2021: A Banner Year for Pakistani Tech Startup Investments
By Riaz Haq
CA
The year 2021 is turning out to be a banner year for Pakistani tech startups. At the end of the third quarter of the current year, technology startups have already raised $278 million, twice the funding raised in the previous five years combined.
The third quarter (July-Sept 2021) alone has seen startup companies raise $172.6 in 17 deals closed in the three-month period, according to data compiled by Kalsoom Lakhani of i2i ventures. The top deals closed in the third quarter were: 1. Airlift $85 million series B 2; Bazaar $30 million in series A and 3; and QisstPay $15 million seed round.
The lion's share of the money ($117 million) went to E-commerce startups followed by Fintech ($35 million) and trucking platforms ($13.6 million). Male-founded startups got 46.5% while female-founded companies received 1.7% with the rest of the money going to startups whose founding teams included both male and female founders.
Pakistan's technology sector is in the midst of an unprecedented boom. It is being fueled by the country's growing human capital and rising investments in technology startups. A recent tweet by Swedish fund manager Mattias Martinsson captured it well when he wrote, "Have followed Pakistan for 15 years. Can't recall any time when VC activity was anywhere near we've seen in the last few months. Impact of reforms kicking in?". New laws have made it easier to create startups and offered greater protection to investors. Digital infrastructure has expanded with over 100 million smartphones and an equal number of broadband subscriptions.
With expanding Internet infrastructure and rapidly growing user base, Pakistan is now seeing robust growth in venture money pouring into technology startups. Pakistani startups have already attracted more than $278 million in funding in 2021, more funds than all the money raised by Pakistani startups in their entire history. A recent example is Kleiner Perkins, a top Silicon Valley venture capital investment firm, that led a series A round of $17 million investment into Pakistani start-up Tajir. The startup operates an online marketplace for small store merchants in Pakistan. The announcement came via a tweet by Mamoon Hamid, a Pakistani-American Managing Partner at Kleiner Perkins who led the investment. Last year, Tajir raised a $1.8 million seed round. The company's revenue has increased by 10x since its seed round.
Pakistan's technology exports have been experiencing rapid growth in double digits over the last decade. Total technology exports jumped 47% to $2.1 billion in fiscal year 2020-21.
The foundation for Pakistan's digital transformation was laid with the higher education reform and telecommunications deregulation and investments starting in the year 2001 on President Musharraf's watch. With a huge increase in higher education funding, Higher Education Commission Chairman Dr Ata ur Rehman succeeded in establishing 51 new universities during 2002-2008. As a result, university enrollment (which had reached only 275,000 from 1947 to 2003) soared to about 800,000 in 2008. This helped build a significant human capital that drove the IT revolution in Pakistan.
Please watch the following video presentation for more details on Pakistan's technology startup ecosystem:
https://youtu.be/ePApXOM3vkQ
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