Finance

UAE tech investors seek security in the face of uncertainty

April 21, 2025, 6:42 AM

Successful Muslim Businesswoman Wearing Suit and Burka Standing in Office Looking out of Window on Big City. Confident Female Digital Entrepreneur Planning Investment Strategy for e-Commerce Startup — Global economic uncertainty is driving UAE tech investors towards more mature companies, though fintech and ecommerce remain attractive sectors

Q1 seed investment down
Opting for later-stage startups
UAE VCs still bullish on fintech

UAE tech investors reported a strong start to the year but many are increasingly seeking out more mature companies to back, as global economic uncertainty makes them more risk averse, an industry expert has told AGBI.

UAE tech startups raised a total of $872 million in the first quarter, nearly triple the $297 million raised in the fourth quarter of last year, according to research by Tracxn Technologies, an Indian data intelligence platform.

The $872 million figure is also significantly higher than the entire first half of 2024, when Emirati startups raised $234 million.

While seed and early-stage investment fell in the first three months of 2025, late-stage funding drove the overall funding surge, with $760 million raised — a 660 percent increase over Q4 2024.

“The shift toward increased later-stage funding and a decline in early-stage investment indicates that VCs are becoming more risk-averse, prioritising mature startups with proven traction over newer, untested ventures,” Ryaan Sharif, general manager of UAE-based venture capital company and technology incubator Flat6Labs, told AGBI.

Dubai dominated fundraising, with 96 percent of all funds being allocated to companies in the emirate.

Sharif expects tariffs imposed by President Donald Trump’s administration in the US and the ensuing economic turbulence to augment the trend for VCs to seek out safer places to put their money.

“Typically, when tariffs are put up, money flows out of capital markets and into bonds and T-bills [Treasury bills], meaning that for VC as an asset class the sentiment would be extremely cautious,” he said.

Enterprise applications, fintech and retail emerged as the top-performing sectors in the first quarter, with enterprise applications – large-scale software systems designed for a specific company — raising $688 million.

Ashley Lewis, managing partner of DPI Venture Capital, which works across the Middle East and Africa, is bullish.

“We’re seeing strong momentum continuing throughout 2025,” Lewis told AGBI.

Like Sharif, Lewis said her company sees particularly strong opportunities in fintech and segments like e-commerce, mobility, and supply chain management, explaining that digitisation is transforming legacy business models.

Despite what she describes as “macro noise and uncertainty” around US trade policy, Lewis is optimistic: “The fundamentals of our target sectors and geographies continue to signal resilience and long-term growth.”