Developer SKU of Azure APIM deployed in a VNET not sending welcome email on user signup

Since the user is being created but remains inactive, I would first separate the sign-up flow from the Application Gateway path. The welcome or confirmation email is generated by API Management notification behavior; it is not normally something the Application Gateway listener sends.

Check the APIM notification templates, sender settings, spam/quarantine, and whether the developer portal sign-up flow requires approval or email confirmation before the account becomes active. Also make sure the portal host name used in the email is the same custom domain users can reach. Diagnostic settings are useful for gateway traffic, but they may not show every management-side notification action, so Activity Log entries and a support correlation ID are often more useful if the notification service is not sending anything.