KARACHI: Startups in Pakistan have raised a total of $563.5 million in 255 deals from 2015 to date, with $350m raised via 83 deals in 2021 alone, according to the Pakistan Startup Ecosystem Report 2021 released on Tuesday.
The Insights arm of Invest2Innovate — a platform that supports early-stage enterprises — gathered data through surveys from 150 startups, 17 investors and 20 entrepreneurship support organisations and further triangulated it via 52 interviews with founders, investors, support organisation leaders and policymakers.
“Recent years have seen an increasing shift in how investors in developed economies have sought to broaden their holdings to emerging and frontier markets, including Pakistan... In part, the strides made by the ecosystem can be attributed to a more facilitative policy regime,” it said.
A vast majority of polled investors told Invest2Innovate they preferred to invest in early-stage startups.
“This implies that financial capital for later-stage rounds is scarce due to a lack of investors willing to invest at those stages,” it said.
This is in line with the recent investment trends. Most deals in 2021 were at the pre-seed stage ($32m raised across 14 deals) and seed stage ($123m raised across 46 deals).
The trend confirms that a lack of funding for companies in later stages may be an emergent issue when startups begin to reach that phase of their growth lifecycle.
“A significant majority of the investors participating in this study also pointed out that a lack of laws allowing for the seamless inflow of foreign investment capital into the country as well as appropriate venture capital–friendly legislations and processes are a considerable barrier,” it said.
The report highlighted that female-founded startups face barriers in accessing capital. Solely female-founded startups account for only 1.4 per cent of all investments raised in the past seven years.
The report showed a total investment of $230m was raised by founders who have had both prior education and work experience internationally.
The most commonly cited time frame for when investors expect to see a return on their investments in local start-ups is three to 10 years.
Reuters adds: Bazaar, a business-to-business fintech startup, has raised $70 million in a Series B funding round, the platform said on Tuesday, taking the total funding to $100m in less than two years, said a statement.
The latest funding, led by Dragoneer Investment Group and Tiger Global, makes the platform one of best capitalised in the country’s young startup ecosystem.
Published in Dawn, March 16th, 2022