Why MENA, not Africa, led emerging-market venture growth in 2025

In 2025, venture capital returned to parts of the world outside the US and China. African startups raised more money than in the previous year, with the continent securing $3.24 billion by the end of 2025, representing a 44.6% year-on-year increase. However, the Middle East and North Africa (MENA) stood out as one of the only emerging venture markets to grow both funding and deal activity in 2025.

According to data from MAGNiTT, a Middle-Eastern private capital data platform, MENA raised $3.80 billion in funding across 688 deals, a 74% year-on-year increase in funding, and a rare jump in deal volume among emerging markets. Growth in funding without the corresponding deal momentum often signals a few big checks going into established ecosystems. However, increasing deal counts along with capital, as MENA did, indicate ecosystem health, where capital reaches a wider set of founders across stages. 

Growth in funding without corresponding deal momentum most often hides the fragility of an ecosystem, as a few large cheques usually bolster established startups while early-stage activity withers. MENA’s ability to drive deal counts up alongside capital indicates that the ecosystem has a foundation where liquidity is reaching a wider set of founders, rather than just ones at the top.

A possible driver of MENA’s surge in VC activity is the maturing policy and regulatory environments in recent years, to create a safe space for startups and for capital flow. Across the region, governments have taken steps to improve legal frameworks and show commitment to digital economies. In North Africa, Tunisia’s startup environment, ranked among the world’s top 20, according to the Global Startup Ecosystem Report (GSER), has attracted investor attention. In December 2025, its parliament amended the financial law to allow residents to open foreign currency bank accounts, as the circulation of foreign currency had historically been tightly controlled. For startups, it means greater ease in managing international transactions and receiving foreign investment without complex roadblocks. 

Tunisia’s initiatives, like the ANAVA Fund of Funds, with a target size of €100 million ($116 million), boosted capital flow. In September 2025, the Fund of Funds invested $4 million in Qatar’s debt fund to channel more international venture capital into Tunisia’s startup ecosystem. 

Egypt’s ongoing reforms, such as the floating of its currency against the US dollar in March 2024, also contributed to the surge, stabilising the market and eliminating the parallel exchange rate that had previously deterred foreign investors. As part of its effort to strengthen its startup ecosystem, the government launched a $1 billion unified financing initiative to support 5,000 startups.

To eliminate bureaucratic confusion and ensure startups are not miscategorised, the country also introduced a unified legal definition of a startup. The country is also gearing up to launch the Egypt Startup Charter, a framework of measures designed to support startups and investment, to attract $5 billion in investments over the next five years.

Meanwhile, Morocco’s Digital 2030 strategy, a long-term blueprint that aims to transform the country into a regional technology hub and aims to create 240,000 direct jobs, gained traction in 2025. This was supported by the newly launched $40 billion Investment Charter, offering subsidies of up to 30% for investments in key sectors, including the automotive industry, aeronautics, electronics, and digitalisation. These structural reforms gave investors greater confidence to deploy capital into the region, even as other markets took a cautious stance with deals.

In both MENA and Africa, the fintech sector remained the top-funded sector, capturing $1.15 billion across 178 deals in MENA and 45% of all funding in Africa in the first half of 2025, according to MAGNiTT’s report. Funding for AI-related companies also tripled in volume in MENA, reaching $817 million, the highest ever recorded. By contrast, AI funding in Africa remains in earlier stages and is more focused on infrastructure support and adoption. 

While exact continent-wide figures for AI investment are still being compiled, data states that two-thirds of African countries now have some form of data protection law, and several markets are expanding their data centre capacity and laying the groundwork for future AI development.

MENA’s deal growth in 2025 was a bet on liquidity arriving sooner. Rising deal activity across stages suggests investors believe they will not have to wait a decade to recycle capital, as evidenced by the 41% jump in mergers and acquisitions, according to MAGNiTT’s data. For African markets, where funding rose in 2025 but deal counts reduced, MENA’s experience offers a contrast, implying longer holding periods for investments.

What becomes of this is a market where money may be returning, but is invested for longer, limiting the frequency of new companies entering the venture pipeline.