‘Cool-tech’ solutions heat up in the Middle East
15 August 2025
By 2030, half a billion people around the world will be facing extreme heat for at least a month every year.[1] The Middle East is among the most exposed: Dubai could experience more than 80 days of extreme heat annually, when less than 15 minutes of outdoor exposure would pose health risks for healthy adults, even in the shade.
By 2050, the Middle East’s population is also expected to double, exposing millions more to rising temperatures, water scarcity, and food insecurity.[2] For climate tech entrepreneurs, the heat is on — literally and figuratively.
Yet 2025 has been one of the toughest years for the sector. Globally, climate tech’s early-stage deals have historically outperformed broader venture capital, but sentiment has cooled. Only about US$8.7 billion flowed to sustainability start-ups in the first five months of 2025 — nearly half the amount raised in the same period last year.[3],[4]
In the Middle East, there has also been a severe squeeze: investment in regional climate tech start-ups dropped from US$193 million in 2023 to US$114 million in 2024.[5]
Sovereign wealth funds such as Abu Dhabi’s CYVN, Saudi Arabia’s Public Investment Fund (PIF), and the Qatar Investment Authority have committed billions globally to fund electric vehicle makers and clean energy projects. But they have been slower to back start-ups closer to home.[6] For founders looking to scale up, the funding gap is a major constraint.[7]
While accelerators and early-stage VC funds exist, entrepreneurs may need to look beyond traditional equity financing. Alternative credit, including equity-backed financing, can provide the liquidity needed to continue working on promising technologies without giving up the benefits of ownership.
Water, cooling and decarbonization: The holy trinity for ‘cool tech’
The good news is that from solar-powered water systems to passive cooling retrofits, a new wave of start-ups has emerged to help the region achieve ambitious net-zero targets and make the region more livable.
Masdar City in Abu Dhabi exemplifies the region’s capabilities. Envisaged as the world’s first zero-carbon city, it now hosts over 1,000 companies and has achieved reductions of 57% in waste, 31% in electricity use, and 18% in water consumption compared to Abu Dhabi baselines as of 2024.[8]
Buildings are constructed with low-carbon cement and 90% recycled aluminum, cutting energy and water consumption by at least 40% versus conventional structures.[9]
Cooling alone consumes up to 70% of peak electricity in Gulf countries, a figure that will rise as urbanization accelerates.[10] District cooling systems — centralized plants delivering chilled water through insulated pipelines — are rapidly scaling as alternatives to energy-hungry air conditioning, and are attracting significant private equity interest.[11]
Water is another front line. The UAE sources just 4% of its water from surface water and groundwater. Solutions being piloted to strengthen water security range from cloud-seeding nanotechnology — which can produce three times as much water as older methods — to vertical farms that generate 20 times the yield using 90% less water.[12]
Meanwhile, start-ups like Tunisia’s Kumulus Water are deploying atmospheric water generators that extract drinking water from air humidity — one of many solutions that will matter globally, given that half the world’s population will be facing water stress by 2030, according to UNICEF.[13],[14]
These examples demonstrate the region’s importance as a proving ground for the technologies the world urgently needs.
Governments are also stepping in with regulations and incentives. The UAE’s Federal Decree-Law on the Reduction of Climate Change Effects took effect in June, introducing strict compliance measures. It mandates public and private companies — including those in free zones — to measure, report, and maintain records of their emissions for five years with noncompliance expected to lead to high penalties. The law is designed to accelerate decarbonization, strengthen accountability, and push firms to invest in mitigation technologies and R&D.[15]
Still, turning potential into commercially viable enterprises is no small task. Climate-tech innovations often involve long development timelines, high capital intensity, and uncertain market dynamics, making it hard to attract investors who are willing to take early-stage risk. Partnerships with large corporates — often state-linked — can be slow, delaying proof-of-concept deployments that start-ups need to scale. Add talent shortages, regulatory complexity, and a fragmented regional market, and the barriers to growth remain high.[16]
For many, ensuring a sufficient cash runway is therefore as critical as the technology itself.
Despite the challenges, the fundamentals for growth are strong. For founders, capital is out there, but securing it will require flexibility. Equity-backed finance can bridge the funding gap, allowing innovators to maintain momentum without waiting for the next venture capital cycle.
In a world racing to decarbonize, the competitive advantage will belong to those who can develop water, cooling and carbon reduction technologies at scale. With the right access to capital, the Middle East can be an ideal starting point for solutions for a hotter, more resource-constrained global economy.
[1] https://www.washingtonpost.com/climate-environment/interactive/2023/pakistan-extreme-heat-health-impacts-death/
[2] https://www.worldbank.org/en/events/2021/09/22/mena-cities-at-the-forefront-of-climate-action-the-time-is-now
[3] https://news.crunchbase.com/clean-tech-and-energy/sustainability-funding-falling-2025/
[4] https://www.svb.com/trends-insights/reports/future-of-climate-tech/
[5] https://www.pwc.com/m1/en/publications/2024-middle-east-climate-tech-report.html
[6] https://www.pwc.com/m1/en/media-centre/articles/how-middle-easts-swfs-are-driving-the-energy-transition-and-sustainability.html
[7] https://www.fastcompany.com/91159727/climate-tech-investment-middle-east
[8] https://www.ribaj.com/buildings/masdar-city-sustainability-net-zero-carbon
[9] https://masdarcity.ae/docs/default-source/pdf-to-download/masdar-city-brochure-en-2022.pdf
[10] https://www.ft.com/content/d5a5bc1f-e225-4397-b99f-56c62b00366d
[11] https://www.reuters.com/business/energy/cvc-tabreed-enter-partnership-buy-uae-district-cooling-business-2025-06-30/
[12] https://hbr.org/sponsored/2022/04/how-the-uaes-water-innovations-are-helping-to-build-a-more-sustainable-future
[13] https://www.wamda.com/2025/06/tunisia-kumulus-water-closes-3-5-million-seed-round
[14] https://www.thenationalnews.com/business/2025/03/02/tunisian-start-up-kumulus-plots-gulf-expansion-with-machines-that-create-water-from-air/
[15] https://www.skadden.com/insights/publications/2025/06/esg-in-2025-a-midyear-review#theuae
[16] https://www.kearney.com/service/sustainability/article/building-on-progress
Disclaimer
Past performance does not guarantee future returns, and individual returns are not guaranteed or warranted.
This Document is intended solely for accredited investors, sophisticated investors, professional investors, or otherwise qualified investors, as may be required by law or otherwise, and it is not intended for, and should not be used by, persons who do not meet the relevant requirements. The content provided herein is for informational purposes only and is general in nature and not targeted to any specific objective or financial need. The views and opinions expressed in this Document have been prepared by third parties and do not necessarily reflect the views and opinions of EquitiesFirst. EquitiesFirst has not independently examined or verified the information provided herein, and no representation is made that it is accurate or complete. Opinions and information herein are subject to change without notice. The content provided does not constitute an offer to sell (or solicitation of an offer to purchase) any securities, investments, or any financial products (“Offer”). Any such Offer shall only be made through a relevant offering or other documentation which sets forth its material terms and conditions. Nothing contained in this Document shall constitute a recommendation, solicitation, invitation, inducement, promotion, or offer for the purchase or sale of any investment product by Equities First Holdings, LLC or its subsidiaries (collectively, “EquitiesFirst”), nor shall this Document be construed in any way as investment, legal, or tax advice, or as a recommendation, reference, or endorsement by EquitiesFirst. You should seek independent financial advice prior to making an investment decision about a financial product.
This Document contains the intellectual property of EquitiesFirst in the United States and other countries, including, without limitation, their respective logos and other registered and unregistered trademarks and service marks. EquitiesFirst reserves all rights in and to their intellectual property contained in this Document. The Document should not be distributed, published, reproduced or otherwise made available in whole or in part by recipients to any other person and, in particular, should not be distributed to persons in any country where such distribution may lead to a breach of any legal or regulatory requirement.
EquitiesFirst make no representation or warranty with respect to this Document and expressly disclaim any implied warranty under law. You acknowledge that EquitiesFirst is not liable under any circumstances for any direct, indirect, special, consequential, incidental, or punitive damages whatsoever, including, without limitation, any lost profits or lost opportunity, even if EquitiesFirst has been advised of the possibility of such damages.
EquitiesFirst makes the following further statements that may be applicable in the stated jurisdiction:
Australia: Equities First Holdings (Australia) Pty Ltd (ACN: 142 644 399) holds an Australian Financial Services Licence (AFSL Number: 387079). All rights reserved.
The information contained on this Document is intended for persons located in Australia only and classified as a Wholesale Client only as defined in Section 761G of the Corporations Act 2001. The distribution of information to persons outside this criteria may be restricted by law and persons who come into possession of it should seek advice and observe any such restriction.
The material contained in this Document is for information purposes only and should not be construed as an offer or solicitation or recommendation to buy or sell financial products.
The information contained in this Document is intended to be general in nature and is not personal financial product advice. Any advice contained in the Document is general advice only and has been prepared without considering your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. You should seek independent financial advice and read the relevant disclosure statements or other offer documents prior to making an investment decision about a financial product.
Dubai: Equities First Holdings Hong Kong Ltd (DIFC Representative Office) at Gate Precinct Building 4, 6th Floor, Office 7, Dubai International Financial Centre (commercial license number CL7354) is regulated by the Dubai Financial Services Authority (“DFSA”) as a Representative Office (DFSA Firm Reference No.: F008752). All rights reserved.
The information contained in this document is intended to be general in nature, and, to the extent that it is perceived as advice, any advice contained in this document is general advice only and has been prepared without considering your objectives, financial situation, suitability of the financial products or your needs.
The material contained in this document is for information purposes only and should not be construed as financial advice, including an offer or solicitation or recommendation to buy or sell financial products. The information contained in this document is intended to be general in nature and any advice contained in this document is general advice only and has been prepared without considering your objectives, financial situation, suitability of the financial products or your needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. If you do not understand the contents of this document, you should consult an authorised financial adviser.
This document relates to a financial product which is not subject to any form of regulation or approval by the DFSA. The DFSA has no responsibility for reviewing or verifying any documents in connection with this financial product. Accordingly, the DFSA has not approved this document or any other associated documents nor taken any steps to verify the information set out in this document, and has no responsibility for it.
Hong Kong: Equities First Holdings Hong Kong Limited is licensed under the Money Lenders Ordinance (Money Lender’s Licence No. 1659/2024) and to carry on the business of dealing in securities (Type 1 licence) under the Securities and Futures Ordinance (“SFO”) (CE No. BFJ407). This Document has not been reviewed by the Hong Kong Securities and Futures Commission. It is not intended as an offer to sell securities or a solicitation to buy any product managed or provided by Equities First Holdings Hong Kong Limited and is only intended for persons who qualify as Professional Investors under the SFO. This document is not directed to individuals or organizations for whom such offers or invitations would be unlawful or prohibited.
Korea: The foregoing is intended solely for sophisticated investors, professional investors or otherwise qualified investors who have sufficient knowledge and experience in entering into securities financing transactions. It is not intended for, and should not be used by, persons who do not meet those criteria.
United Kingdom: Equities First (London) Limited is authorised and regulated in the UK by the Financial Conduct Authority (“FCA”). In the UK, this Document is only being distributed and made available to persons of the kind described in Article 19(5) (investment professionals) and Article 49(2) (high net worth companies, unincorporated associations etc.) of Part IV of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (‘’FPO’’) and any investment activity to which this presentation relates is only available to, and will only be engaged in with, such persons. Persons who do not have professional experience in matters relating to investment or who are not persons to whom Article 49 of the FPO applies should not rely on this document. This Document is only prepared for and available to persons who qualify as Professional Investors under the Markets in Financial Instruments Directive.
