Pakistan Tech Summit:
At this conference, I was really encouraged by the presence of many young Pakistan entrepreneurs eager to realize the vision of Digital Pakistan. Enthusiasm is necessary but not sufficient. What is missing is serious attention to attract more risk capital to support these young enthusiastic entrepreneurs. Unfortunately, I did not see any known Silicon Valley venture capitalists (VC) at the event. Recent McKinsey report on Pakistani startup ecosystem noted that per capita venture capital is just 6 cents, lower than 7 cents in Bangladesh and only a third of 18 cents in Nigeria. What Pakistan needs is a venture capital initiative along with digitization initiative.
Founders or cofounders of several Pakistani startups pitched their companies hoping to attract venture investors. Among the attendees were many young enthusiastic techies.
Najeeb Ghauri, Chairman of Netsol Technologies, made a pitch that focused on the opportunities presented to investors by Pakistan's growing young enthusiastic talent pool and large aspirational middle class population. JS Bank's Noman Azhar talked about his bank's fund that invests in Pakistani startups taking advantage of the government's Digital Pakistan Initiative. An example of their investment is e-challan systems in Islamabad and Peshawar.
Morning keynote speaker was Farrukh Mahboob of VisionX which offers custom-built digital products and mobile applications for businesses. Their digital solutions are tailored to clients’ needs and are powered by emerging technologies including artificial intelligence (AI), augmented and virtual reality (AR, VR). VisionX clients includes Fortune 500 companies.
A number of startup pitches followed. Founders or co-founders of DontPort, Integry, Kumlaudi, SafePay, JoyCo and Social Pie pitched their ideas.
Examples of VC Funded Startups:
McKinsey report "Starting up: Unlocking entrepreneurship in Pakistan" has cited Daraz, Zameen, PakWheels, Tez Financial, Patari, AugmentCare and Sastaticket. Monis Rahman, CEO of Rozee.pk, says this is an incomplete list. He personally knows about funds raised by the following companies that are missing from the McKinsey list:
Rozee.pk -- $9 Million across 3 rounds
Finja -- $4.5 Million seed + bridge (working on $15 Million round)
Airlift -- $12 Million Series A (working on $20 Million round)
|Examples of VC Funded Pakistani Startups. Source: McKinsey|
Lack of Venture Capital:
It was great to see many young Pakistan entrepreneurs eager to realize the vision of Digital Pakistan. Enthusiasm is necessary but not sufficient. What is missing is an enabling environment for startups to attract more risk capital to support these young enthusiastic entrepreneurs. Unfortunately, I did not see any known Silicon Valley venture capitalists (VC) at the event. Recent McKinsey report on Pakistani startup ecosystem noted that per capita venture capital is just 6 cents, lower than 7 cents in Bangladesh and only a third of 18 cents in Nigeria. India's level of per capita is at $3.72 and UAE's $40 per capita VC investment is more than 10X India's.
|Venture Capital Per Capita. Source: McKinsey|
Need For Venture Investment Initiative:
Pakistan needs to have a venture capital initiative to ensure that Pakistani startups fully participate in Digital Pakistan Initiative. Part of the venture capital initiative should create legal and policy framework to protect investors and facilitate their exit strategies. Pakistan government should invite venture capitalists and offer to participate as a significant investor in professionally VC funds that invest in Pakistani startups. Experienced Pakistani VCs and entrepreneurs like Asad Jamal and Monis Rahman can be used as a resource to establish this venture investment initiative.
|Enabling Startup Ecosystem. Source: McKinsey|
Recent "Pakistan Tech Summit 2020" at Draper University in San Francisco Bay Area attracted dozens of enthusiastic tech savvy young men and women ready with their startup pitches. It confirmed what Deutsche Welle's Miriam Partington recently reported in a story titled "Pakistan: The next big Asian market for tech startups?" in which she wrote: "Pakistan's young and tech-savvy population, market of over 220 million people and increasing levels of local capital are creating opportunities for tech entrepreneurs". Unfortunately, I did not see any known Silicon Valley venture capitalists (VC) at the event. Recent McKinsey report on Pakistani startup ecosystem noted that per capita venture capital is just 6 cents, lower than 7 cents in Bangladesh and only a third of 18 cents in Nigeria. India's level of per capita is at $3.72 and UAE's $40 per capita VC investment is more than 10X India's. Pakistan needs to have a venture capital initiative to ensure that Pakistani startups fully participate in Digital Pakistan Initiative. Part of the venture capital initiative should create legal and policy framework to protect investors and facilitate their exit strategies. Pakistan government should invite venture capitalists and offer to participate as a significant investor in professionally managed VC funds that invest in Pakistani startups. Experienced Pakistani VCs and entrepreneurs like Asad Jamal and Monis Rahman can be used as a resource to establish this venture investment initiative.
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I noticed that the funding in your writeup is missing very notable deals and we may be underplaying investor interest.
Rozee.pk -- $9 Million across 3 rounds
Finja -- $4.5 Million seed + bridge (working on $15 Million round)
Airlift -- $12 Million Series A (working on $20 Million round)
I think a full funding history should be definitively put on the record for al Pakistani startups... we're seeing very fragmented and partial data.
The good news is several new funds have invested or about to invest in Pakistan for the first time (in companies like Zameen, Rozee, Finja, Bykea, Airlift, Tez, Pakwheels, etc) and several local funds have emerged (Sarmayacar, Fatima/Gobi, Lakson, 47 Ventures, etc). Govt should certainly deploy capital in to this ecosystem to help catalyze. The pace at which the ecosystem is heating up is encouraging.
A high-profile panel discussion on Pakistan’s digital future attended by prominent players in the local digital industry was hosted by Serena hotels as part of its public diplomacy initiative called ‘Raabta’.
The event titled ‘Re imagine our Digital Future – Preparing to Thrive or Survive?’ was hosted by raabta curator and prominent journalist Sidra Iqbal.
A lively and thought-provoking discussion was held about the challenges facing the local digital economy in face of its rapid expansion, and the challenges and opportunities this brings in terms of innovation, governance, job market, cyber risks, regulation and ease of doing business.
“The focus of the event is to discuss the potential benefits and costs arising from global digital technology changes and, importantly, anticipate public policy solutions to emerging problems that will shape the future of society and the economy for generations to come,” said Sidra Iqbal. “Change can come within a generation if managed properly, rather than waiting for millennia. We are asking if the policymakers going to be reactive to the digital revolution or take the bull by the horn and prepare an environment for the digital economy to thrive?”
The keynote speaker at the event was ‘Digital Pakistan’ initiative chief Tania Aidrus, who spoke about the five pillars that form the cornerstone of the government’s digital policy, which include access and connectivity, digital infrastructure, e Government and digital skilling. Tania said the response to the PM’s digital initiative was overwhelmingly good and it felt like a movement already. She said a lot is happening in the digital arena but it’s important to keep an end view in sight and take a strategic approach. She said the efforts at provincial and federal levels have to be synchronized to achieve the objectives on a broader scale. She said the internet is a democratizing force and digital allows equitable access to knowledge provided the affordability of digital infrastructure was enabled and commodities like the internet are not taxed as a luxury item.
The panel included prominent figures of the local digital landscape including GM of Careem Zeeshan Hasib Baig, MD Daraz.pk Ehsan Saya, CEO Foodpanda Nauman Sikandar Mirza, Chief Corporate and Enterprise Officer Jazz Ali Naseer, MD KPITB Dr Shahbaz Khan and Chief Business Support Officer U Microfinance Bank Sharmeen Niaz.
Zeeshan Hasib Baig said that Careem has enabled 500,000 jobs which shows that going digital will not take away jobs as some fear, however it will change the way we work and make it more efficient so the focus can be on better quality leading to productivity gains. He said digital companies like Careem are improving livelihoods, moreover they are allowing females much better mobility for work and leisure.
Ali Naseer from Jazz said “we need to change the lens of how we look at things and there needs to be a paradigm shift in our traditional processes to allow for digital to be effective lest we become redundant.” “Whilst we have 3G/4G broadband license since 2014 but less than 40% of the population is connected on broadband currently which is a travesty.”
Nauman Sikander Mirza of food delivery service Foodpanda Pakistan said that Pakistan’s digital economy was in very early stages with no e-commerce companies operating in the country and very few government entities using automation.
MD of online selling platform Daraz.pk Ehsan Saya spoke about digitization boosting the trade industry like never before despite the fact that the majority of the population is not accustomed to buying online. He said the e-commerce will pick up eventually when the government improves regulation.
Bayut (#Dubai) & Zameen (#Pakistan) parent EMPG #emergingmarket #realestate business group raises $150 million at a valuation of over $1 billion, announces merger with OLX in a few markets, including Pakistan
Dubai-based Emerging Markets Property Group (EMPG) that runs property portals in different emerging markets across the world including Bayut in Dubai, Zameen in Pakistan, and Mubawab in North Africa, has become a unicorn after raising a $150 million round led by OLX Group and its existing shareholders, the company announced in a statement to MENAbytes today.
EMPG did not disclose the exact valuation but said the deal values the company at over $1 billion post-transaction.
The deal includes merger of OLX Group’s classifieds business with Emerging Markets Property Group (EMPG) in Pakistan, Egypt, Lebanon, and the United Arab Emirates.
OLX Group with the deal has become the single largest shareholder of EMPG, owning 39 percent of the company. The $150 million investment is fresh cash injection and will be used by the company to develop a range of new services, creating a more seamless user experience, enhancing data transparency, and deepening market intelligence for both consumers and business users.
According to the statement, EMPG will operate existing OLX platforms in Egypt & Lebanon, and roll out new services for the real estate community. EMPG before the deal did not have any presence in Egypt & Lebanon.
In Pakistan & United Arab Emirates, the platform of both the groups which apparently include EMPG’s Zameen & Bayut and OLX Groups’ OLX and Dubizzle, will be operated EMPG.
EMPG will also operate OLX’s platforms in Saudi Arabia, Bahrain, Kuwait, Qatar, and Oman after this deal.
The statement notes that the aggregated value of properties sold in these markets is estimated at $90 billion, providing a commission pool for real estate agencies of over US $2 billion per annum, “This presents a great opportunity for EMPG to enhance their real estate services in these markets.”
Imran Ali Khan, the co-founder, and CEO of EMPG, said, “EMPG has grown at a tremendous pace since its inception. Our unique ability to scale using our proprietary tech has aided and enabled this expansion. This deal puts us one step further in our journey towards providing solutions in multiple markets to over a billion consumers around the world, expanding our classifieds offering significantly.”
Martin Scheepbouwer, CEO of OLX Group, says “I’m proud of what we have built in these four markets. Our brands are household names, and currently help tens of millions of people to exchange goods and services every month. The next phase is an exciting one, with EMPG’s real estate industry expertise helping deepen the customer experience. As EMPG’s largest shareholder, we’ll have a front seat to explore how we can scale their services model further – taking our ambition to shape the future of classifieds into its next stage.”
Haider Ali Khan, Head of EMPG – MENA on this collaboration: “We, at Bayut and EMPG, are very excited about the future of the UAE real estate industry and the prospects of real estate in the MENA region. This merger of EMPG and OLX will allow us to better serve our customers, given that both operate brands with a strong following and will allow us to leverage existing tech and data to paint a more accurate picture of the state of affairs in the real estate industry across the region.”
“At the same time, we will be making significant technology investments to provide more value to all users of property, automotive and other segments of the Dubizzle and OLX platforms. I look forward to a bright and prosperous future for the group,” he added.
EMPG is currently present in the GCC region with Bayut, Pakistan with Zameen, Bangladesh with Bproperty, Morocco and Tunisia with Mubawab, and Thailand with Kaidee.
Telenor Accelerator launches #EdTech Innovation program in #Pakistan. It provides curriculum and skill-based #education for school, college and university students, as well as additional courses incl personal development modules, #digital skills & #STEM https://www.telecompaper.com/news/telenor-velocity-launches-edtech-innovation-programme-in-pakistan--1339472#.XsgMksKQ1Mc.twitter
Telenor Velocity, the digital startup accelerator by Telenor Pakistan, has introduced its EdTech Innovation programme, to forge alliances with EdTech startups/scaleups. This initiative is launched in response to the closure of educational institutions and offices due to the coronavirus outbreak, Telenor said.
The programme provides curriculum and skill-based education for school, college and university students, as well as additional courses including personal development modules, digital skills, and STEAM (Science, technology, engineering, arts and mathematics) with a special focus on Robotics.
The Telenor Velocity EdTech Cohort has stepped forward to help students shift to online access and added a number of partners for this purpose including K-5 SABAQ Muse, a learning service based on videos, games and ebooks in multiple languages for early grades. The Edaksa service supports STEAM education and helps Pakistani high school students prepare and pass their standardized government exams; while the EDTechWorx content creation and collaborative delivery platform connects learner, educators and the overall industry. The Skills First online academy aims to allow users to develop their skills; while LearnObots aims to develop makers and creators of tomorrow, with a practical learning approach in the domain of Educational Robotics.
Y-Combinator backed #Lahore-based #Pakistan #startup Tajir raises $1.8M to help mom-and-pop stores source inventory. It is led by Pioneer Fund, Golden Gate Ventures, Fatima Gobi Ventures, Karavan, and VentureSouq. | TechCrunch
But slowly, global investors who arrived in India and other Asian markets in the last decade are beginning to look at Pakistan and bet on startups that are solving similar challenges.
Tajir, a Lahore-headquartered startup, today serves more than 15,000 neighborhood stores, locally known in the region as kirana, across Pakistan.
The two-year-old startup, the first startup from the nation to be backed by Y Combinator, said on Friday that it has closed a new financing round.
Pioneer Fund, Golden Gate Ventures, Fatima Gobi Ventures, Karavan, and VentureSouq led the round, with participation from a clutch of angel investors, Tajir co-founders Babar Khan and Ismail Khan told TechCrunch in an interview.
Tajir offers full transparency on the prices of various products, addressing a challenge that store owners confront offline each day, and sells and delivers inventories to the stores, said the Khan brothers, whose father ran an FMCG retail distribution business for three decades.
“We help store owners save money on inventory and help them boost their sales,” said Ismail.
Like in India, offline retail drives the vast majority of sales in Pakistan. “The retail is even more unorganized here compared to neighboring nations,” they said. There’s no Amazon or any major giant running an e-commerce business for consumers in Pakistan today.
For Babar and Ismail, that’s a big opportunity as they scale. According to official government data, there are about 2 million neighborhood stores in Pakistan.
Tajir is gaining ground in the country today mostly through word-of-mouth endorsement from existing partners, though the startup also maintains a sales team to educate more store owners about their platform.
It plans to use the capital to expand its offering and develop more services that stores need to grow their business, the brothers said. These offerings could include a wider catalog of inventory, and access to financial services, they said.
“We want to offer an essential service to every single mom-and-pop store in Pakistan,” said Babar.
Tajir today does not have any major competitor, which is good news as a lot is riding on its founders’ shoulders who are among the early batch of entrepreneurs in the country. In many ways, their success will determine the perception of the Pakistani market to investors worldwide.
South Korea’s Eximbank plans to finance Pakistan’s large-scale IT project. #Korea to offer a $76 million-plus loan to #Pakistan for IT-related projects including electronic intelligence. #tech #informationtechnology
South Korea’s state-run policy lender Export-Import Bank of Korea plans to offer a $76 million-plus loan to Pakistan for IT-related projects including electronic intelligence, a top official told The Korea Herald on Monday.
Eximbank established the Economic Development Cooperation Fund in 1987 to support industrialization and economic growth in developing countries as well as promote bilateral economic exchanges.
“The size of the loan and project is expected to be larger than the IT Park construction project in 2017,” said the official, who requested anonymity.
The project is aimed to support Pakistan’s small-and medium-sized IT firms and bolster technology cooperation between South Korea and the South Asian country.
“But there have been discussions about expanding IT cooperation between the two countries beyond infrastructure, which led to the project taking shape,” the official added.
The project is still in its early stages due to the coronavirus pandemic, the official stressed. Key details, such as the master plan and the exact size of the loan are yet to be discussed.
Eximbank is also planning to delay debt repayment of seven loans extended to Pakistan via EDCF that face maturity this year -- there are a total of 13 of such loans extended to the country so far.
This is in line with the government’s decision, announced in April, to provide more than $400 million to developing countries for virus-related programs and delay repayment of debt from 27 developing nations.
“The debt repayment issue is being discussed via the Paris Club,” the official explained, pointing to a group of major creditor nations who seek to find solutions for payment problems that debtor economies face.
#SBP modernizes FX regulations to a) attract foreign investment in fintechs and startups thru holding companies; b) support exporters to establish presence abroad to promote Pakistani products; and c) allow residents to acquire sweat equity; and more:
SBP Modernizes Foreign Exchange Regulations to facilitate Start-ups, Fintechs and Exports
State Bank of Pakistan (SBP) has notified revisions in chapter 20 of the Foreign Exchange Manual to
facilitate Start-ups, Fintechs and Exports. The new policy for equity investment abroad will attract
foreign direct investment through the establishment of holding companies by Pakistani fintechs and
startups; support exports by facilitating exporters to establish subsidiaries or branch offices outside
Pakistan; and, allow resident Pakistanis to acquire sweat equity, amongst other changes to the Foreign
Exchange (FX) regulations. Further changes in the foreign exchange regulations will facilitate portfolio
investment in the country including mutual funds, Exchange Traded Funds (ETF) and Real Estate
Investment Trust (REIT) Funds through Pak rupee based Roshan Digital Account (RDA) and Special
Convertible Rupee Account (SCRA).
SBP, after approval of the Federal Government, has introduced three new categories of investment
abroad under its revised policy governing equity investment abroad and banks have been authorized
to allow remittances under newly introduced categories.
i. Establishment of Holding Company abroad by residents for raising capital from
abroad: Pakistan’s investment regime is quite liberal that allows full freedom to repatriate profit,
dividend and capital; however, some international investors prefer to invest indirectly through
holding company established abroad specially in the Fintech and Startup firms. SBP’s revised
policy will enable the Pakistani Fintech and startup companies to channelize foreign direct
investment in the country by establishing a holding company abroad against remittance of up to
USD 10,000 and subsequent swapping of shares to mirror the shareholding of local company in
the holding company.
ii. Establishment of subsidiary/branch office abroad by export oriented companies/ firms for
promoting exports: The policy will enable the export oriented companies to establish subsidiary/
branch office abroad against remittance of 10% of their average annual export earnings of last
three calendar years, or USD 100,000 whichever is higher. This will facilitate exploring new and
non-traditional markets and capturing more export orders, as international buyers prefer dealing
with subsidiaries/ representative offices of foreign companies present in their
country. Accordingly, the proposed policy would help in growth of export-oriented companies and
boost the exports of the country.
ii. Investment abroad by Resident Individuals: The policy will allow the resident Individuals of
Pakistan to acquire equity stake in international firms through share option plans or investment in
listed securities subject to observance of annual ceiling of foreign exchange defined in the policy.
In case of sweat equity a person can acquire upto twenty percent shareholding in a foreign
company. These policy provisions will provide opportunities to individuals to earn foreign
exchange for the country in the form of repatriation of dividend/ capital gains to Pakistan.
Investment in Mutual/Private Funds in Pakistan by Non-Residents:
With an objective to attract investment in the country, SBP has allowed the trading of units of funds
quoted at Stock Exchange, including Exchange Traded Funds (ETF), Real Estate Investment Trust (REIT)
SBP, after approval of the Federal Government, has introduced three new categories of investment abroad under its revised policy governing equity investment abroad and banks have been authorized to allow remittances under newly introduced categories.
1. Establishment of Holding Company abroad by residents for raising capital from abroad: Pakistan’s investment regime is quite liberal that allows full freedom to repatriate profit, dividend, and capital. However, some international investors prefer to invest indirectly through a holding company established abroad specially in the Fintech and Startup firms. SBP’s revised policy will enable the Pakistani Fintech and startup companies to channelize foreign direct investment in the country by establishing a holding company abroad against remittance of up to USD 10,000 and subsequent swapping of shares to mirror the shareholding of a local company in the holding company.
2. Establishment of subsidiary/branch office abroad by export-oriented companies/firms for promoting exports: The policy will enable the export-oriented companies to establish subsidiary/branch office abroad against remittance of 10 percent of their average annual export earnings of last three calendar years, or USD 100,000 whichever is higher. This will facilitate exploring new and non-traditional markets and capturing more export orders, as international buyers prefer dealing with subsidiaries/representative offices of foreign companies present in their country. Accordingly, the proposed policy would help in the growth of export-oriented companies and boost the exports of the country.
3. Investment abroad by Resident Individuals: The policy will allow the Resident Individuals of Pakistan to acquire an equity stake in international firms through share option plans or investment in listed securities subject to observance of the annual ceiling of foreign exchange defined in the policy. In the case of sweat equity, a person can acquire up to twenty percent shareholding in a foreign company. These policy provisions will provide opportunities to individuals to earn foreign exchange for the country in the form of repatriation of dividend/ capital gains to Pakistan.
Pakistan launches growth funds for startups
The (IT) minister (Aminul Haq) said the overall environment in the country is improving. Bykea, one of the startups accelerated at NIC Karachi, has raised $21 million of Series B Funding.
Altogether, 122 deals worth $178 million were made from 2015-2020 in Pakistani startups including another 19 deals with amounts that were undisclosed. This brings the total deals count up 141.
Asim Shahryar Husain, CEO of Ignite said 272 startups have graduated from Ignite’s National Incubation Centers with a total investment commitment of Rs8 billion and cumulative revenue of Rs3 billion. These nascent companies have created more than 100,000 new jobs and these numbers quantify the achievements of our five incubators in a short span of time. Ignite is planning vertical incubators and accelerators in future to boost the startup ecosystem of Pakistan.
Husain said the platform will be the first of its kind in and will aim to bridge the gap between entrepreneurs and national and international investors of all types including commercial and impact investors, donors and philanthropists.
The ministry and Ignite will invite various investors, donors and other investment/financial institutions to participate in the platform to consider business opportunities for financing, investments, supply chain commitments and networking. “It will be open to qualifying startups from all NICs and AP incubated and accelerated businesses across Pakistan. Under PakImpactInvest, first grand national pitching session of top 25-30 startups selected from all NICs and AP accelerated companies will be held in the last week of March 2021.”
In 2012, Pakistan’s start-up ecosystem had only two major
business incubators and accelerators – it has quickly evolved
By 2019, the country had 24 incubators and
accelerators and around 20 key investors
with many funds
catering to early stage start-ups.
The era of VCs and boom of start-ups
Fatima S AttarwalaPublished March 8, 2021
“I have never seen as much genuine interest in writing cheques as I have in the last year,” says Kalsoom Lakhani, co-founder of the $15 million venture capital fund i2i Ventures. “There are so many international funds in Silicon Valley, East Asia, Middle East and other places that are realising that Pakistan is one of the most exciting places to come.”
Despite the pandemic, venture capitalist (VC) activities increased by 37 per cent to $65.6m in 2020 in Pakistan, explains Misbah Naqvi, co-founder of i2i Ventures. The fund is a sister concern of Invest2Innovate that was formed to support frontier markets in 2011 and acts as a pipeline of start-ups for i2i Ventures.
The lockdown speeded up sectors such as e-grocery, e-food delivery, fintech and edtech. International funds that have invested in similar companies in other markets have a much higher appetite to come into Pakistan as they already know what that model looks like, they explain.
In the last five years, over $200m has been raised by startups of which only about 3pc was towards female-founded or co-founded companies
They give the example TelloTalk, Pakistan’s first messaging platform in English, Urdu and regional languages. With close to 1.5m downloads and continuing to grow, the company has grown four times in terms of active user growth since i2i Ventures’ investment in 2019.
Understanding the VC model
In a traditional business model, the bottom line indicates the returns investors receive. In a VC model, investors make money when they sell their stake and exit the business. The exit can be in the form of an initial public offering, an acquisition, or it could be that the company is growing so fast, such as in the case of Careem and Uber, that more and more investors come in at later stages and buy the stake of initial investors.
“The whole idea of VC is to look at making 10x returns on your investments. The way VC works is that there will be a couple of unicorns that go on to become hundred-million-dollar companies, a few that will do pretty well and offer 3x to 5x returns, some that will just recoup the investment and then there will be those that will go bust,” outlines Ms Naqvi.
“It is a very high-risk asset class, especially in Pakistan where it is unproven,” says Ms Lakhani. “Since the space is really new, and exits require a five- to ten-year timeframe at least, it is too early to assess exits.”
A more mature market
There are several rounds of investments for startups. The first is when capital is raised by friends and family, followed by a pre-seed round that has angels and institutions involved. The seed level is when one starts seeing traction, after which the founders can raise either pre-seeds, Series A, up to Series A1. The Series A round of funding is when the company has figured out its product market and wants to, for example, grow to a few more cities. Series B and beyond is like putting fuel into the engine, explains Ms Naqvi.
“Considering the continuum, you can appreciate that a few years ago we were mostly seeing seed-stage deals. However, in the last year, we have had more series A deals in tandem with higher valuations of these companies.”
Criteria for funding
“We typically finance $100,000-200,000 in each investment,” they explain. Their process can take anywhere between four weeks to a few months, depending on how investment-ready the founders are.
The most important factor for the investing duo is the strength of the founding team. Secondly, they analyse the market opportunity — for example, a business in the organic food niche may be great but the opportunity would not be as large as say e-groceries. The third factor is traction — the partners don’t invest in a company that is just an idea.
#Pakistan's #tech ecosystem is finally taking off. In 2021, Pakistani #startups are on track to raise more money than the previous 5 years combined. This capital is coming from investors from #Asia, #MiddleEast & top #SiliconValley VCs.
https://tcrn.ch/2TEwRR0 via @techcrunch
Pakistan, the world’s fifth most populous country, has been slow to adapt to the internet economy. Unlike other emerging economies such as China, India and Indonesia, which have embraced digitization and technology, Pakistan has trailed the region in the adoption of technology and startup formation.
Despite this, investors have dreamed for years of the huge opportunities in unlocking Pakistan’s potential as a digital economy. As a country of 220 million people, almost two-thirds of whom are under the age of 30, Pakistan draws natural comparisons to Indonesia — which has rapidly emerged as one of the most vibrant technology ecosystems outside the U.S. and China.
After years of lagging behind, over the course of the past 18 months, Pakistan’s technology ecosystem has come to life in unprecedented fashion. In 2021, Pakistani startups are on track to raise more money than the previous five years combined. Even more excitingly, a large portion of this capital is coming from international investors from across Asia, the Middle East and even famed investors from Silicon Valley.
The rapid emergence of Pakistan’s technology ecosystem on the international stage has been no accident — it’s the result of a confluence of changing facts on the ground and shifting dynamics in the startup and investing world as a result of the pandemic.
The sudden emergence of Pakistan’s tech ecosystem on the international stage has been driven by three major factors: an improving security situation, quickly growing mobile connectivity, and critical legal changes and deregulation.
As a frontline state and coalition partner in the United States’ invasion of Afghanistan, Pakistan saw fatalities from terrorist violence soar from 295 in 2001 to a peak of over 11,000 in 2009. This climate of instability and violence scared away international business and investors from Pakistan for much of the first two decades of the 21st century.
The startup boom in Pakistan
Record levels of funding are pouring into Pakistan-based startups, boosting hopes for a brighter economic outlook for the world’s fifth-most populous country.
Startups have received $85 million in venture capital (VC) funding so far this year, outpacing the $66 million raised in 2020, and venture firms continue to build their war chest.
“A surge in venture capital investment in 2021 augurs well for innovation in the country,” said HBL COO Sagheer Mufti while talking to The Express Tribune.
“In particular, the focus on fintech and partnerships with banks provide immense opportunity for driving consumer choice and ease, employment, financial inclusion and economic growth. HBL’s investment in Finja was in this spirit,” he added.
Fintech companies have received about a fourth of the total VC investment so far this year. They are finding plenty of overseas investors eager to tap the world’s third-largest unbanked population in what is being called a “fintech revolution”.
In Pakistan, 71% of adults do not have a bank account, one of the highest rates in the world.
Islamabad-based fintech SadaPay raised $7.2 million - reportedly the largest seed round ever in the country - for a personal debit card and e-wallet that still awaits regulatory approval.
Trading app KTrade - dubbed the “Robinhood of Pakistan” - raised $4.5 million after amassing 200,000 users since its launch in 2019.
US-based mega-firm Kleiner Perkins made its first investment in the country - a $17 million round for Tajir, a B2B marketplace based in Lahore that enables small business owners to buy from manufacturers and wholesalers.
Another B2B marketplace, Bazaar, raised $6.5 million in seed capital. Abhi raised $2.1 million for its early wage access platform and is headed to Y-Combinator (along with TAG).
#Pakistani #fintech Dastgyr raises $3.5 million in seed round. #Karachi-based B2B marketplace aims to connect over 2 million underserved #retailers directly to manufacturers, distributors, and wholesalers to fix what is currently a fragmented supply chain https://www.dawn.com/news/1637048
On top of further building the tech stack and expanding the already 280-odd team, “the funds will be deployed towards officially launching new fintech solutions that Dastgyr’s team has already been experimenting with, including ‘Buy Now Pay Later’.
Its fintech products will strive for financial inclusion of the retailers that Dastgyr aims to serve, the majority of whom remain unbanked. "Access to financing options will ultimately enable them to have more purchasing power and expand their businesses to include more categories, improve store capacity, or purchase new equipment like refrigerators and shelves,” the press release states.
Founded in 2020 during the height of Covid-19, Dastgyr is a B2B marketplace app that enables retailers to order wholesale inventory of over 2,000 stock-keeping units (SKUs) with guaranteed next-day delivery and telephonic helpline support. Product categories on the app include fast-moving consumer goods, stationery, mobile accessories, and more. The startup claims to have grown the gross merchandise value 7x between September 2020 and July 2021, while boasting 5,240 daily active users on the app.
SME retailers are the backbone of Pakistan’s economy, representing a combined market of roughly $125 billion dollars, about 30-40 per cent of the country’s GDP. Dastgyr aims to empower and uplift this segment with a near-perfect supply chain and financial inclusion to increase that contribution even further, the press release states.
In addition to SOSV, the round also included ADB Ventures, the Asian Development Bank’s venture capital arm, Seedstars, and Edgebrook Partners, marking their first investments into the Pakistan market. Strategic institutional and angel investors from the MENA region also participated, including Zayani Venture Capital and Tricap investments.
“Pakistan is seeing the same patterns as India five years ago and China 10 years ago: with 75pc of the population owning a smartphone, the first-movers in mobile-first services will be the winners. We are particularly impressed with Dastgyr’s culture of growth: the company’s fintech offering is truly a game-changer for the unbanked and underbanked while ensuring the success of their businesses. We are particularly impressed with the company’s culture of growth and are proud to have the company as part of our portfolio,” said William Bao Bean, General Manager at SOSV and Managing Director of MOX.
Dastgyr’s asset-light model functions on a cross-docking approach: goods are delivered to sorting centres, sorted into individual orders and routes, and are then dispatched to retailers. Currently operational in both Karachi and Lahore after its official launch in September 2020, it has fulfilled hundreds of thousands of orders worth millions of dollars to roughly 30,000 customers.
Dastgyr hasn’t raised an incredibly large dollar amount in this seed round, but its management has been conscientious about ensuring that their deployment of capital remains exceedingly efficient. Its current investment to gross merchandise value (GMV) ratio is $1 into $58.
Dastgyr’s team includes former members of some of the region’s fastest growing startups, including Daraz (Rocket Internet venture acquired by AliBaba), Careem (acquired by Uber), and Airlift (raised Pakistan’s largest Series A at the time led by First Round Capital).
Pakistan’s startups fund raising is going through the roof. Record $101 million in the first half of this year compared with $65.6 million in the whole of 2020
Pakistan’s Keenu Eyes IFC backing as startups raises record funds – Bloomberg
(Bloomberg) -- Wemsol Pvt., known as Keenu, is looking to raise as much as $5 million from the International Finance Corporation that would extend a record fundraising spree by Pakistan’s startups. The Karachi-based company, which makes point-of-sale debit and credit card machines, will use the money to expand its network, Chief...
Pakistan’s Airlift raises $85 million for its quick commerce startup, eyes international expansion
A one-year-old startup that is attempting to build the railroads for e-commerce in Pakistan has just secured a mega round of funding in a major boost to the South Asia nation’s nascent startup ecosystem.
Airlift operates a quick commerce service in eight cities including Lahore, Karachi, and Islamabad in Pakistan. Users can order groceries, fresh produce, other essential items including medicines as well as sports goods from Airlift website or app and have it delivered to them in 30 minutes.
The startup said on Wednesday that it has raised $85 million in its Series B financing round at a valuation of $275 million. Harry Stebbings of 20VC and Josh Buckley of Buckley Ventures co-led the financing round, which is by far the largest for a Pakistani startup.
Sam Altman, former president of Y Combinator, Biz Stone, co-founder of Twitter and Medium, Steve Pagliuca, co-chairman of Bain Capital, Jeffrey Katzenberg, ex-chief executive of Disney and Quibi, and Taavet Hinrikus, founder and chief executive of TransferWise also participated in the new round, which brings the startup’s to-date raise to $110 million.
Stanley Tang, co-founder of DoorDash, Simon Borrero, founder and chief executive of Rappi, Baastian Lehman, founder and chief executive of Postmates, Quiet Capital and Indus Valley Capital also participated in the new round.
Airlift started as a transit business, building a service similar to Uber for air conditioned-buses in Pakistan. The startup quick amassed traction, clocking over 35,000 rides a day. And then the pandemic arrived, disrupting all mobility in the country.
That’s when Usman Gul, the founder and chief executive of Airlift, took the call to pivot to quick commerce, he told TechCrunch in an interview.
“This entire space of quick commerce is on the brink of global transformation. Airlift is in the forefront for leading that transformation in Asia and Africa,” he said. Gul said he plans to expand the service to many international markets in the next few months.
“Airlift’s early traction in Pakistan is a window into the future for how quick commerce will play out in the developing world,” said Altman in a statement.
Airlift today operates over 30 dark stores and processes hundreds of thousands of orders each month.
Gul said the startup has found that setting up these fulfillment centers is the most efficient way to serve the market. “The more middlemen you introduce in this chain between the items and the customers, you begin to compromise the experience,” he said.
Within the first twelve months of launch, Airlift has been able to reduce its cost of blended customer acquisition to $5 and unit costs to $2.50, it said.
Gul said the startup, which today employs over 100 people, plans to expand to more categories including electronics. “The idea is to expand to new categories and build the railroads to move consumer goods from manufacturers to consumers,” said Gul.
He left his job at DoorDash and moved back to Pakistan to start Airlift. “The idea was to create impact at the base of the pyramid and solve problems that would enrich millions of lives — for whom change is desperately needed. That drove my transition frankly,” he said.
“Transparently, when I first met Usman, I knew this was an entrepreneur who was going to create an industry-defining company. Humble, ambitious and strategic, Usman will be one of the great founders of this generation,” said Stebbings in a statement.
#Karachi-based #startup Bazaar completes series A round. #Pakistan's B2B marketplace and digital ledger platform Bazaar has raised $30 million led by #SiliconValley-based early stage VC Defy Partners & #Singapore-based Wavemaker Partners. https://tcrn.ch/3j9oAyj via @techcrunch
A one-year-old startup that is building a business-to-business marketplace for merchants in Pakistan and also helping them digitize their bookkeeping is the latest to secure a mega round in the South Asian market.
Bazaar said on Tuesday it has raised $30 million in a Series A round. The new financing round — the largest Series A in Pakistan — was led by Silicon Valley-based early stage VC Defy Partners and Singapore-based Wavemaker Partners.
Scores of other investors including current and former leaders of Antler, Careem, Endeavor, Gumroad, LinkedIn and Notion as well as new investors Acrew Capital, Japan’s Saison Capital, UAE’s Zayn Capital and B&Y Venture Partners and existing investors Indus Valley Capital, Global Founders Capital, Next Billion Ventures, and Alter Global also participated in the new round.
One way to think about Bazaar is — especially if you have been following the Indian startup ecosystem — that it’s sort of a blend between Udaan and KhataBook. “That’s a good way to describe us,” said Hamza Jawaid, co-founder of Bazaar in an interview. “We had this benefit of hindsight to not just look at India but other emerging markets,” he said.
“We saw lots of synergies between these two. If you look at commerce, you have to acquire every single merchant in every single category differently. Whereas with Khata, merchants in any city and category can download it. So effectively, it’s a great customer acquisition tool for you,” he said on a WhatsApp call, adding that this also provides greater insight into businesses.
Bazaar’s business-to-business marketplace, which provides merchants with the ability to procure inventories at a standard price and choose from a much larger catalog, is currently available in Karachi and Lahore, the nation’s largest cities, while Easy Khata is live across the country.
At stake is a booming $170 billion retail market in the world’s fifth-most populous nation that is yet to see much deployment of technology, said Saad Jangda, Bazaar’s other co-founder. Both of them have known each other since childhood and reconnected in Dubai a few years ago. At the time, Jawaid was at McKinsey & Company while Jangda was working with Careem as a product manager for ride-hailing and food delivery products.
There are about 5 million micro, small, and medium-sized businesses in Pakistan. Like India, even as a significant portion of the population has come online, most merchants remain unconnected, said the founders, who surveyed shops going door-to-door.
“We’ve been investing in FMCG B2B marketplaces across the region since 2017. After working with Hamza and Saad over the past year, we’ve been impressed by their customer-centric approach to product development and the speed of their learning and execution,” said Paul Santos, Managing Partner at Wavemaker Partners, in a statement.
“It’s no surprise that they’ve received glowing reviews from their customers and partners. We’re excited to support Bazaar as they solidify their market leadership and digitize Pakistan’s retail ecosystem,” he added.
The startup said it has amassed over 750,000 merchants since launch last year. And it appears to have solved a problem that many of its South Asian peers are still grappling with: Retention. Bazaar said it has a 90% retention rate.
I asked Jangda if he plans to expand to the ‘dukaan’ category. Several startups in Asia are currently building tools to help merchants set up online presence and accept digital orders. He said the market is currently not ready for a dukaan product just yet. “The B2C market is still developing, so there is not so much demand from the consumer side yet,” he added.
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