Venture Capital in Pakistan: Startup Funding Rises in Q1 2023 After Hitting Lows in Q4 2022
Pakistani startups raised $23.1 million in the first quarter of this year after hitting a low of $15.2 million in the last quarter of 2022, according to Data Darbar. The amount of money raised by Pakistani startups increased in each of the first 3 months of 2023, bringing the total funding amount to $945.4 million across 321 deals since 2015. It started out slow with just $1.5 million raised in January, followed by $8.7 million in February and $12.9 million in March. Most of the money went for seed or pre-seed stage companies.
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| Pakistan Startup Funding Trend. Source: Data Darbar |
Six of the eight deals in Q1/2023 involved seed stage. The pre-seed and accelerator rounds were never disclosed and aren’t, therefore, reflected in the numbers. The lion's share of the investments this year went to logistics ($10.1 million) and fintech ($9 million) startups with the two sectors drawing about $10 million each. Education technology (Edtech) startup Maqsad raised $2.8 million.
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| Deal Flow in Q1/2023. Source: I2I Ventures |
In terms of gender, a little over 70% of the money raised in Q1/2023 went to male-founded startups and about 30% to female-founded companies. In Q1 2022, international angels accounted only for 9% (8 investors out of 89) of total investors across disclosed deals. In Q1 2023 they made up 26% (7 investors out of 27), according to Shehryar Hydri, a managing partner at Deosai Ventures. Here are the details of the Q1/2023 deals:
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| Pakistan Deal Flow. Source: Data Darbar |
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Comments
Huge decrease from a healthy 172. 8 million USD in the first quarter of 2022 to 23.1 million USD in the first qaurter of 2023, a meagre increase after a 9 fold decrease means nothing.
Venture money is risk capital. VCs generally look at the long term prospects for return on their investments. They know they'll come out ahead even if just one of 10 investments succeeds in producing blockbuster returns.
Please read this:
"The Odds of Succeeding for a Startup Funded by a Top VC:
Since there are 4,000 companies looking for funding, that translates to odds of 5.0%. Of the 200 that are funded by top VCs, 15 of those startups will generate nearly all of the economic return"
https://corporatefinanceinstitute.com/resources/valuation/how-vcs-look-at-startups-and-founders/
https://www.zawya.com/en/wealth/wealth-management/eib-backs-150mln-middle-east-venture-capital-initiative-to-accelerate-digital-transformation-create-8-000-jobs-r60kcgxe
The new venture capital fund launched by Middle East Venture Partners (MEVP) will increase targeted equity investment in high-growth e-commerce, health and education technology companies across the Middle East and Pakistan
The European Investment Bank (EIB), through its new dedicated development finance arm EIB Global, will provide $27m participation in the $150m Middle East Venture Fund IV.
The new venture capital fund launched by Middle East Venture Partners (MEVP) will increase targeted equity investment in high-growth e-commerce, health and education technology companies across the Middle East and Pakistan.
“The European Investment Bank has a unique global experience of ensuring that entrepreneurs and growth companies access finance. We welcome EIB Global’s $27m anchor investment in the $150m Middle East Venture Fund IV that will ensure that growth companies across the Middle East can grow, harness new business opportunities and create thousands of skilled jobs,” said Walid Hanna, Founder and co-CEO of MEVP.
“The European Investment Bank recognises the unique role of venture capital and works with leading venture capital partners to unlock high-impact targeted investment that boosts economic growth and ensures that entrepreneurs benefit from growth and innovation best practices. EIB Global is pleased to be the first anchor investor in the Middle East Venture Fund IV. New equity investment backed by the fund will enable local companies to grow, build on new opportunities for digital commerce, education and healthcare services highlighted by the COVID-19 pandemic and deliver thousands of high-skilled jobs across the region.” said Gelsomina Vigliotti, Vice President of the EIB.
“The European Union is committed to private sector development in Egypt and across the region. This new cooperation between EIB Global and Middle East Venture Partners will accelerate skilled job creation and increase the role of technology-driven business in the years ahead,” said Ambassador Christian Berger, Head of the European Union Delegation to Egypt.
The $27m European Investment Bank backing for the $150m Middle East Venture Fund IV represents the largest-ever venture capital engagement by the EIB in the Middle East.
Investing in local growth companies to strengthen regional economic resilience
Venture capital investment backed by the new fund will enable local companies across the Middle East and Pakistan to harness digital business opportunities unlocked by the COVID-19 pandemic and is expected to support the creation of more than 8,000 skilled jobs.
Local innovation companies will benefit from 12 years of successful technical and sector investment and hands-on guidance shared by Middle East Venture Partners (MEVP) and the new initiative will scale up long-term investment in early and growth-stage companies across the region.
Enabling Middle Eastern consumers to benefit from global digital trends
Equity investment backed in the new fund will accelerate innovation and expansion of digital services across the region to reflect global lifestyle changes, including increased access to online health services, education, entertainment and services.
Over the last 12 years Middle East Venture Partners has successfully backed more than 60 technology start-up companies across the Middle East. These include Anghami, the first legal music streaming platform and digital distribution company in the Arab world that has listed on NASDAQ, grocery and food delivery firms Nana and Toters.
https://pakobserver.net/daftarkhwan-partners-with-paf-to-launch-daftarkhwan-alpha/
Daftarkhwan is launching its newest coworking space- Alpha, in the National Aerospace Science and Technology Park (NASTP), in partnership with Aviation City Pakistan, a project spearheaded by the Pakistan Air Force.
Alpha opened its doors this December, 2022- Situated in the Old Islamabad International Airport, Alpha provides a unique chance for enterprising tech companies to engage with the innovation ecosystem focused on Aerospace, IT and Cyber Tech domains.
Adjacent to Alpha, NASTP also boasts Pakistan’s very first National Incubation Centre with an aerospace vertical and a specialized focus on deep tech, funded by Ignite, a subsidiary of the Ministry of Information Technology. Daftarkhwan Alpha has a 450+ member capacity and brings you Daftarkhwan’s signature design and vibrant workspaces including amenities such as military-grade security, secure parking, a 10,000 sq. ft. cafe and a podcast room. Furthermore an on-site daycare facility, banking centers, ATMs and one-window legal and regulatory support facilities are planned to launch this January.
https://www.dawn.com/news/1873376
KARACHI: Despite internet disruptions and firewall issues, Pakistan’s IT exports rose 35 per cent to $1.21bn during July-October 2024-25.
Nasheed Malik of Topline Securities said exports have risen due to IT export companies’ growing client base globally, especially in the Gulf Cooperation Council (GCC) region, relaxation in the permissible retention limit increasing it from 35pc to 50pc in the Exporters’ Specialised Foreign Currency Accounts, and exchange rate stability encouraged IT exporters to bring a higher portion of profits back to Pakistan.
IT exports surged 39pc year-on-year and 13pc month-on-month to $330m in October.
These monthly IT exports in October 2024 are higher than last 12-month average of $287mn. This is the 13th consecutive month of YoY IT export growth, starting from October 2023, he said.
He said the MoM increase in IT exports is due to a higher number of working days in October (23) compared to September (20). Export proceeds per day were recorded at $14.3mn for October 2024 versus $14.6mn in September 2024.
Pakistani IT companies are actively engaged with global clients. He added that leading IT companies recently attended Oslo Innovation Week 2024 and the Pak-US Tech Investment Conference.
According to a Pakistan Software Houses Association (P@SHA) survey, 62pc of IT companies maintain specialised foreign currency accounts.
Nasheed said a major development in FY25 was SBP adding a new category of Equity Investment Abroad (EIA), specifically for export-oriented IT companies. IT exporters can now acquire interest (shareholding) in entities abroad utilising up to 50pc proceeds from specialised foreign currency accounts.
https://www.dawn.com/news/1878597
LAHORE: Gobi Partners, a leading pan-Asian venture capital firm, has officially announced the $50m Techxila Fund II alongside the signing of a memorandum of understanding (MoU) with the Bank of Punjab (BoP).
This strategic partnership aims to foster entrepreneurship and strengthen economic cooperation in Pakistan. The announcement has been made during the Pakistan Investment Conference in Shanghai, part of Punjab Chief Minister Maryam Nawaz’s visit to China.
The Techxila Fund II aims to empower startups in Pakistan, with a focus on high potential sectors such as fintech, e-commerce, logistics and supply chain, health tech, and SaaS. This initiative supports under-served entrepreneurs, encourages innovation, and drives sustainable growth in emerging markets.
The plan to launch $50m Techxila Fund II builds on the success of Gobi’s first Pakistan-focused venture capital fund (Techxila Fund I), which has invested in 22 startups to date. These portfolio companies have collectively impacted 3.2 million low-income households, generated a total revenue of $245m in 2023, and issued loans worth $54m during the same year.
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Shark Tank Pakistan sets world record with largest deal in history - Pakistan - Aaj English TV
https://english.aaj.tv/news/330389926/shark-tank-pakistan-sets-world-record-with-largest-deal-in-history
Shark Tank Pakistan has made history by facilitating a record-breaking investment deal worth Rs150 crore. The recipient of this substantial funding is SARAAF, a global trading company that has captured the attention of investors with its innovative business model and ambitious goals.
SARAAF secured Rs80 crore for a 20% equity stake, along with Rs70 crore in exchange for a 3% royalty.
This unprecedented deal not only reflects the confidence investors have in SARAAF’s potential but also highlights Pakistan’s growing prominence in the global entrepreneurial landscape.
With over 25 years of experience, SARAAF specializes in connecting Central Asian suppliers with international markets, particularly in exporting premium Onyx, Cotton, and minerals.
The company’s vision of becoming Asia’s largest B2B sourcing platform has received a significant boost from this investment.
The panel of investors, known as “sharks,” includes notable figures such as Faisal Aftab, Rabeel Warraich, Romanna Dada, Junaid Iqbal, and Usman Bashir, all of whom bring diverse expertise to support entrepreneurs in scaling their ventures.
This historic deal marks a pivotal moment for Pakistani startups, demonstrating the potential for innovation and growth within the country’s entrepreneurial ecosystem.
As Shark Tank Pakistan continues to spotlight transformative ideas and businesses, it paves the way for future success stories in the region.