gateway in sectors like AI, sustainability and fintech, said the UAE’s transformation into a global hub for start-ups 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.
Tech industry to see record growth
The UAE’s technology industry is set to achieve record growth in 2025, driven by significant expansion in digital innovation and the adoption of cutting-edge technologies.
According to a new report by Statista, revenues from the technology services market in the UAE are likely to increase by around $3bn in 2025.
The company’s report emphasised that this projected growth reflects the UAE’s continued progress in developing its tech sector and increasing reliance on digital services.
It also predicts a stable annual growth rate of 6.24% from 2025 to 2029, which will raise the market size to £3.9bn by the end of the forecast period.
Statista said the UAE has strengthened its position on the global map as an innovation-driven environment and an exceptional destination for the expansion of both global and emerging tech companies.
This has been made possible through its sustainable investments in digital infrastructure development and the establishment of supportive regulations and policies that create a favourable climate for innovation and growth.
Its report predict that the tech sector will continue to grow in areas such as artificial intelligence (AI), cloud computing, and emerging technologies like blockchain and the Internet of Things.
Officials from various emerging tech companies told the Emirates News Agency (WAM) that the UAE is a key attraction for these businesses, owing to its advanced infrastructure and supportive business environment.
Harsh Sajnani, CEO of Kingpin, stated that the UAE, and particularly Abu Dhabi, is “a beacon for start-ups due to its world-class infrastructure”. This facilitates the growth and success of such companies and encourages them to expand globally with ground-breaking technological innovations, he said.
He added that the UAE offers a competitive environment for companies across various sectors, including technology, thanks to the rapid digital transformation and the growing tech industry.
This supports companies in adopting advanced technologies to enhance their operational efficiency and competitiveness.
Meanwhile, Alex Zito, Strategic COO of CapeCade, said the company is transitioning its operations to the UAE to expand its business due to the promising opportunities and significant government support that helps companies thrive.
He added that the company views Abu Dhabi as an ideal environment to transform its current regional user base into long-term clients, as it provides a comprehensive ecosystem that supports the objectives of both start-ups and investors alike.
Source:IAAP