Years down the line when we look back, 2019 would probably be regarded as a watershed moment for the country’s startup ecosystem. Be it the e-commerce policy and the Digital Pakistan Initiative on the regulatory front or the record amount of Series A witnessed and the emergence of new investors, a lot of road has been covered over the last 12 months.

Keeping in mind these latest developments, one wonders what is to follow in 2020. Would it be the age of digital wallets as we saw in India or are smart buses going to rule, continuing the domination of mobility tech? Or perhaps we’ll see a super app, pushed by the likes of Careem, to rule them all?

Let’s start with the fintech sector, which seems to have finally caught the attention of regulators — the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP). The former, under the leadership of its ex-IMF executive Reza Baqir, has taken a leap forward with not only a national payments strategy but also a faster gateway for the same on the state’s exchequer.

The latter didn’t stay much behind and took a series of progressive steps for the tech sector, including a regulatory sandbox as well as amendments to the Companies Act to incorporate the definition of startups.

The sector is dominated by payments and wallets with telcos and, to a limited extent, banks enjoying the bulk of the market share

Currently, the sector is dominated by payments and wallets where traction-wise telcos and, to a limited extent, banks have the bulk of the market share. But with the regulatory easing, is the trend now going to change?

“Over the next few years, I don’t see anyone giving a competition to these players, except for the ride-hailing companies like Careem, Uber and Bykea,” says Nadeem Hussain, CEO of Planet N, a holding company that has stakes in a number of startups.

However, he doesn’t see a significant boom in the same in terms of usage. “Unless the merchant network is developed properly, wallets will continue to lag. They will be able to get downloads but there won’t be a lot of active users,” continues Mr Hussain.

On the regulatory front, the banker-turned-entrepreneur feels most of the issues have been addressed, with only two more areas expected to see a strategy/policy over the year or so: open banking and crowdfunding.

Moving on to mobility — the hottest sector by far, be it the market penetration, investment raised or, more qualitatively, the brand names made — is likely to lead again, but in what way? Would it be the already existing ride-hailing players further expanding or the smart buses giving the former a run for their money?

“As far as Bykea is concerned, these new entrants are a blessing since they complement us and bring in more customers, giving them options where we couldn’t (for longer distance). And with money in the kitty, these guys would be burning a lot of cash and obviously growing significantly,” says CEO Muneeb Maayr.

Careem, though technically not Pakistani, has played an outsized role in promoting the local ecosystem and mainstreaming tech-based services. Would this trend continue or is the Dubai-based giant going to be replaced by a local player?

Like its parent company Uber, Careem has been running in losses for its entire existence, as is usually the case with high-growth startups. But given the events of the past one year, beginning with a shaky stock performance of major tech startups post-IPO and then the theatrical fall of WeWork, investors around the world have been forced to reassess their top line–focused approach.

That squeezes the ability of Careem (and others) to buy additional growth. So how are the local players going about it? Mr Maayr, CEO of Bykea, one of the largest home-grown new tech companies, says they are already on a contribution margin in Karachi, their primary market.

“We want to achieve the same in Lahore, Rawalpindi and Islamabad, where there is significant competition from Careem and Uber as they are burning quite a bit of money too. But after the next six months, we expect that to subside,” says Mr Maayr. “Plus, we will focus on our core logistics side, and expand into payments which, by default, one has to do.”

While generally companies tend to divest when faced with consistent red bottom lines, some in the tech sector have a different scheme altogether. They instead argue for entering into even more areas, and building a “super app,” which basically serves as a platform for others to list their own services. And that’s exactly what Careem hopes to pull off.

Not sure how this is supposed to work? Say you want to start a laundry startup but rather than doing everything on your own, you integrate with the super app’s application programme interface (APIs), thus giving you greater visibility. Alternatively, some start doing all on their own, as we have far too often witnessed, be it the mobile wallets entering the online retail business or ride-hailing venturing into payments.

In November 2019, Careem Founder and CEO Mudassir Sheikha shared his plans of building a super app conference in Karachi, saying they had built the tech infrastructure and reached a significant audience. But aspirations aside, can it become a reality?

“We have been the longest-time believers in the concept of super app but for it to be viable, you have to integrate with others and not do everything on your own. This has been our approach towards Bykea Cash as well, where we are partnering up with existing banks rather than becoming one ourselves,” says Mr Maayr.

Published in Dawn, The Business and Finance Weekly, January 6th, 2020