KARACHI: Pakistani startups raised a total of $6.8 million in just five deals in the July-September quarter, down 87.7 per cent from a year ago when the sum stood at $55.4m.

However, the amount of quarterly funding rose 30.8pc from the preceding three-month period when it totalled $5.2m.

Statistics compiled by Data Darbar, a website that tracks investment flows into the country’s tech ecosystem, showed the quarterly improvement of 30.8pc was on a low base while the deal count dropped from eight to five.

Pakistan’s startup ecosystem has been in financial turmoil for many quarters now. Heavily funded startups like instant-delivery service provider Airlift and mobility player Swvl shut down operations altogether while other firms have either rolled back services or laid off employees.

Inflation has gone up globally and so have the benchmark interest rates set by the US Federal Reserve. Venture capitalists–backed startups are struggling to find new funding for rapid customer acquisition. VCs aren’t willing to write blank cheques anymore to help start-ups acquire new customers at a heavy price. Investors are asking entrepreneurs to hit early break-evens instead of focusing solely on revenue mobilisation.

Data Darbar co-founder Mutaher Khan told Dawn the average ticket size of the deals finalised in the July-September quarter remained $1.36m, down 70.5pc from a year ago when the mean was $4.62m. However, the ticket size expended 83pc on a quarterly basis as the average was $0.74m in the second quarter of 2023.

Round-wise, all deals in the outgoing quarter concluded at the seed stage. Sector-wise, the quarterly funding showed a “fairly healthy mix” albeit because of “very small numbers,” he said.

Each of the five deals belonged to a different sector. The largest share was claimed by edtech, courtesy Taleemabad ($2.3m), which was followed by Paismo from the HR and payroll sector that accounted for another $1.2m.

As for the startup funding for the first nine months of 2023, data showed the amount clocked in at $35.1m, down 89.4pc on an annual basis. The number of deals so far in 2023 has been 21, down by two-thirds from 62 a year ago. The fintech segment accounted for $14m or 39.9pc, followed by transport and logistics ($11.1m or 31.6pc) and edtech ($5.1m or 14.5pc).

Published in Dawn, October 1st, 2023