Looking at the top 20 global startup ecosystems, it’s perhaps no surprise that Silicon Valley comes out top, with New York close behind. Other US cities feature prominently, along with European entries from London and Paris. In Asia, Beijing and Tokyo also rank highly.
But we are now seeing an increasing number of stories about startups in our region getting funded. In fact, last year the GCC’s startups together raised USD 2.3bn across 610 deals. While this is a relatively modest figure compared to the likes of Silicon Valley, it represents a 3.5% increase in deal volume compared to 2023. So things are moving in the right direction, and like everything in the Gulf, they’re moving quickly.
In terms of where exactly the money is going, Saudi Arabia and the UAE account for over 90% of deal volume, according to PwC. However, there is now a rise in activity coming from other countries in the region. This increase in deals is rooted in the ambitious national plans and strategies the governments of the Gulf have formulated to move away from reliance on oil revenues. But it’s more than that – it’s about actively becoming a regional, eventually global, centre for innovation.
So, this article examines the current state of GCC startups, exploring how governments built these vibrant ecosystems and which sectors are attracting the most funding.
GCC startups – the current state of play
According to market intelligence firm Tracxn, as of July 2025, the GCC was home to over 63,000 startups. This number includes 4,270 funded companies, which together have raised USD 267 billion. The region also boasts nine unicorns and has seen 3,027 investors participate in 2,939 funding rounds. The activity is spread across pre-seed, seed, Series A, later-stage, as well as mega deals.
This momentum demonstrates the level to which the GCC has transformed into a dynamic startup centre with global ambitions. Let’s now look at how this transformation came about.
How GCC governments encouraged startup ecosystems
Each GCC government has a national vision with the broad aim of diversifying away from oil dependence. While each of these visions has a different focus, they all emphasise supporting small businesses and encouraging startups.
This is evident in Saudi Arabia’s Vision 2030, We the Emirates 2031, Qatar’s Vision 2030, Oman’s Vision 2040, Bahrain’s Economic Vision 2030, and Kuwait’s Vision 2035, all of which see innovation-driven growth as a key part of their future and an important part of the route away from oil dependence.
Let’s take the UAE as a prime example. The government’s goal was to create a highly desirable startup location that attracts both regional and global entrepreneurs. To that end, they created a business environment with low taxes and a high ease of doing business. In addition, foreigners can benefit from 100% company ownership as well as a growing number of accelerators and incubators, which form part of a growing startup ecosystem. On top of that, the UAE offers world-leading logistics, transport hubs, and all the other pieces needed to both attract and retain talented entrepreneurs.
Overview of the GCC investment landscape
The funding landscape in the Gulf is a mixture of public and private. Boasting by far the most active sovereign wealth funds (SWF) globally, some of the key players in the GCC are the Abu Dhabi Investment Authority, the Public Investment Fund (PIF) of Saudi Arabia, and the Kuwait Investment Authority (KIA). Each of these three is managing USD 1 trillion in assets, and over the past few years has made several headline-grabbing investments.
There are also a growing number of private investors, including family offices and venture capital firms, which complement government efforts.
Where are the funding dollars going?
As we have seen, the busiest startup ecosystems in the region are the UAE and Saudi Arabia, with the other countries now starting to make significant moves as well. Let’s break down the most popular sectors:
- Fintech: The regionhas been a leader when it comes to digital banking and payment solutions, creating services for previously unbanked sectors of the population, as well as sharia-compliant solutions. Fintech startups have become such a focal point that they make up by far the largest percentage of tech startups in the UAE.
- AI: The Gulf wants to position itself as a leader in AI and is already showing high uptake and usage among its populations – often ahead of the rest of the world. There have been significant investments in AI-driven startups, with investors wanting to align their decision-making with national priorities. The region is also becoming a centre for events and conferences on AI.
- Renewable energy: As part of the GCC’s sustainability goals, countries are investing in startups that focus on renewable energy. This serves two key objectives – diversifying energy sources and reducing carbon footprints.
- E-commerce and retail: The digital consumer base in the Gulf is growing quickly, and the number of investments in e-commerce platforms reflects that. The region’s tech-savvy population demands solutions tailored to the local culture, and investors have pinpointed this as a key area of interest.
- Healthtech and edtech: Startups in healthcare and education technology are also receiving considerable attention, with the UAE aiming to become a leader in medical technology as well as a hub for medical tourism.
Implications for the wider economy
Many countries around the world now see the wider economic value of startups. This is supported by the World Economic Forum, which noted that startups are a ‘catalyst’ for economic growth.
So the surge in startup funding goes beyond just a financial trend and is part of a much larger move towards economic diversification. Gulf countries are investing in startups so they can create ecosystems that have the potential to drive economic growth in the long term and help them retain a competitive edge.
Startups also matter to the wider economy because they can pivot quickly, unlike their larger counterparts. During periods of great change or recession – times when many businesses struggle – startups are often in the best position to change tack as needed, updating their offering, pivoting to a new product or service, and keeping revenues flowing in.
While they are small, startups also create employment opportunities. Many of them scale up over time and help attract talent from around the world.
Going forward
While the Gulf’s startup funding may be modest compared to some of the global giants, things are changing quickly. More and more headlines report major investments into the region’s startups, and thanks to a supportive ecosystem, these companies have the opportunity to grow and flourish.
We are already seeing unique solutions coming out of the GCC, many of which are tailored to the region but have the potential to expand globally. As the ecosystem continues to mature over time, it seems likely that one or perhaps several cities in the GCC will be joining the Top 20 list of global startup ecosystems in the very near future.
