South Asia Investor Review

Pakistan is experiencing one of the darkest periods of its history. Political instability is eroding confidence in the nation's future. Declining economic growth and high inflation are hurting the people of all strata of society, particularly the poor whose numbers are rapidly rising. Is there any  hope  left for the country? Is it a case of the "darkest before dawn"? How do investors see it?  Ex PM Imran Khan (R) with President Erdogan Writing in the Time magazine immediately after the recent arrest of former Prime Minister Imran Khan, American investor, author and commentator Zachary Karabell who has invested in Pakistani startups sees rare hope for Pakistan. He sees Pakistan where Turkey was back in 2001-2003, "when a series of elections brought Recep Erdogan to power even as he was repeatedly disqualified by a military that was determined to retain control". Here's an excerpt of his article titled " The Contrarian Case for Pakistan " published ...

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 2021 is turning out to be a banner year for  Pakistani tech startups . At the end of the third quarter of the current year, technology startups have already raised $278 million, twice the funding raised in the previous 5 years combined. In per capita terms, this is still just over $1 per person, a lot less compared to neighboring India where startups attracted  $20 per person .  Venture Capital Investment in Pakistan. Source: Kalsoom Lakhani, i2i Ventures The third quarter (July-Sept 2021) alone has seen startup companies raise $172.6 in 17 deals closed in the three-month period, according to data compiled by Kalsoom Lakhani of i2i ventures. The top deals closed in the third quarter were: 1. Airlift $85 million series B 2. Bazaar $30 million in series A and 3. QisstPay $15 million seed round.  Source: Kalsoom Lakhani, i2i Ventures The lion's share of the ,money ($117 million) went to E-commerce startups followed by Fintech ($35 million) and trucking platform...

Pakistan's technology sector is in the midst of an unprecedented boom. It is being fueled by the country's growing human capital and rising investments in technology startups. A recent  tweet  by Swedish fund manager Mattias Martinsson captured it well when he wrote, "Have followed Pakistan for 15 years. Can't recall any time time when VC activity was anywhere near we've seen in the last few months. Impact of reforms kicking in?".  New laws have made it easier to create startups and offered greater protection to investors.  Digital infrastructure has expanded with over 100 million smartphones and an equal number of broadband subscriptions.  Source: Twitter Pakistan is churning out more than 30,000 information technology graduates every year. Over three-quarters of Pakistanis in the top three metros of Karachi, Lahore and Islamabad are regularly using the internet. Technology startups are on track to attract more than $230 million in venture capital investments...

Pakistan's  digital transformation  is in full swing. Over three-quarters of Pakistanis living in the top three metros of Karachi, Lahore and Islamabad are connected to the Internet, according to a report titled "Journey to Digital" produced by global tech giant Google and Kantara consultants. Researchers found that two-thirds of urban and nearly half of rural Pakistanis regularly use the Internet in the South Asian country of 220 million, the 5th most populous nation in the world. It has a young population with the median age of 22.8 years. 46% of Pakistanis access the Internet everyday.  They use the Internet for education, entertainment, shopping and to search for information. Over Half of All Pakistanis Are Connected to the Internet. Source: Google-Kantar Pakistan has seen a phenomenal growth of 3500% in broadband subscriptions over the last 8 years . Pakistanis now own more than 103 million smartphones with mobile  broadband subscriptions . In a Youtube presenta...

Hundreds of Pakistanis and Pakistani-Americans attended Pakistan Tech Summit 2020 at Draper University in San Mateo, California on February 15, 2020. It was organized by Arzish Azam of Ejad Labs with sponsorships from JS Bank, Netsol, VisionX, Pakistan IT ministry, Pakistan National IT Board and Pakistan Software Exports Board. This event came after a recent report in Germany's  Deutsche Welle  (DW) by Miriam Partington who wrote in a story titled "Pakistan: The next big Asian market for tech startups?" that "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". 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 sup...