ISLAMABAD: Pakistan’s startups witnessed significant growth in 2021 despite the COVID-19 pandemic, WealthPK reported.
The startups raised the investment of $350 million in 83 deals, compared to $65 million in 2020, and registered 438% growth. According to a report released by Invest2Innovate fintech firm titled “Pakistan Startup Ecosystem Report (PSER) 2021”, Pakistani startups have raised a total investment of $563.5 million in 255 deals from 2015 to 2021.
The fintech firm gathered the data through surveys from 150 startups, 17 investors and 20 entrepreneurs in various cities of Pakistan. Furthermore, 52 interviews were conducted with organization leaders and policymakers.
According to economic experts, the total market capitalization for all Pakistani startups currently lies between an estimated $1.5 billion and $2 billion, and is expected to increase to $6 billion over the next five years. Experts assessed that the startups assets will be $30 billion by 2031 in Pakistan.
Similarly, e-commerce has been the largest sector both in terms of deal count and amount of investment. E-commerce registered $315 million growth from 2015-2021 in 64 deals, with $211 million raised in 2021 alone in 26 deals. However, the sector’s dominance has decreased as fintech startups continually raised bigger rounds in 2021, amounting to a total of $95 million across 25 deals, thus yielding a 2015-2021 aggregate of $113 million across 40 deals.
According to the report, a vast majority of interviewed investors told Invest2Innovate that they preferred to invest in early-stage startups. Therefore, most of the investment was raised in pre-seed and seed investment stages. In the pre-seed stage, $32 million has been invested in 14 deals, while the seed stage has raised $123 million in 46 deals. It means that the current scenario is encouraging for businesses.
The report showed that a total investment of $230 million was raised in 2021 by founders with prior education and work experience internationally.
The most commonly cited timeframe when investors expect to see a return on their investments in local start-ups is three to 10 years.
Notable international investors, including Tiger Global and Kleiner Perkins, also made their first entry into the Pakistani startup landscape in 2021. Amid investor-side interest, newer startups have emerged with the value proposition of digitizing traditional brickand-mortar-driven sectors including agriculture and Business to Business (B2B) commerce.
The founder of Invest2innovate Kalsoom Lakhani stated that the private sector investors have persuaded the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP) to change and update their business-friendly policies.
“Macroeconomic considerations caused international funds to look to newer emerging markets for outsized returns. While this growth is exciting, we also need to work to build the capacity of our local startup ecosystem and all its players if we want to see sustainable and long-lasting change,” she said.
INP
