Is Pakistan the next big market for tech startups?

Updated 30 Jan 2020

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Market of over 220m people, increasing local capital creating opportunities for tech entrepreneurs. — Reuters/File
Market of over 220m people, increasing local capital creating opportunities for tech entrepreneurs. — Reuters/File

Pakistan may be Asia's next big tech startup market, according to a report published by Germany's Deutsche Welle on Wednesday.

According to DW, Pakistan's young population and increasing levels of local capital are creating opportunities for tech entrepreneurs to explore the country's market.

Pakistan has been named one of the fastest-growing economies in Asia in McKinsey & Co's latest report on the Pakistani ecosystem, DW said.

Quoting the same report, DW said that 720 startups have been created in the country since 2010 — 67 per cent of which are still operational.

Presenting an example of how Pakistan's startup scene is garnering support worldwide, the DW article said that Egyptian ride-hailing company, Swvl, has recently disclosed plans to invest $25 million in Pakistan's tech sector over the next two years to fund pre-seed startups and create 10,000 jobs.

The article further pointed out that the startup industry "is central to government plans to create an enabling environment [...] and stimulate economic growth" and that in the latter half of 2019, Pakistan passed six reforms focused on creating a better environment for tech-based businesses in the country.

These measures look to ease the regulatory environment for businesses, including the introduction of a three-year tax relief and creating an online one-stop registration system, through which "companies can now be incorporated in 17 days, rather than 20, at a reduced cost of 1.1pc," the DW said.

According to DW, these reforms seem to be effective as "Pakistan's position in the World Bank's Ease of Doing Business report jumped from 136th place in 2018 to 108th place in 2019".

The article — while pointing out that startups in Pakistan raised $18.8 million in funding in 2019 — said that "more capital is expected to flow into startups from overseas in the ensuing years".

The DW article also welcomed the launch of the 'Digital Pakistan' initiative in December 2019. The initiative — headed by former Google executive Tania Aidrus — has the agenda to increase access and connectivity, enhance digital education and introduce a new era of e-governance in Pakistan.

"Pakistan's tech ecosystem has been slowly gaining momentum in the last few years. It's home to a strong tech talent base and it's still competitively affordable, which makes it ideal for early-stage founders like myself," Hena Husain, founder of London-based communications startup, The Content Architects, was quoted by DW as saying. According to Hena, the growth in Karachi's tech market is increasing by the day. The Content Architects work with a development team based in Karachi.

According to DW, confidence in Pakistan's tech market has led to an increase in the availability of local capital.

"While Pakistan's startup scene and venture capital market is still relatively new, the number of funds — such as i2i Ventures and Fatima Gobi Ventures — and active angel investors have increased significantly since 2018, DW said.

While trying to find out where Pakistan's tech revolution has sprung out from, DW quoted Iskander Pataudi — a Pakistan-born tech professional working in Berlin — as saying that the tech scene in the country evolved organically.

"A few Pakistani tech startups have raised huge funding rounds at a time where our economy is just keeping its head above water," he was quoted as saying. "This makes sense, considering we have a huge market of young, digitally-savvy consumers and increased 3G and 4G connectivity."

Quoting Rabeel Warraich — founder of Pakistan-based venture capital fund Sarmayacar — DW said that a string of startup success stories, combined with a more stable political landscape under President Imran Khan, has increased "investors' confidence that Pakistan holds huge potential for exiting businesses."

According to DW, Pakistani nationals living overseas are beginning to believe that new avenues of opportunity are opening up back home.