AI Companies Captured Half of MENA’s Venture Funding in H1 2026 from Just a Quarter of All Deals.

 

AI and AI-Enabled companies raised $678M across MENA in the first half of 2026, the highest half-year total of the period, and 50% of all regional venture funding.

AI funding in MENA reached $678M in H1 2026, up 81% YoY, putting the sector on track for another record year. H1 alone accounted for 68% of the $1.0B raised in full-year 2025, the previous annual high. 

Deal activity, however, moved in the opposite direction. MENA recorded 53 AI transactions in H1 2026, down 56% YoY, making it the second-lowest half-year deal count in the period, ahead of only the 48 transactions recorded in H1 2023. The divergence between rising funding and falling deal activity points to a market where capital is increasingly concentrated in fewer, larger transactions.

Download State of Venture Capital of AI in MENA for the full country, sector and investor dataset here.

The composition of the record has reversed
AI funding has grown consistently across MENA’s first halves since 2023, reaching a new record in H1 2026. At the same time, the composition of that funding has changed. AI companies now account for the majority of funding, reversing the pattern seen in earlier years when AI-Enabled companies captured the larger share. In H1 2026, AI companies accounted for 58% of total AI funding, up from 46% in H1 2022.

Half the funding from a quarter of the deals
AI and AI-Enabled companies raised $678M in H1 2026, representing half of all MENA venture funding, compared with just 26% in 2025. However, they accounted for only 25% of total transactions, highlighting the growing concentration of capital in AI.

Geographic Concentration
The UAE accounted for the vast majority of MENA’s AI funding in H1 2026, capturing 93% of the regional total. Saudi Arabia and Egypt followed at around 2% each, with Morocco and Lebanon completing the five markets shown.

Transaction activity was more evenly distributed, with the UAE accounting for just over half of all AI deals, followed by Saudi Arabia and Egypt. The gap between funding and transaction share highlights that the concentration of AI funding in the UAE is driven primarily by larger deal sizes, rather than a significantly higher number of transactions.

Why a record half year is not yet a trend
H1 has not always been a reliable indicator of MENA’s full-year AI funding performance. The share of annual funding captured in the first half has varied significantly across recent years, meaning that annualising the $678M raised in H1 2026 should be viewed as an indication rather than a forecast. Whether funding reaches a new annual record will depend largely on how activity develops in H2.

Funding concentration is another key consideration. FinTech and Transport & Logistics together accounted for more than three-quarters of AI funding in H1 2026, while Enterprise Software recorded the highest transaction activity. At the same time, the UAE captured the vast majority of regional AI funding, reinforcing the concentration of capital across both markets and sectors.

With deal activity down 56% YoY, the key question for H2 is whether the strong funding performance of the first half can be sustained through broader transaction activity, or whether H1 represents a period of unusually concentrated capital deployment.

The report examines annual and half-year AI funding and transaction trends, AI’s contribution to MENA venture capital, country and sector performance, as well as the largest deals and most active investors shaping the ecosystem.

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