A Storm is Brewing
A storm is brewing in the startup ecosystem of Pakistan. It started with NUST Technology Incubator Center (TIC) launch about 15 years back followed by Government led initiatives such as National ICT R&D Fund (now Ignite NTF) which launched five of its own Incubators in Islamabad, Lahore, Karachi, Peshawar and Quetta. Along the way came Plan9 (also Government backed), Nest I/O, LUMS LCE, i2i, Dot Zero, 10XC, NSPIRE, Basecamp, Durshal etc. If 2000s were about producing PhDs, conducting R&D within the country and publishing papers and patents then 2010s were certainly about developing a startup culture. It is widely believed that in the current decade we will see startups scaling up, Venture Capital (VC) coming into the mix and more Series-A and Series-B funding. Time is not far when we will see the first Unicorn from within the country.
Let us briefly discuss what are the indicators that give us hope for the future. When incubators first started a decade back there were very few applicants as leaving a job to launch your own startup was not considered “fashionable”. But this has changed. Now incubators regularly induct new startups and the number of applicants is 4–5 times the number that can be accepted. The quality of mentors has greatly improved and it’s not unusual for expats to fly in all the way from Silicon Valley to mentor and coach local startups and build relationships. Finally, when the startups graduate, the chances for seed funding or even Series-A have greatly improved. Investor Connect is no more a formality rather chances for raising funds are real. Hackathons, startup challenges and TV reality shows with substantial awards are the norm. It must be noted that although there have been severe COVID-19 restrictions over the last one year, VC funding has seen an increase of more than 60%.
Let us throw in a few numbers to substantiate our claims. PakVitae a startup from NIC Lahore raised $18 million whereas Bykea a startup incubated at NIC Karachi raised $18.7 million from local and foreign investors. Electrocure and Knowledge Platform, two Ignite funded projects, were funded post seed round for a total of $3 million. More recently AirLift a Pakistan based transportation startup has raised $24.2 million from international investors which include First Round Capital, an investor in Uber. Local investors in Airlift include Fatima Gobi Ventures and Indus Valley Capital. Finja and Cheetay have also raised $14.5 million and $9.7 million respectively. Previously Zameen.com, Rozee.pk and PakWheels.com had raised $31.1 million, $8.5 million and $3.5 million respectively. Careem and Daraz acquisitions valued at more than $3.25 billion combined also created a positive vibe in the entrepreneur community. Local VCs such as Sarmayacar, 47 Ventures, i2i Ventures, Lakson Investments and CresVentures have also made substantial investments. Startups are making Pakistan proud at international competitions such as APICTA where the Pakistani contingent is a regular feature.
According to the Pakistan Software Export Board (PSEB), the total size of the software sector is approximately $6.5 billion and Pakistan is ranked as the fourth most popular country for freelancing. Programs such as DigiSkills.pk and other Government backed youth training and employment programs are helping us further in this cause. The government is also starting to value the importance of the IT sector and as a result of positive steps taken, Pakistan has moved up in ease of doing business ranking of World Bank. Launch of 3G/4G was also a big plus and Pakistan Telecommunication Authority (PTA) is working towards testing 5G in the country. According to latest figures released by PTA, Pakistan has 180 million cellular subscribers and 95 million 3G/4G subscribers. Smartphone usage is on the rise and number of broadband subscribers has reached 100 million. Pakistan has faced a crippling energy crisis but situation is under control now as new power plants, including those based on wind and solar, are being commissioned. Pakistan is expected to have excess energy of 15,000 MW by 2025 which can be exported to as far as Central Asia.
A storm is brewing, rain is in the air and first drops are already falling.
