Abu Dhabi, Dubai, Riyadh and Doha have spent years trying to build globally competitive technology sectors through sovereign wealth, tax incentives, accelerator programs and direct investment.
Despite attacks in the region and renewed fighting between the United States and Iran, founders have largely remained in the region and government-backed programs continue to attract applicants.
None of the 27 companies selected for the February intake of Hub71, Abu Dhabi’s startup program, withdrew after the conflict began, according to Bloomberg. The program’s latest cohort also received a similar number of applications and was the first made up entirely of companies from outside the United Arab Emirates.
The financial effects, however, may not yet be fully visible. Middle East and North African startups raised $1.35 billion in the first half of 2026, down more than 20% from a year earlier, according to data platform Magnitt. The number of deals fell even more sharply to 214, while second-quarter activity dropped to its lowest level in at least two years.
“I don’t believe that the impact of the war has come into the numbers yet, that will come in Q3 and Q4,” Magnitt chief executive Philip Bahoshy told Bloomberg TV, adding that investors were already shifting their attention from early-stage companies toward more established businesses.
Some startups are also facing higher fuel, shipping and insurance costs, worsening cash flow and longer delays in receiving payments. Bloomberg cited one investor as saying that a sovereign investor withdrew a $1 million commitment from a funding round when the war began.
Regional governments are continuing to spend heavily. Hub71 offers successful applicants $140,000 in investment and incentives, while Qatar expanded its Fund of Funds program from $1 billion to $3 billion before the conflict. Startup Qatar has awarded more than $51 million to 45 companies, including 11 since the fighting began.
The Persian Gulf’s startup markets remain smaller than established centers in the United States, Europe and Asia, with limited late-stage financing, technology listings and specialist talent. But founders and investors told Bloomberg that access to capital, lower costs and government support continued to outweigh the risks for many companies.
