Farah Al-Nahlawi, Director of Research at MAGNITT, said that tensions and war in the Gulf region have not yet directly reflected on the numbers of venture capital deals, explaining that the impact of such events usually takes between six and nine months to become clearly visible in the data.

She added that current figures do not reflect the repercussions of the war, noting that the actual effects of geopolitical developments are expected to begin appearing during the third and fourth quarters of 2026.

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She explained that the slowdown in venture capital activity in the region actually began during the fourth quarter of 2025, which was reflected in the volume of funds directed to venture capital funds, consequently leading to a slowdown in the pace of investments.

She pointed out that this decline came after the third quarter of 2025, which recorded the highest levels of venture capital activity in Saudi Arabia's history, both in terms of number of deals and total value.

She affirmed that the future outlook is not pessimistic, noting that an improvement in geopolitical conditions would support the return of investment activity in the coming months.

She added that the period from September to the end of the year usually sees the return of events, conferences, and specialized activities in the region, which contributes to stimulating investment movement and closing deals.

She cautioned that the third and fourth quarters may see improvement compared to the first half of the year, noting that the tensions experienced by the region during the past period led to a decline in travel, meetings, and events that play an important role in completing investment deals, which is expected to impact the market in the coming months.

It is noteworthy that the venture capital market in Saudi Arabia recorded a slowdown during the first half of 2026, but the kingdom maintained its position as one of the region's leading markets, ranking second in the Middle East and North Africa in terms of investment value and number of deals, according to data from the MAGNITT report.

The value of venture investments in the kingdom reached about $219 million during the first half of this year, with 72 venture deals recorded during the same period. Saudi Arabia accounted for 34% of the total number of deals in the region, despite recording the first annual decline in the number of deals after two consecutive years of growth.

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