In a nutshell, the paradox is that capital is plentiful in the GCC. However, late-stage VC funding faces hiccups and hampers strategic exits from efficiently materializing, and thus slows commercialization efforts for startups. Enterprises that benefited from substantial early-stage funding are facing difficulties raising capital when taking their businesses to the next stage of development.
This is despite the fact that the GCC is one of the world’s largest concentrated pools of state capital, driven by large sovereign wealth funds (SWFs) such as the PIF, ADIA, QIA, Mubadala, and KIA, totaling some $4 trillion just among those, in addition to large state-backed development funds, family offices and growing large Corporate Venture Capital (CVC) activity.
Statista estimates that total CVC funding raised in the GCC is forecasted at nearly $900 million in 2025.
Despite this liquidity, the region’s VC ecosystem in 2025 is uneven: robust early-stage activity and headline mega-rounds contrast with a lack of independent local Series A–C funds, scarce late-stage capital, and an immature exit market. In 2024, startup funding failed to reach $1 billion.
According to Teneo, a global CEO Advisory firm, between 2020 and 2025, up to H1 2025, exit activity by deal size in the Middle East reached $3 billion for lower mid-market deals ranging between $50 million and $200 million, totaling 30 deals, $8.6 billion for upper mid-market deals ranging between $200 million and $500 million, totaling 27 deals, and $12.2 billion for large deals over $500 million, totaling 12 deals. In terms of exit activity, Software and IT services garnered $12.6 billion through 124 deals, Healthcare registered $12 billion through 25 deals, while Media & Entertainment recorded $2.6 billion in 17 deals, almost matched by Energy and Industrials with $2.4 billion in 16 deals.
Unlike traditional Small and Medium Enterprises (SMEs), Innovation-Driven Enterprises (IDEs) are built on new technology and business ideas that seek exponential growth and shape their exit options.
“Seed-stage IDEs are characterized by patented innovations, proprietary data, unique algorithms, or specialized technical insights that create meaningful barriers to imitation. Yet technological strength alone does not guarantee success. The founding team must have a clear vision for global scalability. Early access to cross-border commercialization channels helps founders test scalability beyond the local market,” Dr. Soumaya Askri, Assistant Professor, School of Management, Canadian University Dubai, said in a published op-ed.
Governments and SWFs dominate, making the market overly reliant on state-driven growth and orchestrated exits. The IPO pipeline, secondary markets, and local PE buyers are advancing but remain too immature to drive real momentum.
Proof the GCC is capital-rich
GCC sovereign wealth funds manage extraordinary pools of capital internationally with investments in real estate, renewable energy, and technology interests, among many others. Deloitte’s region-focused reporting in 2025 highlights that Gulf SWFs are expanding their global footprint, deploying $56.3 billion internationally in the first nine months of 2025 alone, and that Gulf SWFs’ Assets Under Management (AUMs) have accelerated to reach $6 trillion.
Deloitte press pieces in 2025 note sustained multi-billion-dollar deal flows from Abu Dhabi investors like Mubadala, ADIA, and the PIF into global tech, energy transition, and private equity aimed at backing the region’s strategic industrial and digital ambitions.
PwC’s 2025 CVC report states that corporate and government-linked venture activity now forms a meaningful share of deal counts and records active IPO and M&A pipelines tied to public and quasi-public sponsors. GCC M&A deal value and transaction counts were higher in 2025 than in 2024, with total value reaching approximately $72.7 billion across 554 transactions by December 1, 2025, according to Lexology, a global legal intelligence platform.
The GCC IPO market, meanwhile, maintained a robust pipeline and consistent activity, with total proceeds reaching around $5.6 billion by Q3 2025.
Series A–C gap and dearth of exits
Reuters’ February 24, 2025, reporting on the Qatar Investment Authority’s $1 billion “fund-of-funds” program explicitly states that the program was designed to address a gap in Series A–C funding in Qatar, pointing to a lack of established late-stage VC managers to absorb companies beyond the early stages.
Bloomberg’s July 2025 analysis framed the “VC paradox”: while SWFs and family offices hold enormous capital, much of that liquidity is either allocated strategically toward industrial priorities, buyouts, and global Private Equity or directed into mega-deals and cross-border strategic stakes rather than into sustained, independent late-stage venture funds.
PwC documents healthy early-stage deal counts and growing corporate-led VC participation. Bloomberg 2025 reporting also highlights that capital exists but often not in vehicles optimized for multi-round venture growth, IPO, and other highly liquid pipelines, and predictable exit events.
Further quantitative context from KPMG’s 2025 Venture Pulse explains that a still-maturing M&A buyer universe means that many founders wait longer for credible exit pathways, which in turn lowers the appetite of Limited Partnerships (LPs) or General Partnerships (GPs) for large late-stage allocations within the GCC ecosystem. Deloitte remarked in 2025, “Sovereign capital is catalytic, yet sustainable scale requires independent GPs and deeper secondary/IPO channels.”
PwC’s 2025 CVC reports explicitly recommend strengthening capital markets pathways (IPOs and M&A) and building repeatable fund ecosystems, including GP capacity building and tax/regulatory tweaks, naming fund-of-funds and CVCs as immediate tools to plug the Series A–C financing gap.
“Fund-of-funds and corporate venture activity can plug near-term financing gaps, but capital markets must mature for durable exits,” PwC remarked in 2025.
In that context, Qatar is striving in that direction. Speaking to TRENDS, Adam Connon, Country Manager and General Counsel, at the Web Summit Qatar, said, “Through QIA, QDB, and Invest Qatar, the country is becoming a regional anchor for venture capital, attracting global investors and encouraging local LP participation.”
Deloitte recommends policies that enable private LPs, pension funds, and insurance companies to allocate to venture over time. “SWFs can unlock scale, but independent GPs and repeatable exit channels are the long-term solution,” Deloitte reported in 2025.
McKinsey expanded on this and echoed similar proposals during pragmatic market commentary in 2025. It advised creating regionally-domiciled growth equity or late-stage funds with mixed public/private LPs, as well as reforms in exchange markets enabling the hosting of tech listings to attract growth firms, and build a market for secondaries and structured buyouts to offer early liquidity without full exit.
To make money, cash has to change hands, and ideas have to be exchanged. For this to happen, the VC entry and exit strategies must be given a chance to evolve, not just adapt. This maturity in thinking is already taking shape.
