Pakistani startups have raised a total of $563.5 million in 255 deals since 2015, with $350 million raised via 83 deals in 2021 alone and $136 million raised so far this year.
Over the last few years, Pakistan’s economy has been hit by growing inflation, COVID, supply chain disruptions, and high energy prices. However, in a world of continual shocks, the country’s expanding startup industry is proving to be a silver lining.
According to Invest2Innovate, a Pakistani consultancy firm, 83 companies raised $350 million in 2021 and the sector has already raised $136 million this year.
The five largest disclosed startup funding rounds in 2021 were: Airlift ($85 million), Bazaar ($30 million), Tajir ($17 million), Qisstpay ($15 million), and TAG ($12 million).
COVID-19 acted as a stimulant for Pakistan’s startup scene, with investments increasing from $65 million in 2020 to $350 million in 2021. Entrepreneurs were able to produce digital products with a human impact thanks to extended lockdowns and quarantines.
According to Faisal Aftab, CEO Zayn Capital, a venture capital fund and one of the primary investors in the Pakistani startup landscape, estimates that Pakistani startups will be worth $50 billion by 2030.
The Pakistan Startup Ecosystem Report 2021, published by Invest2Innovate, emphasizes the need for more attention to be paid to startups in order to establish a supportive environment in which firms can thrive.
Opportunities for expansion, however, are accompanied by the problem of locating the appropriate human and capital resources to enable the construction of infrastructure capable of absorbing the two million additional workers entering the workforce each year, according to the research.
While regulatory authorities have made progress for startups, there is still a legal structure in place for foreign enterprises interested in purchasing shares in Pakistani firms.
The government has made it possible for startups to hold shares outside of Pakistan, thereby encouraging foreign investment. Companies feel more secure knowing they may store their shares outside of Pakistan, according to Zayn Capital’s Aftab, due to a lack of trust in Pakistan’s courts and legal systems.
Furthermore, taxation laws for venture capitalists and individuals looking to sell their holdings in these firms are unclear.