Modern, futuristic, and lifestyle-changing entrepreneurial ideas always seek highly liquid markets, especially where hyperscalers can provide vast computing power, storage, and networking capabilities. This describes the GCC startup funding ecosystem where sovereign, state-related investors, corporate venture capitalists (CVCs), angel investors, family offices, and other capital-rich entities either reside or plan to establish a strong presence in 2026 and beyond.
Deloitte’s 2025 Middle East research highlights the continued dominance of Gulf sovereign wealth funds (SWFs) along with their affiliated co-investment vehicles, when it comes to both writing direct checks and backing funds of funds and local VCs to seed local ecosystems and encourage large follow-on rounds of Series-type funding.
PwC’s 2025 “Corporate Venturing/CVC in the GCC” report shows that corporates, family offices, and newly active regional family-backed funds are underwriting earlier-stage risk and bridging pre-seed/seed gaps through CVC programs.
Bloomberg’s independent reporting shows a surge in locally based early-stage investors, including boutique angels, family offices, and fintech-focused funds, that co-invest with global managers, incentivized via SWF-backed fund-of-funds programs.
SWFs anchor the large rounds and funds, while big regional CVCs and family offices pool their resources to finance projects. Finally, local angels and micro-VCs fill the earliest funding rounds.
SWF investments in numbers
According to a 2025 Deloitte report, titled “Growth in funds and assets drives SWF’s landscape”, Gulf SWFs have maintained an aggressive investment pace, deploying $82 billion in 2023 and an additional $55 billion in the first nine months of 2024.
Five major players – the Abu Dhabi Investment Authority (ADIA), Abu Dhabi’s Mubadala and Abu Dhabi Developmental Holding Company, Saudi Arabia’s Public Investment Fund (PIF), and the Qatar Investment Authority (QIA) – continue to dominate activity in the region.
Gulf SWFs currently employ an estimated 9,000 professionals across their operations.
Julie Kassab, Sovereign Wealth Fund Leader at Deloitte Middle East, commented: “We are witnessing these funds not only expand their geographical footprint but also significantly enhance their internal capabilities, setting new standards for the industry in terms of performance and governance.”
In 2025, Gulf SWFs significantly increased their domestic investments to build local capacity, focusing heavily on the technology, artificial intelligence (AI), digital infrastructure, and renewable energy sectors.
The PIF, a primary driver of domestic investment in the region, announced an annual target to invest around $70 billion domestically as part of its Vision 2030 initiatives, an increase from its previous range of $40-$50 billion.
UAE funds are also very active domestically. In October 2025, Abu Dhabi’s Lunate partnered with Blackstone, the world’s largest alternative asset manager, with more than $1 trillion in AUM, to launch GLIDE, a logistics platform with a $5 billion commitment to warehouse and transport infrastructure across the GCC.
Qatar doesn’t release totals for its domestic investments, but the deals it makes project a robust internal investment ecosystem.
Qatar recently partnered with Canada’s Brookfield to establish a $20 billion joint venture aimed at building advanced artificial intelligence infrastructure and positioning the Gulf state as a regional hub for next-generation computing. Qai, a subsidiary of QIA, will invest in domestic and select international markets, the companies said in a statement.
Exit strategies welcome
Initial Public Offerings (IPOs) have been a growing, visible path in 2025 as a strategic exit for both state-related sponsors and private investors. Ernest & Young’s (EY’s) 2025 MENA IPO Eye documents a notable uptick in IPO activity across the GCC in H1–Q2 2025, driven by privatizations and state-related spin-offs that allow both SWFs and strategic investors to realize value while retaining governance influence.
Those IPOs are used both to monetize stakes and deliver liquidity to institutional backers.
EY’s report stated that in Q2, 2025, MENA raised a total of $2.5 billion from 14 IPOs, a slight decrease of 6.2 percent compared to Q2, 2024.
Saudi Arabia led the region with 13 IPOs, raising $1.9 billion. Saudi Arabia’s leading low-cost airline, Flynas, was the top listing, contributing $1.1 billion, followed by Dubai Residential REIT with $584 million.
Total proceeds increased slightly from $2.4 billion in Q1, 2025, to $2.5 billion in Q2, 2025. Saudi Arabia accounted for 13 out of 14 IPOs in the MENA region, with the transportation sector contributing 44 percent and healthcare 21 percent of total proceeds.
The Dubai Financial Market (DFM) had one listing, Dubai Residential REIT. Total GCC IPO proceeds declined by 6 percent in H1, 2025, compared to H1, 2024.
The EY report highlights the performance of various stock exchanges, with Tadawul Main Market and Nomu leading in IPO activity.
The report concludes with a cautiously optimistic outlook for MENA IPOs, emphasizing the need for companies to adopt innovative business models and maintain strong working capital management to navigate market challenges.
Merger and Acquisitions (M&As)
Reuters and Bloomberg coverage in 2025 also documents large-scale strategic divestments by Abu Dhabi and other conglomerates, starting from hundreds of millions, reaching up to multi-billion US Dollar deals.
According to A&O Shearman, a top-tier global law firm, M&A activity within the GCC defied the international trend in 2025 as both deal value and deal transaction count to December 1, 2025, were higher than the totals for 2024. The 2025 M&A deals reached $72.7 billion over 554 transactions, up 170 percent and 2.6 percent, respectively.
The UAE ($60.4bn) and Saudi Arabia ($8bn) were the two biggest markets.
Some of the biggest deals were inbound acquisitions in the energy and infrastructure sectors, including Aramco’s $11bn lease and leaseback of its Jafurah gas processing business to a consortium of investors led by Global Infrastructure Partners.
The region’s financial services sector has also seen a number of in-market mergers, including Gulf Bank and Kuwait’s Warba Bank.
The highest-profile SWF transaction of 2025 was the PIF’s $55bn acquisition of videogame developer Electronic Arts alongside Silver Lake and Affinity Partners.
Internal investments
Middle Eastern SWFs are also investing heavily in digital infrastructure and AI capacity closer to home through state-affiliated investment vehicles, such as Saudi Arabia’s HUMAIN (backed by PIF), and MGX, the UAE’s dedicated AI fund, according to a recent CNN report.
HUMAIN, launched in May 2025 as a national champion for the Saudi Arabian tech sector, plans to build up to 6GW in data center capability across the country by 2034, working with partners including Nvidia, AMD, Qualcomm, and Cibsco. In November, the company announced a $3bn domestic data center deal with Blackstone.
Saudi Arabia is home to Aramco Ventures and Neom Investment Fund, while Qatar has signaled plans to invest more than $1bn in local VCs. The UAE, for its part, backs accelerator initiatives such as Dubai’s DIFC Innovation Hub and Abu Dhabi’s Hub71.
GCC stock market performance
Stock market performances often reflect the viability and visibility of capital investments and exit strategies. The S&P GCC Composite was up 5 percent by Q3, 2025, revealing mixed performance amid varying sectoral and liquidity trends, according to PWC.
Oman led regional markets, with the MSX General Index up 21 percent, a rally driven by robust industrial sector performance, strong corporate earnings, and steady domestic investor participation.
The Kuwait Premier Market Index followed closely, gaining 19 percent by Q3, 2025, supported by solid momentum in the financial services and energy sectors.
Dubai’s DFM General Index advanced 18 percent in the same period, underpinned by resilient corporate earnings and sustained investor confidence, particularly in the real estate and financial sectors.
The Abu Dhabi Securities Exchange (ADX) General Index recorded a 9 percent increase, led by strength in the financial services and energy sectors.
Elsewhere in the region, Saudi Arabia’s Tadawul All Share Index (TASI) declined 3 percent by Q3, 2025, while the Qatar Exchange General Index and Bahrain All Share Index remained broadly flat.
Startup outcomes post exit
Post exit, companies with strong unit economics and recurring revenue often become self-funded. They tighten overheads, strategically deploy cash flow, and pursue organic growth or look for opportunistic M&As.
Deloitte’s 2025 regional economic analysis stresses that firms with market-fit products in fintech, logistics, and AI enterprise software are increasingly able to transition from reliance on VC follow-ons toward cash-flow-led growth in the GCC.
Other high-growth startups try to remain visible to new investors as a practical route to running bridge rounds, pursuing regional strategic partnerships, or preparing for local public markets.
For companies lacking either capital or visibility, options narrow to acquisition by a strategic buyer, management buyout, or, in worst cases, liquidation.
McKinsey/BCG advisory pieces in 2025 recommend startups plan dual tracks (self-fund runway + investor outreach) and keep governance and reporting “IPO-ready” to preserve optionality.
The future bodes well for the region. The World Bank projects GCC GDP growth of 3.2 percent in 2025, rising to 4.5 percent in 2026, outpacing the global average.
It is a rosy outlook, but not a picture-perfect one. Advanced and varied funding mechanisms and exit opportunities, the creation of robust secondary markets to provide alternative liquidity routes for investors such as VCs to sell their stakes in privately held companies or private equity funds before traditional exit events like an IPO or an M&A, are all awaiting market maturity, before we can really talk of bustling GCC capital markets. It’s coming.
(This article was originally published in the print issue of TRENDS in Jan 2026)
