When I first moved to the UAE in late 2010 to report on technology, most of the news centred on the telecoms companies and what they were up to.
Back then they were at the forefront of digital innovation, releasing new products and services to monopolise the rise of internet adoption.
Within a couple of years this shifted to coverage of new digital companies emerging in the region, including ecommerce services, digital wallets and online publications. Digital companies then came to be known as startups, and since then, the ecosystem has gone from strength to strength.
Last year more than $3.5 billion was pumped into startups across the region. If we count the debt that also flowed into the coffers of several later-stage companies, that sum increased to over $7 billion, according to figures from Wamda, a data provider.
This indicates yearly growth of 77 percent and 225 percent, respectively.
The region is now meeting – and in some cases surpassing – the benchmarks typically used to gauge the health of the sector.
Investment volumes, fund formation, startup creation, the emergence of unicorns and a growing number of exits and secondary transactions all point to an startup scene that has not only matured but continues to deepen.
US investors, in particular, tend to view the Middle East as a monolith, so the risk of war in one country can adversely affect their willingness to invest
But recent unrest in the region and US President Donald Trump’s volatile actions warrant caution. The uncertainty of what could transpire in the next few months will no doubt impact investor sentiment, foreign exchange expectations and consumer confidence.
Before the war in Ukraine broke out in 2022, investment in the region’s startups had surpassed $3.5 billion by the end of that year. The impact of the war on the global cost of living, rising inflation and rising interest rates led to a drop in the sums available to invest in startups regionally.
So while the $3.5 billion invested in 2025 marks a rise compared to the past year, the market has only just recovered from the impact seen since 2022.
The uncertainty about what will happen in Iran (which will no doubt affect oil prices) will inevitably affect Mena’s startup scene.
That is partly because global investors now account for almost half of startup funding in the region. US investors, in particular, tend to view the Middle East as a monolith, so the risk of war in one country can adversely affect their willingness to invest elsewhere.
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The other major shift affecting startups in the region is the proliferation of artificial intelligence.
On the one hand, it presents an exciting opportunity. AI-native startups will become more prevalent, that is, entire systems from core software to execution – all built using generative AI.
But on the other hand, it presents a frightening prospect for young graduates, whose entry-level roles will likely be replaced by AI.
Government investment in entrepreneurship has partly been driven by a desire to create more jobs, so while their economies are likely to become more efficient, youth unemployment will be hit.
Unemployment has long been a bane of the region and the last time millions of unemployed young people felt helpless, they took to the streets.
But this is not to say we are entering a downward spiral, far from it.
Government support for the sector will likely ensure the ecosystem continues to grow and mature, investments are made and exits continue this year.
Triska Hamid is a writer focusing on technology and startups in the Middle East and an angel investor