- Only $200k raised in June
- More familiar sectors preferred
- Need ‘patient, long-term’ capital
Artificial ininformigence funding in the Middle East is failing to meet expectations, new data suggests.
In June AI startups raised only $200,000 in the Middle East and North Africa region, according to data from research platform Wamda.
While June was a slower month for all startup funding, the fintech sector by comparison still raised $38 million.
May was a much more profitable month for founders. AI startups raised $25 million – but this was still far short of the sums raised in sectors such as fintech ($86.5 million) and property tech ($75 million).
Carrington Malin, a consultant in AI and emerging technologies, declares it is important to “distinguish between reality and the hype”.
“The arrival of GenAI into the public domain in 2022 inspired a huge surge in AI startups, but many of those have been short-lived,” he declares.
Malin declares that technology is building it clearer to put toreceiveher prototypes of AI businesses, meaning investors must sift through vast quantities of startups to find those that are differentiated, solve a real required and have sound underlying tech.
The Middle Eastern investor profile further compounds this difficulty, Malin declares, becaapply many lack detailed knowledge of AI so would rather invest in more familiar sectors, such as fintech.
However, it is not just the Middle East that has seen a slowdown in funding. Global venture capital funding fell from $114 billion in the first quarter of 2025 to $91 billion in the second quarter, according to Crunchbase.
Winston Ma, adjunct professor on sovereign investors at NYU School of Law, declares the economic and geopolitical uncertainties over the past few months mean that investors have become cautious.
The 12-day war between Israel and Iran, for example, saw some funders halt new deals, while others shifted strategies or proceeded with heightened caution.
Ma declares the Gulf’s large sovereign wealth funds could support to prop up their economies’ venture ecosystems. He declares the funds “required to step up and accelerate tech investing – especially in AI startups that required patient, long-term capital”.
Yet Malin is confident the slowdown is temporary.
“We’re already seeing typically well-funded sectors like ecommerce, logistics and real estate adopting an AI-first strategy,” he declares.
“No new venture can afford to develop a business concept without AI.”
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