Pakistani Tech Startups Attract Record VC Funding in First Half of 2022
By Riaz Haq
CA
Technology startups in Pakistan received a record $249 million funding during January-June 2022, up a whopping 171% from the same period last year. A total of 35 deals closed, up 6% from the first half of 2021.
July 2022 saw a maiden investment from Sequoia Capital which is considered among the top venture capital firms headquartered in Silicon Valley, California. Last year was a banner year for Pakistani startups with $310 million venture capital investments.
Venture Capital Investments in MENAPT Region 1H/22. Source: Magnitt
Sequoia Capital and Kleiner Perkins co-led $17.6 million seed round in Islamabad-based fintech startup DBank this month. DBank has been founded by Tania Aidrus and Khurram Jamali, both of whom have studied the challenges the unbanked population faces closely at their previous stint at Google, where they worked on payments rails for the company’s Next Billion Users initiative, according to Tech Crunch .
Soaring VC investments in Pakistani startups – Source Bloomberg
Pakistani startups set a record in 2021 with $310 million venture capital investments, more than the previous six years combined, according to Bloomberg . The South Asian nation has seen a wave of investments from many global venture capital firms, including Sequoia Capital and Kleiner Perkins -- early investors in Google and Amazon.com Inc.
Venture Capital Investments in MENAPT Region 1H/22 -source Magnitt
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 tweet by Swedish fund manager Mattias Martinsson captured the trend well when he wrote, "Have followed Pakistan for 15 years. Can't recall any time 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 $310 million in funding in FY 2021-22, 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. Another example is Sequoia Capital's first investment in Pakistan this month.
Pakistan technology exports - source Arif Habib
Pakistan's technology exports have been experiencing rapid growth in double digits over the last decade. Total technology exports jumped 22% to $2.6 billion in fiscal year 2021-22, as reported by Arif Habib Securities .
Pakistan university enrollment growth - source Encyclopedia of Higher Education
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
(Riaz Haq is a Silicon Valley-based Pakistani-American analyst and writer. He blogs at www.riazhaq.com )
