South Asia Investor Review

Islamabad is establishing the Pakistan Crypto Council (PCC) to look into regulating and legalizing the use of cryptocurrencies, according to media reports. Cryptocurrency refers to digital currencies that can be used to make purchases or investments using encryption algorithms. US President Donald Trump's endorsement of cryptocurrencies and creation of a " bitcoin reserve " has boosted investors’ confidence in it.   The State Bank of Pakistan, the nation's central bank, has not authorized any individuals or organizations to carry out the sale, purchase, exchange, and investment of  digital currencies , coins, and tokens. But the country has not officially banned the use of cryptocurrencies either, allowing about 20 million users to engage in crypto transactions. “We are coming on number three and four globally and there are many blockchain technology opportunities in Pakistan", said Bilal Saqib, the chair of the PCC.   Top Countries Ranked By Global Crypto ...

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.  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....

The year 2022 was a very rough year for Pakistan. The nation was hit by devastating floods that badly affected tens of millions of people. Macroeconomic indicators took a nose dive as political instability reached new heights. In the middle of such bad news, Pakistan saw installation of thousands of kilometers of new  fiber optic  cable, inauguration of a new high bandwidth  PEACE  submarine cable connecting Karachi with Africa and Europe, and millions of new broadband subscriptions. Broadband penetration among 140 million (59% of 236 million population) Pakistanis in  the15-64 years age group reached almost 90%. This new digital infrastructure helped grow technology adoption in the country.  Internet and Mobile Phone Banking Growth in 2021-22. Source: State Bank of Pakistan Fintech:  Mobile phone banking and internet banking grew by 141.1% to Rs. 11.9 trillion while Internet banking jumped 81.1% to reach Rs10.2 trillion.  E-commerce tra...

Technology startups in Pakistan received record $249 million funding during January-June 2022, up a whopping 171% from the same period last year. A total of 35 deals closed, up 6% from the first half of 2021. July 2022 saw a maiden investment from Sequoia Capital which is considered among the top venture capital firms headquartered in Silicon Valley, California.  Last year was a banner year for Pakistani startups with $310 million venture capital investments.  Venture Capital Investments in MENAPT Region 1H/22. Source: Magnitt Sequoia Capital and Kleiner Perkins co-led $17.6 million seed round in Islamabad-based fintech startup DBank this month. DBank has been founded by Tania Aidrus and Khurram Jamali, both of whom have studied the challenges the unbanked population faces closely at their previous stint at Google, where they worked on payments rails for the company’s Next Billion Users initiative, according to Tech Crunch .  Soaring VC Investments in Pakistani Startups...

Pakistan's chief central banker Dr. Reza Baqir's 3-year term saw a broad expansion and modernization of the nation's financial services industry. The impact of Baqir's policies can be seen in multiple sectors including agriculture, housing, manufacturing, exports, financial digitization and record-high  investments in technology startups . Supported by Dr. Baqir's accommodative monetary policy during the  COVID19 pandemic , Pakistan poverty headcount, as measured at the lower-middle-income class line of US$3.20 PPP 2011 per day, declined from 37% in FY2020 to 34% in FY2021, according to the  World Bank's Pakistan Development Update 2022  released this month. The report said Pakistan's real GDP shrank by 1% in FY20, followed by 5.6% growth in FY21.  Pakistan’s economy created 5.5 million jobs during the past three years –on an average 1.84 million jobs a year, which is far higher than yearly average of creation of new jobs during the 2008-18 decade, according...

Seed Labs, a Pakistani  financial technology  startup based in Karachi, has raised $6.5 million in seed funding to launch a derivatives trading platform. It was founded about a year ago by four young men in their mid-20s: Yameen Malik, Rabeel Jawaid, Zabi Mohebzada, and Ahmad Jawaid, according to Bloomberg reporter  Faseeh Mangi .  Seed Labs Founders Seed Labs's first app is designed for decentralized trading of derivatives on commodities, cryptocurrencies and stocks using blockchain technology.  Seed Labs  is backed by venture money from investors in 9 different countries, including institutional liquidity providers, Alameda Research, Kronos Research, LedgerPrime and others that collectively trade over $28 billions a day, the company said in a statement. The initial platform planned to launched later this year will primarily be a Perpetual Swap Trading Exchange. It will allow any trade pair from any asset class to be offered — from commodities, equities, d...

State Bank of Pakistan is studying the issuance of central bank digital currency (CBDC), according to the country's central bank chief Dr. Reza Baqir. Recognizing Pakistan's growth potential, the San Francisco-based Stripe, valued at $95 billion, has recently invested in Safepay, a fintech startup in Karachi, Pakistan. Dr. Baqir spoke of both of these developments in an  interview  with CNN's Julia Chatterly.  Central Bank Digital Currency (CBDC): China's central bank is testing its  digital currency  in several major Chinese cities. The chairman of the US Federal Reserve has recently confirmed that the US Central Bank is working on digital dollar. The State Bank of Pakistan announced in 2019 that it was developing a digital currency. It seems that the popularity of Bitcoin has triggered serious worries of loss of control of the official financial systems among the central bankers around the world. China's substantial lead in digital currency could put it far ah...

Pakistani-American serial entrepreneur and NED alumnus Dr. Safwan Shah has raised $100 million in Series C funding for his  financial technology  (fintech) startup PayActiv Inc. based in  Silicon Valley, California . The round was led by  Eldridge Wealth Ltd , a venture capital firm headquartered in Greenwich, Connecticut. PayActiv currently has a 200 member development team in Islamabad, Pakistan. Dr. Safwan Shah, CEO PayActiv Inc. PayActiv allows employees to draw accumulated pay or wages in real-time before the end of the pay period. Funds are moved to the employees bank account or card instantly. Unbanked employee can even get cash through a Walmart partnership. Employees can pay bills, call Uber, start savings, get financial coaching and much more. This fintech startup offers a low-cost alternative to Pay Day lenders and other financial institutions that charge employees exorbitant fees and high interest rates for loans against future paychecks. Safwan Sha...

Two Pakistani technology startups have recently won recognition in international competitions.  Sabaq, an EdTech startup, has been shortlisted for Siemens Foundation’s global award. Another Pakistani startup Tez Financial Services in  FinTech  space has been selected as one of the winners of $100,000 Prize at 2019’s Inclusive Fintech 50.  Growing availability of smartphones, tablets and  mobile broadband  is enabling Pakistani technology entrepreneurs to offer technology-based solutions in multiple fields including education and financial services. These young ambitious entrepreneurs are beginning to attract venture investments from overseas. Tez Financial Services has received $1.1 million seed funding led by Omidyar Network. Sabaq: Karachi-based Pakistani education technology (EdTech) startup SABAQ has been shortlisted for Siemens Foundation’s global award. The award recognizes and endorses low-cost technologies providing vital services and solutions...