King Lai landed in Abu Dhabi from Hong Kong in February, one of 27 startups Hub71 admitted to its latest cohort. Within days, Iran was striking Gulf capitals. He stayed, signed two local customers, and began courting Emirati venture funds.
He was far from alone. Across Abu Dhabi, Dubai, Riyadh, and Doha, founders mostly held their ground through a shooting war that opened on February 28 and, after an April ceasefire and a June memorandum, flared again in July over the Strait of Hormuz. The funding announcements kept coming.
The first-half numbers still came in low all the same, and they had started falling before the war could have had anything to do with it.
Jeremy Savory, who relocated to Dubai to build his residency advisory, Savory & Partners, thinks the fear is aimed at the wrong thing. “People think a war scares the money off. It doesn’t, not really, it’s just numbers on a screen, and it goes where it goes. What takes a hit is trust, people being willing to show up and sit across a table from each other, and that’s the part that takes ages to come back.”
Two Sets of Numbers
The two firms that track the region disagree on how far funding fell. MAGNiTT, the Dubai tracker Bloomberg relied on, counts $1.35 billion raised across the Middle East and North Africa (MENA) in the first half, down 22 percent on the year, with the deal count down 41 percent to 214, the weakest half since at least 2022.
Wamda, working with Digital Digest, is gentler: $1.7 billion across 242 rounds, an 18 percent fall. The difference is mostly in the counting, since Wamda includes debt financing and treats a round more loosely, while MAGNiTT stays closer to equity.
They disagree on the size of the drop but not on its direction, or on the shape of what is left. The UAE now draws two-thirds or more of all regional capital, and the money is clustering into a handful of very large rounds while the middle of the market goes quiet.
The Fall Predates the War
A venture round takes six to nine months to move from handshake to close, so the first-half money mostly records decisions founders and funds made in 2025, before a regional war was part of the calculation. As MAGNiTT’s Philip Bahoshy put it to Semafor, the numbers have not caught up with the mood.
Early-stage dealmaking, which tracks current appetite more closely than the totals do, has already fallen by more than half on the year. Two rounds worth a combined $480 million held the first-half figure up, and the ten largest deals took 58 percent of all the capital. Without those, the underlying picture is weaker still.
Bahoshy expects a repeat of 2020, when announced deals carried the headline numbers through the first half before the pipeline emptied and the next quarter showed what had really happened. The exit market is tightening alongside it. Mergers and acquisitions fell 56 percent to 16, and foreign investors, who had lately been outspending local ones, roughly halved their share.
Why They Stayed
Founders did not stay because a war zone appealed to them. They stayed because the money is already in hand and leaving is expensive. Governments across the Gulf spent years making it that way on purpose, and Savory sees the design plainly. “The UAE set itself up to be the room where the capital and the people who need it and provide it actually meet. That was always the plan, and now we’re seeing if it holds up under real pressure.”
Hub71, the Mubadala-backed Abu Dhabi program that took Lai’s cohort, pays each startup AED 250,000 in cash for equity and another AED 250,000 in services, about US$136,000 together, on top of subsidized housing and office space. Its February intake drew nearly 2,500 applicants for 27 places, and for the first time none of the firms it chose were Emirati. None withdrew after the strikes began.
Doha has spent more. In February, weeks before the first strikes, the Qatar Investment Authority (QIA) tripled its Fund of Funds program to $3 billion from the $1 billion it launched in 2024, bringing 12 global managers to the city, among them B Capital, which Facebook’s Eduardo Saverin co-founded; it has committed about a third of the money so far.
A separate program, Startup Qatar, has fielded more than 7,700 applications and, by Bloomberg’s count, paid $51 million to 45 firms, 11 of them since the fighting began.
Dubai and Riyadh run their own versions. Dubai Founders HQ opened months before the war and put its first cohort through in April, while Saudi Arabia moves founders through incubators such as The Garage and the Sanabil Accelerator toward state money from Saudi Venture Capital and the Jada Fund of Funds.
The Kingdom’s own successes, Tamara, Ninja, Foodics, and Jahez, the food-delivery firm that listed on the Saudi exchange’s parallel market in January 2022, are the names the whole system points to when it sells itself.
The Relocation Condition
One requirement runs through nearly all of it: The founder has to be there in person. Startup Qatar wants at least one founder resident, Hub71 expects the same, and Golden Gate Ventures moved partner Michael Lints from Singapore to Doha in 2024 to run the $100 million MENA fund it raised from Qatari families. In the Gulf, the money rarely follows a founder who stays abroad.
Savory, who arranges these moves for a living, says the funds are pricing something specific. “Nine times out of ten they want the founder actually living here, not flying in when there’s a meeting. And it’s simple, if you’ve moved the family over, put the kids in school, taken a lease, you’re not going to bolt the second things get hard. That’s what the money’s really backing.”
The residency rules have caught up to that. In the same Web Summit push, Qatar moved to add a 10-year entrepreneur residency to the five-year permit it already grants founders, and the UAE golden visa and Saudi Arabia’s Premium Residency do the same elsewhere, which turns the demand to relocate into something a founder can plan a life around.
The Second-Passport Hedge
Staying in the Gulf has not stopped the same founders from arranging a way out on paper.
Elena Ruda, co-founder and managing partner of Immigrant Invest, a residency and citizenship advisory, says the war has pushed more Gulf-based entrepreneurs to build a second residency or passport into their own planning, and she reads it as risk management rather than flight, the same instinct that leads globally mobile founders to keep more than one passport, more than one bank, and more than one place to live if they ever need it.
Her firm’s enquiry numbers point the same way. Since March, the share of UAE-based clients in its pipeline has roughly doubled, from about 7 percent earlier in the year to around 15 percent, and stayed there; among entrepreneurs alone, enquiries roughly tripled by April.
She says interest from Qatar has “more than quadrupled” over the same stretch, with regional security coming up in more than a third of those conversations, and about one in five Saudi clients now raise the same worry.
The destinations are the ones mobile wealth tends to favor: Portugal, Italy, and Greece golden visas, Spain’s digital nomad visa, and Caribbean citizenship, with Grenada the clear favorite.
What almost none of it is, Ruda stresses, is an exit. “For the large majority, this is additive, not a substitute. They’re not closing their UAE operations or relocating away from the region. They’re adding optionality while keeping their business based exactly where it is.” It is the same habit of mind they bring to their money. “They think in terms of portfolios, not single points of failure, for their capital, and increasingly for their own mobility too.”
An Untested Bet
For all the machinery, the Gulf is still a minor hub by global standards, its talent pool shallow and its technology listings few. Some investors are unbothered by that. Alex Lazarow, the San Francisco founder of Fluent Ventures, points out that only four cities produced a unicorn when he started investing in 2013, against more than 300 today, a growing share of them Saudi and Emirati; he is not slowing down.
Savory does not think anywhere else could take its place. “People always ask me where else they could go, and the truth is there’s nowhere like it. You’ll find the big sovereign money in one place, the family offices somewhere else, maybe a government that leaves you alone, but never all of it together like you get here. Everywhere else is either years behind or so tangled in red tape that nothing gets done.”
The confidence may be right, but the war has not tested it yet. The capital is in place, and the residency rules to keep founders there mostly are too. What no one can say yet is whether the first-half resilience came from real demand or simply from committed money working its way out. The deals from the war months will start to show up in the third-quarter figures, and those are due soon.
