KARACHI
A flood of overseas capital into local firms is continuing unabated, as Pakistani startups raised around $375 million last year.
A funding frenzy startup scene last year saw Pakistani startups attracting the largest share, or 32 percent, of funding in logistics, followed by e-commerce at 27 percent, fintech 25 percent and edtech and healthtech 4 percent, according to data shared by startup investment advisory platform Alpha Beta Core.
“Pakistan startups raised more than $375 million in 2021, that’s two times more versus the last six years combined,” Alpha Beta Core CEO Khurram Shahzad, said in a statement, adding investment in Pakistan startups grows by leaps and bounds.
Invest2Innovate (I2I), another organisation that keeps track of funding flows to startups, put the inflow figure at $350 million.
During the outgoing year, 81 investment deals were made by Pakistani startups as compared to 174 deals worth $231 million made between 2015 to 2020, according to data shared by Invest2Innovate.
Airlift technologies, with a $85 million Series B funding round closed in August this year, was the largest single private funding round in the history of Pakistan. Another startup, Bazaar, a B2B marketplace, raised $30 million while Tajir raised $17 million and TAG, a fintech startup, raised $17.5 million.
Online travel and ticketing platform Bookme, and Bagallery, a beauty and fashion startup, raised $7.5 million and $4.5 million respectively in Series A rounds last month. Krave Mart, the first to introduce quick-commerce in Pakistan, also raised $6 million in a pre-seed funding round to expand its operations in the port city of Karachi and to other major cities.
Startups were valued at over $1.5 billion in 2021, which is five times, or 400 percent, higher as compared to startups valued in 2020 at $300 million, according to Shahzad.
Experts expect the funding rush to continue in 2022 because of the huge untapped market in Pakistan with 188 million cellular subscribers, 107 million 3G/4G users and 110 million Internet users.
Advisor to the PM on Commerce and Investment Abdul Razak Dawood recently said that 2021 has been a fantastic year for Pakistan’s startup ecosystem. He congratulated different start-ups, saying: “I would like to congratulate Bookme, Bagallery, Clicky, and DevNation for getting an investment of $7.5 million, $4.5 million, $2.4 million, and $170,000 respectively.”
He said that all the startups raising investment are coming up with innovative business solutions. “We, as a nation, need more entrepreneurs and brands,” he added.
The country has seen more money flow into its nascent technology sector during 2021 than in the previous six years combined. Many global venture capital firms have invested in Pakistan for the first time in the current wave including Kleiner Perkins, an early investor in Google and Amazon.com Inc.
Pakistan’s e-commerce industry is just picking up with online retail accounting for about 2% of gross domestic product, compared with 20% in Indonesia. Alibaba Group Holding Ltd’s Daraz Group, the largest e-commerce company in Pakistan, expects to double its retail volume every year over the next five years, sustaining the pace of the past four years.
Fashion is the largest segment within e-commerce and Bagallery founders believe there will be as many as four unicorns in Pakistan in the next seven years. The country has none so far.
