Why the Middle East Is Emerging as the New Playground for Indian VCs

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When one thinks of venture capital in India, one imagines term sheets signed behind closed doors in Bengaluru or Mumbai. But the epicenter of Indian VC activity is broadening. Leading domestic firms are looking to the Middle East, especially Dubai and Abu Dhabi, to raise capital and to invest.

India accounted for nearly 9% of global deal volume and a little over 4% of total funding value in January and February 2025, according to data analytics and consulting company GlobalData, underscoring the depth and ambition of local VC. Two months into the year, India logged a 40% year-over-year rise in VC funding versus 17% growth globally. 

“The region is attractive [to Indian VCs] because it combines deep pools of patient capital with an active search for diversification,” said Mark Kahn, managing partner at Bengaluru-based impact VC Omnivore, adding that “India offers strong growth and scale.”

The Middle East Appeal

Indian VCs are eyeing the Middle East for its capital, proximity, and access. VC firms such as Stellaris Venture Partners and Blume Ventures are raising funds from the region, while Ideaspring Capital and Java Capital are reportedly exploring opportunities there.

The ecosystem’s draw includes a growing tech base, supportive regulation, and access to global capital. Partnerships between UAE and Indian investors are advancing the UN’s South-South economic cooperation, an initiative to exchange knowledge, skills, and expertise between developing countries of the Global South.

The ties are not new. In 2017, Indian investors committed $265 million across seven deals in the UAE, according to Grant Thornton Bharat. By 2022, that had risen to more than 24 deals worth about $1.34 billion.

“The Middle East has the potential to be a large LP market for Indian VCs and PEs, given the affinity created by strong diplomatic, economic, and immigration ties,” said Rajeev Kalambi, general partner at Cactus Partners, an early growth-stage venture investment firm focusing on climate tech, and B2B software-as-a-service sectors.

The UAE now hosts more than 5,600 startups, creating an environment where Indian VCs are actively seeking to invest and leverage the region’s scale and cross-border links. Recent examples include sports-focused VC Yashaa Global Capital, co-founded by cricketer Shikhar Dhawan, which was set up in Abu Dhabi with a targeted $75 million corpus, and 100Unicorns, an early-stage venture capital fund that claims to have backed 145 startups, choosing Abu Dhabi for its first overseas expansion.

Recent deals span WestBridge Capital in personal care and beauty firm VINI International, Inspira Enterprise in healthtech platform Udenz, OHI Group in car rental service Udrive, RippleHire in fintech firm Zywa, Resonance Eduventures in refurbished consumer electronics marketplace Revibe Technology, and PB Fintech in outsourced sales and marketing services provider of outsourced sales and marketing services firm YKNP Marketing.

Sectoral Preference

Thematic convergence is visible. Between 2017 and 2022, Indian investors made large bets in the UAE across transport and logistics, fintech, and travel and hospitality. Real estate, life sciences and health tech, enterprise applications, energy, high-tech, and food and agriculture also drew capital, signaling Indian investors’ willingness to diversify. Meanwhile, the UAE investors are eyeing retail and consumer, fintech, enterprise applications, ed-tech, and food and agriculture.

“Food and agriculture are core because of their global relevance, but there is also strong interest in climate solutions, advanced materials, and technology platforms that bring efficiency into fragmented value chains. Healthcare and digital infrastructure remain attractive, reflecting broader global trends,” said Omnivore’s Kahn on the sectors Middle Eastern investors prioritize when they back India-focused VC funds.

In October 2024, Jetapult, a gaming investment platform backed by JetSynthesys, Accel, and Fireside Ventures, invested $4.5 million in Saudi-based UMX Studio. Pointing to a fast-growing youth market in esports and gaming, JetSynthesys CEO Rajan Navani said, “We are also setting up a base in Abu Dhabi.”

Mordor Intelligence estimates the Middle East gaming market at $4.56 billion in 2024, with a forecast of $9.57 billion by 2030.

Crucially, investors are becoming more deliberate. “Investor interest has become more structured and intentional. Earlier, allocations were largely indirect; now there’s a shift toward India-specific strategies with defined sectoral focus,” said Kahn.

Cautious Winds

Opportunities aside, building relationships takes time. “The biggest challenge is the time required to build confidence — relationships are multi-step, with extensive diligence and a preference for visible consistency,” said Kahn.

Family offices understand the asset class, but converting interest into commitments is not straightforward. “Only those investment managers that develop a strong fund performance track record are likely to be able to attract LPs from the Middle East. We have met large family offices that have invested in VC and PE over the last decade but have done so only in strong global franchises, in late-stage funds, and with large tickets,” said Kalambi.

Investors, including high-net-worth individuals, family offices, corporations, and sovereign wealth funds, are increasingly viewing VC as an attractive allocation, driven by economic diversification agendas, high-growth potential in sectors like AI and digital transformation, and a growing comfort with alternative assets.

A Strategy& report notes that since many first-time investors lack a clear entry strategy, creating  unnecessary portfolio risk, investors should approach VC opportunities in a manner that aligns with their respective aims and capabilities.

Understanding risk profiles, leveraging local networks, focusing on high-growth sectors, navigating regulatory environments, and engaging in thorough due diligence, all should form the foundation for prudent ME investment into Indian venture capital, the report said.