ISLAMABAD: Pakistani startups raised $69 million during the fourth quarter of 2021 through 22 business deals, taking the total amount raised by them to $350m.

With total 81 deals in the year, the amount raised reflects an increase of five times over 2020, the Board of Investment (BoI) announced on Saturday.

Commenting on the achievement, Minister of State and BoI Chairman Azfar Ahsan said the government is committed to support and promote business in the country and the success of these ventures will set the tone for several other projects in future and build investors confidence.

“Developing an ecosystem of enterprise is imperative for the economic prosperity of a country and is one of the key priorities of the BoI. Dedicated efforts of the government have borne fruit and have been able to build momentum of startups and business culture over the last few years,” Mr Ahsan said.

Startups are founded by one or more entrepreneurs who want to develop a product or service for which they believe there is demand. These companies generally start with high costs and limited revenue, for that reason they look for capital from a variety of sources such as Venture Capitalists (VCs) which are private equity investors providing capital to companies with high growth potential in exchange for an equity stake.

According to the BoI, “Pakis­tani startup funding landscape has reached an exciting inflection point, raising unprecedented rounds with international VCs writing significant cheques into the country.”

Statistics gathered by the BoI reveal that in 2021, e-commerce raised $202m in 23 deals, while fintech raised $95m in 25 deals. However, in the fourth quarter, fintech startups raised more than e-commerce startups for the first time. This is because the regulatory environment shifted this past year, opening up the sector significantly for the first time, the board said.

In 2022, we will see fintech startups raise later and larger funding rounds, matc­hing and potentially surpassing the growth of the e-commerce space, Mr Ahsan said.

Statistics show that average ticket sizes in fintech have been on the rise since 2016. In 2021 the average ticket size in fintech stood at $4.8m versus $6.5m in e-commerce, which will continue to increase as current fintech plays raise later rounds of funding, since most fintech deals in 2021 were pre-seed and seed. Similarly, average ticket size for fintech deals grew from $2.6m to $4.8m in 2021.

Although in the fourth quarter of 2021, not a single female-founded startups raised investment, however, overall, in 2021 female-founded business fetched a total of $4m from two deals, which is the highest-ever so far. Female co-founded-startups on the other hand have raised the highest amount of $114m this year in comparison to any year before.

Published in Dawn, January 23rd, 2022

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