2021: A Banner Year For Pakistani Tech Startup Investments

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, i2...

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 platforms ($13.6 million). Male-founded startups got 46.5% while female-founded companies received 1.7% with the rest of the money going to startups whose founding teams include both male and female founders. 

Venture Funding in Pakistan Lowest Among Most Populous Nations. Sou...


In per capita terms, startup investment in Pakistan is still just over $1 per person, a lot less compared to neighboring India where startups attracted $20 per person. As expected, the startups in the United States dwarfed all other countries in both per capita terms ($808) and in total size ($269 billion) of venture capital investments. 

 
Largest Global Market For Venture Funding. Source: Crunchbase

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. 

With expanding Internet infrastructure and rapidly growing user base, Pakistan is now seeing robust growth in venture money pouring into technology startups. Pakistani startups have already attracted more than $278 million in funding in 2021, more funds than all the money raised by Pakistani startups in their entire history. A recent example is Kleiner Perkins, a top Silicon Valley venture capital investment firm, that led a series A round of $17 million investment into Pakistani start-up Tajir. The startup operates an online marketplace for small store merchants in Pakistan. The announcement came via a tweet by Mamoon Hamid, a Pakistani-American Managing Partner at Kleiner Perkins who led the investment. Last year, Tajir raised a $1.8 million seed round.  The company's revenue has increased by 10x since its seed round. 
Pakistan Technology Exports Trend 2007-2021. Source: Arif Habib

Pakistan's technology exports are experiencing rapid growth in double digits over the last decade. Total technology exports jumped 47% to $2.1 billion in fiscal year 2020-21. 
Pakistan University Enrollment Growth. Source: Encyclopedia of High...
The foundation for Pakistan's digital transformation was laid with the higher education reform and telecommunications deregulation and investments starting in the year 2001 on President Musharraf's watch. With a huge increase in higher education funding, Higher Education Commission Chairman Dr. Ata ur Rehman succeeded in establishing 51 new universities during 2002-2008. As a result, university enrollment (which had reached only 275,000  from 1947 to 2003) soared to about 800,000 in 2008. This helped build a significant human capital that drove the IT revolution in Pakistan.      
Please watch the following video presentation for more details on Pakistan's technology startup ecosystem:
http://www.youtube.com/embed/ePApXOM3vkQ"; title="YouTube video player" width="560"></iframe>" height="315" src="https://img1.blogblog.com/img/video_object.png" width="560" style="cursor: move; background-color: #b2b2b2;" /> 
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Comment by Riaz Haq on February 24, 2022 at 10:39am

NayaPay secures $13 million, largest seed funding in South Asia for its messaging and payment app – TechCrunch

https://techcrunch.com/2022/02/23/nayapay-secures-13-million-larges...


Pakistan-based fintech platform, NayaPay, has raised $13 million in a seed round to rollout its multi-service messaging and payment app, and to build payment acceptance and financial management tools for businesses in the South Asian country.

NayaPay CEO and founder Danish Lakhani told TechCrunch that the super-app allows people residing in Pakistan to send and receive money, split bills and make payments conveniently from smartphones. They have also issued virtual and physical Visa cards linked to the NayaPay wallet further allowing its users to make POS payments, and businesses to accept payments.

Lakhani said that NayaPay is leading a digital payment revolution in Pakistan, a cash-heavy economy, where only 1% of $4 trillion payments are done electronically. This is in a country of 220 million people. But NayaPay’s goal is even bigger; to bank millions of adults that remain unbanked, with women affected the most — only one in three women holds a bank account. The youth and freelance communities in Pakistan are also majorly locked out by traditional banks. About 100 million people are unbanked in Pakistan, according to this World Bank report.


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Pakistan’s NayaPay Pvt. has raised $13 million in early stage funding as it seeks to capture millions of users in one of the world’s largest under banked nations.

The Karachi-based startup’s seed round was led by Zayn Capital, MSA Novo and Silicon Valley early-stage investor Graph Ventures, Chief Executive Officer Danish Lakhani said in an interview. NayaPay became the first startup to offer financial services after receiving a license from the State Bank of Pakistan in August. The fintech’s chat-led payments app started by targeting students and freelancers.

https://www.bloomberg.com/news/articles/2022-02-24/startup-nayapay-...

Comment by Riaz Haq on February 24, 2022 at 10:39am

NayaPay secures $13 million, largest seed funding in South Asia for its messaging and payment app – TechCrunch

https://techcrunch.com/2022/02/23/nayapay-secures-13-million-larges...


Pakistan-based fintech platform, NayaPay, has raised $13 million in a seed round to rollout its multi-service messaging and payment app, and to build payment acceptance and financial management tools for businesses in the South Asian country.

NayaPay CEO and founder Danish Lakhani told TechCrunch that the super-app allows people residing in Pakistan to send and receive money, split bills and make payments conveniently from smartphones. They have also issued virtual and physical Visa cards linked to the NayaPay wallet further allowing its users to make POS payments, and businesses to accept payments.

Lakhani said that NayaPay is leading a digital payment revolution in Pakistan, a cash-heavy economy, where only 1% of $4 trillion payments are done electronically. This is in a country of 220 million people. But NayaPay’s goal is even bigger; to bank millions of adults that remain unbanked, with women affected the most — only one in three women holds a bank account. The youth and freelance communities in Pakistan are also majorly locked out by traditional banks. About 100 million people are unbanked in Pakistan, according to this World Bank report.


--------------

Pakistan’s NayaPay Pvt. has raised $13 million in early stage funding as it seeks to capture millions of users in one of the world’s largest under banked nations.

The Karachi-based startup’s seed round was led by Zayn Capital, MSA Novo and Silicon Valley early-stage investor Graph Ventures, Chief Executive Officer Danish Lakhani said in an interview. NayaPay became the first startup to offer financial services after receiving a license from the State Bank of Pakistan in August. The fintech’s chat-led payments app started by targeting students and freelancers.

https://www.bloomberg.com/news/articles/2022-02-24/startup-nayapay-...

Comment by Riaz Haq on March 15, 2022 at 7:50am

#Pakistani #Tech #Startup Bazaar raises $70 million from Tiger Global and Dragoneer to digitize #Pakistan's #retail. It’s a $170 billion market that comprises 5 million small and medium-sized businesses and enterprises across the country. https://tcrn.ch/3i6bfoX via @techcrunch

Dragoneer Investment Group and Tiger Global are backing Bazaar, a startup that is attempting to digitize Pakistan’s retail with e-commerce, fintech and last-mile supply chain solutions, they said today, joining a growing list of high-profile investors making large bets in the South Asian market.

The two investors are leading Bazaar’s $70 million Series B funding. Existing backers including Indus Valley Capital, Defy Partners, Acrew Capital, Wavemaker Partners, B&Y Venture Partners and Zayn Capital also participated in the new round, which brings one-and-a-half-year-old startup’s all-time raise to over $100 million.

Bazaar is attempting to build what it calls an “operating system for traditional retail” in Pakistan. It’s a $170 billion market that comprises 5 million small and medium-sized businesses and enterprises across the country.

But these merchants are largely unbanked and offline today. Banks and other formal financial institutions don’t extend credit to these merchants because they don’t have a credit score. This gap has forced many of these shop operators to take loans from shark loan providers.

For those following the South Asia coverage, this challenge will sound very familiar.

Business-to-business e-commerce Udaan, logistics startup ElasticRun, and Dukaan, a startup that is helping shops go online, as well as scores of startups and giants including Reliance and Amazon, are solving a similar problem in India.

Bazaar is combining many of these offerings.

The startup’s B2B e-commerce marketplace, thanks to its network of a dozen fulfillment facilities, is helping merchants in 21 towns and cities across Pakistan procure items to sell.

These merchants also use the startup’s Easy Khata app, which helps them maintain bookkeeping. Bazaar’s financial arm, called Bazaar Credit, is offering these merchants, many of whom operate neighborhood stores, with short-term working capital financing.

Piecing together many of its services makes sense for a startup like Bazaar in Pakistan because it enables the startup to offer a more comprehensive set of values to a merchant, and Easy Khata is helping the firm win customers, Saad Jangda, co-founder of Bazaar, said in an interview with TechCrunch.

In August, “we had just started piloting our credit product and at the time we had partnered with a third-party,” he said. “Now, our credit product is developed completely in-house and is digitally enabled that connects to our last mile network. Everything from order generation to credit disbursement to cash collection is done completely by Bazaar,” he said.

“We acquire customers through Easy Khata, funnel them through commerce, and once we have enough data on the merchants, we start building a credit product atop of it,” he said, adding that the startup has issued thousands of loans in recent months.

Easy Khata has amassed over 2.4 million registered businesses across 500 cities in Pakistan. “But more importantly, Easy Khata is serving as both a core system of records and also helping us launch in new cities,” he said.

Merchants have recorded over $10 billion in annualized bookkeeping transaction value on Easy Khata, the startup said. “Our expansion within Pakistan in the last few months is a testament to how crucial Easy Khata is for us,” Jangda said.

The startup’s last-mile network, which was operational in just two cities in August of last year, is now adding three to four cities each month.

Comment by Riaz Haq on March 16, 2022 at 10:51am

Pakistan’s startups take centre stage

https://www.aljazeera.com/economy/2022/3/16/pakistans-startups-take...

#Pakistan’s #startups take centre stage. In 2021, 83 startups raised $350m. And so far this year, the sector has already raised $136m. #technology #economy #entrepreneurship #venture #investment #venturecapital #vc | Infographic | Al Jazeera


Kalsoom Lakhani, the founder of Invest2Innovate and general partner at its sister firm i2iVentures, an early-stage investor, says 2021 was a record-breaking year and says people will question if the momentum is sustainable.

“What’s really important is for the ecosystem to also be building the health overall,” she told Al Jazeera, referring to startups and investors preparing for things such as how to grow the talent pipeline to meet the needs of these fledgling businesses, or how to improve the policy and regulatory environment to help them grow. “So while this momentum is exciting, there needs to be strengthening of these pillars in order to create sustainability and longevity and the continuing growth of the startup ecosystem,” she said.

COVID-19 was a catalyst for the startup landscape in Pakistan, which saw investments rise from $65m in 2020 to $350m in 2021. Extended lockdowns and quarantines provided entrepreneurs the opportunity to create digital products with a human impact.

With more than 250 startups since 2015, an increasing internet penetration driven by low-cost smartphones – there were 184 million cellphone users at the end of 2021 – and affordable data, Pakistan is one of the final few untapped markets for startups and investors to offer internet-based services similar to those in other parts of the world. These services include ride-hailing, and food and grocery delivery, among others.

Faisal Aftab, CEO of Zayn Capital, a venture capital fund and one of the primary investors in the Pakistani startup landscape, estimates that Pakistani startups will be worth $50bn by 2030.

“Today the number sits at $1.8bn, if we count Daraz and FoodPanda, which people should, then we’re sitting at $3bn to $4bn. We’re looking at an easy 10 times growth here,” says Aftab. Daraz, an e-commerce platform, was founded in Pakistan and now offers its services in several countries, and Foodpanda is an international food and grocery delivery business.

“It’s profound what is happening,” says Aftab, referring to the many first-time investors that have mushroomed in the country to pour money into these startups in hopes of handsome returns down the line. Many of these startups straddle parts of the informal economy and will help bring that under the formal economy and the tax net for the first time, he adds.

The five largest disclosed startup funding rounds in 2021 were: Airlift ($85m), Bazaar ($30m), Tajir ($17m), Qisstpay ($15m), and TAG ($12m).

Invest2Innovate’s Pakistan Startup Ecosystem Report 2021 highlights the need for more attention directed towards startups to create a supportive ecosystem in which businesses can flourish.

Opportunities for growth, however, come with the challenge of finding the right human and capital resources to allow the building of infrastructure that can absorb the two million new people entering the workforce every year, the report says.

Infrastructure
Recent reforms, including a legal framework for Electronic Money Institutions set up by the country’s central bank, the State Bank of Pakistan, have allowed new businesses to be set up and have led to an increase in investments. Another policy that led to investor cheer was the Digital Banking Policy, which was finalised in January and allows digital banks to not just be e-wallets, but also provide credit, investments, and other products.

The Securities and Exchange Commission of Pakistan, which oversees non-banking companies, has established legal definitions for startups, and the federal government has helped set up Special Technology Zones.

Comment by Riaz Haq on March 25, 2022 at 8:13am

#Pakistani B2B #ecommerce #startup firm raises $22m in series A #investment round led by Sary, a B2B marketplace that focuses on the Middle East, North Africa, and Pakistan (MENAP) markets. Sarmayacar and Systems Limited also participated in the round. https://www.techinasia.com/pakistani-b2b-ecommerce-firm-raises-22m-...

Jugnu said that more than one million kiryana (mom and pop) stores in Pakistan lack access to convenient inventory procurement, and that over two-thirds of retail stores don’t get serviced directly by any organized distribution channel.

The startup aims to resolve these challenges by connecting retail stores and SMEs directly to manufacturers through its app.

Since its establishment, Jugnu has onboarded more than 30,000 kiryana stores across Lahore, Rawalpindi, and Islamabad, and it is currently expanding into other cities. It has also started offering buy now, pay later services for kiryana owners.

Jugnu was founded in 2019 by Sharoon Saleem, Yasir Memon, Syed Khurram Haider, and Ahsan Muhammad Khan.

In addition to the investment, Sary has also entered into a partnership with Jugnu.

“The strategic investment and alliance with Sary paves way for consolidation in the B2B space in MENAP, providing both companies with the ability to leverage diverse expertise and talent transfers across the region,” the companies said in a joint statement

Comment by Riaz Haq on March 25, 2022 at 1:02pm

Colabs gets $3 million seed to expand across #Pakistan, launch back-office SaaS solution. #Startup hosts 100+ firms with 1,200 people at 3 locations in #Lahore. It plans to open 100,000 seats nationwide in next 5 years, including #Islamabad & #Karachi.

https://techcrunch.com/2022/03/24/colabs-gets-3-million-seed-to-exp...

Lahore-based coworking space startup Colabs is set to roll out a SaaS product to enable businesses to meet back-office needs including company registration, talent sourcing and management, payroll processing, and legal and tax compliance. It also plans to hire more staff, which will include increasing the product team for its SaaS workspace business service that is emerging from the beta phase.

The new plans come after the startup secured $3 million in seed funding in a round led by Indus Valley Capital, Zayn Capital and Fatima Gobi Ventures, the first time that the three Pakistan-focused VCs are investing in a startup together.

“We realized that people setting up operations in Pakistan need other services; they need help to set up companies, process payrolls and to ensure tax compliance,” Colabs co-founder and CEO Omar Shah, a former investment banker, told TechCrunch. “That is why we introduced our business solutions.”

“Our plan is to get to 600 paying customers in the next 12 months, and from there we will roll this product out to the market,” said Shah.

Shah and his twin brother Ali Shah co-founded Colabs as a coworking outfit for entrepreneurs launching businesses and multinationals setting up hubs in Pakistan. This was in 2019, when they were inspired by the flourishing startup ecosystem and advancing technology space in the country.

Prior to launching Colabs, Shah worked in the private equity sector for about eight years, with his last assignment at Abraaj Capital, before he collaborated with his brother, who operates long-established family-run real estate and development firm SABCON, to launch the startup. The family-owned real estate firm develops Colabs spaces.

Planned national expansion
The startup hosts over 100 companies with a combined 1,200 people across its three locations in Lahore. It plans to open 100,000 seats across the country over the next five years in a nationwide expansion to major cities, including Islamabad and Karachi.

“The idea for Colabs is to create spaces across the country, where we can service freelancers, startups, SMEs and large enterprises. It is a community for anyone who wants to start up their career or a company or wants to enter the country. Colabs will support them in their journey. We want to become that gateway into Pakistan,” said Shah.

“Our growth plan is very ambitious. But we see a demand for what we are offering because by the time we open our new spaces, they are already sold out. And this is because there are so many companies that are entering the country. And so many startups here that are raising capital and want to be inside spaces like ours, as opposed to investing in their own campus,” he said.


The rise of flexible workplaces has also grown amid the pandemic as more companies reduce the overhead associated with operating exclusive physical locations. Coworking spaces like Colabs also host events, which are important for networking, learning, or meeting potential investors or clients.

According to Shah, the rising interest in Pakistan by major investors like Tiger Global means that the growth of the country’s startup ecosystem is set to continue, increasing the demand for spaces like Colabs. Investments into Pakistan rose to $350 million in 2021 amid a fintech and e-commerce boom.

Colabs’ new funding brings the total amount raised by the startup to $4 million, including capital from an unannounced pre-seed round.

Comment by Riaz Haq on April 14, 2022 at 4:20pm

Pakistan’s Zaraye, a B2B supplies platform, raises $2.1M from Tiger Global and Zayn

https://techcrunch.com/2022/04/14/pakistans-zaraye-a-b2b-supplies-p...

Obtaining raw materials is a major pain point for Pakistan’s manufacturers, who need to have multiple phone calls with suppliers while waiting for rates, say the founders of Zaraye.

The startup, which runs a platform that connects manufacturers directly with suppliers, announced today it has raised $2.1 million in pre-seed funding from Tiger Global and Zayn Capital. This marks the first time Tiger Global has made a pre-seed investment in a Pakistani startup. Other investors include +92 Ventures, Alan Rutledge, Jack Rizvi and current and former employees of Careem.

The startup was founded in late 2021 by Taha Iqbal Teli, Hashair Junair Ahmedani and Ahshan Ali Khan, who went to school together. Zaraye provides manufacturing businesses with working capital, in addition to raw materials. It currently serves the textile and construction industries, with more than 300 partners and suppliers in about 20 cities.

Teli and Khan worked together at Careem, Swvl and other companies, while Ahmedani’s family worked in the conventional manufacturing business. “The manufacturing sector in Pakistan has been operating with very marginal innovations [for] decades, [with] WhatsApp being the only notable change in how processes have evolved. Zaraye intends to change that,” said Khan.

Materials on the platform include cotton yarn, which CEO Khan told TechCrunch is the single biggest raw material used for creating end-use fabric in the textile industry. For the construction industry, Zaraye provides cement, sand, gravel and crushed stone. The company is focused on smaller manufacturers, whose annualized revenue varies between $250,000 up to $2 million USD.

Typically, manufacturers connect with intermediaries or directly with suppliers and wait for them to furnish rates. Zaraye, on the other hand, gives more autonomy to manufacturers by allowing them to post their requirements and wait for quotes from suppliers. For suppliers, this means they can see consolidated demand from Zaraye’s network of buyers.


Based on data aggregated by Zaraye from the Pakistan Credit Rating Agency, Pakistan’s industrial manufacturing sector contributes to 20% of the country’s economy with $35 billion in raw materials annually, with raw materials contributing 60% to 65% of total costs for manufacturers, who need to deal with small net margins.

Comment by Riaz Haq on April 15, 2022 at 4:32pm

CPEC enters second phase of improving people’s livelihoods.
Smart Classrooms, CPEC project, is growing vigorously in 50 universities across Pakistan.
It is learnt that total of 100 smart classrooms will be built at 50 public universities in 49 cities.

https://www.geo.tv/latest/411742-muslims-boys-arrested

Smart Classrooms, a project under China-Pakistan Economic Corridor (CPEC), is growing vigorously in 50 universities across Pakistan, which may inject new life into Pakistan’s education system in the near future.

According to Chen Chun, project manager from China Railway Signal and Communication Shanghai Engineering Bureau Group Co Ltd, in the smart classrooms, teaching can be realised both offline and online at the same time, overstepping the boundaries of time and space, and interaction between teachers and students will be much more enhanced.

“Moreover, through advanced information and communication technology from China, an intelligent system of data sharing and assessment will be established (in Pakistan),” he added.

“The smart classrooms will improve the accessibility of students from one location to the best teachers located at another place,” Umar Idrees, Pakistani site engineer of the Smart Classroom project told CEN.

It is learnt that a total of 100 smart classrooms will be built in 50 public universities in 49 cities from Hunza in the northernmost to Karachi in the far south, covering all the provinces and regions of Pakistan, which means the state-of-the-art educational resources will be better utilised and distributed over the whole country. It is indeed inspiring for students who currently lack high-quality educational resources in the country.

Chen Chun said the construction of the Smart Classroom project started in September, 2021. Due to the coronavirus pandemic, the team had risen to many challenges in equipment and material imports, customs clearance and construction, etc.

“Now all the equipment and materials of the project have arrived at our warehouse in Pakistan. We’re striving to complete the whole project by November,” he added.

As CPEC entered the second phase of improving people’s livelihoods, education has become one of the key areas to develop to help Pakistan alleviate poverty and let more Pakistani people live a better life.

“The Smart Classroom project will benefit the university students in Pakistan, who are the pillar of the state in the future. It will greatly promote the development of higher education in Pakistan, supporting Pakistan to evolve into a knowledge-based economy,” Chen Chun concluded.

Comment by Riaz Haq on April 18, 2022 at 8:46pm



Pakistani financial platform Abhi Pvt. raised funds at a $90 million valuation within a year after introducing its business, the latest startup to benefit from investors’ increasing interest in the South Asian country.

The Karachi-based company’s $17 million Series A round was led by Speedinvest, marking the venture capital firm’s first bet in Pakistan, Abhi Chief Executive Officer Omair Ansari said in an interview. Global Ventures, VentureSouq, VEF, Sturgeon Capital, Rallycap, FJ Labs, Fatima Gobi, Sarmayacar and i2i Ventures also participated.

Pakistan is attracting investors eager to back startups in one of the last large untapped markets. Companies raised more than $350 million last year in the country, greater than the amount over the previous six years combined. Among the firms making their first-time investments in the country recently are Kleiner Perkins, Tiger Global Management and Dragoneer Investment Group.



Startup Fever Grips Pakistan, World’s Last Big Untapped Nation

The lending startup offers an alternative to people asking their employer, family or friends for cash to make ends meet until their next salary. It also gives small- and medium-sized companies financing for working capital requirements. The company has now become cash-flow positive.

“This is the first time you’re able to get this access in the country,” Ansari said in an interview. “As people and smaller companies get this access then it becomes something they want to keep using.”

The app takes less than 30 seconds and two clicks for a registered user to access the funds, with a flat 2% transaction fee. The funds are automatically deducted from the next paycheck.

Co-founder Ansari previously oversaw two funds at Morgan Stanley, and was looking at investment opportunities in consumer companies and fintech in emerging and frontier markets. He helped with early-stage investments in fintech companies from China to Brazil. He was also an adviser to VEF, which focuses on fintech in frontier and emerging markets.



The company has increased users to 650,000 from about 200,000 since a previous round in Novemberand also on-boarded over 150 companies. Individuals are accessing 15% to 20% of their monthly wage through the platform, Ansari said.

“Abhi has the potential to change millions of lives across MENA and South Asia,” said Stefan Klestil, general partner at Speedinvest. “It’s no wonder they have been able to establish themselves as one of the fastest-growing Pakistani startups.”

https://www.bloomberg.com/news/articles/2022-04-19/pakistan-startup...

Comment by Riaz Haq on April 19, 2022 at 7:24am

“It’s like drinking from a firehose”: Inside Pakistan’s tech investment boom
Pakistani VC Kalsoom Lakhani on the good, bad, and ugly of the recent funding boom.

https://restofworld.org/2022/pakistan-tech-investment-boom/

In 2019, when Kalsoom Lakhani and Misbah Naqvi founded i2i Ventures, a $15 million Pakistan-focused venture capital (VC) fund, they hoped to sign about three deals a year. Now, they’re signing that many deals every quarter.

“I can barely keep up with the deal flow,” Lakhani told Rest of World. “My days are insane. My partner and I work anywhere between 10- and 14-hour days. I’m meeting about four to five new teams each week, in comparison to one or two a year back.”

Pakistan is in the midst of a massive boom in its tech startup sector: In 2021, Pakistani startups raised $365.87 million in VC funding, more than every previous year combined. By the end of the first quarter of 2022, the sector had received seven times as much funding as in the first quarter of 2021. The world’s fifth-most populous nation has also caught the fancy of some of the world’s largest VC investors: Tiger Global made its first investment in Pakistan in December and has since backed at least two more startups.

But Lakhani says these international investors are still not seeing Pakistan as a “strategic” investment destination but are, rather, simply “dipping their toes” into the country. In fact, the flood of funds has her worried. “There’s a lot of noise, and sometimes the valuations [that the startups are getting] are not priced right. What I would have laughed at a year ago is the norm now. I keep wondering, when did we become comfortable with valuations like these?”

Lakhani spoke to Rest of World, via Zoom from Washington D.C., about the reasons for the recent spurt, the change it has triggered on the ground, and why she’s cautious about the future.

As someone who has been a stakeholder in the Pakistani startup space for a while, what do you think of the recent funding boom?
It feels like we’re drinking from a firehose. The pace at which things are moving right now is probably 20 times faster than I’ve ever seen in the ecosystem. Earlier, on average, you would get a deal, and it would take a month or two to close. So, you had about six weeks to do due diligence, and by the end of it, you felt quite sure. Now, sometimes I have to do the due diligence in a week! You have international investors who aren’t really on the ground. So, they’re doing their diligence but not to the extent of checking things on the ground. These are early deals, so they oftentimes make decisions in a few days.

Not only are the first rounds happening really fast but the time between successive funding rounds is also getting shorter. I’ve seen people raising funds again within four months. Like, how? A company that we invested in raised their first and second rounds within six months of each other. As an investor, it felt like I was barely caught up with what was happening.

Will we see more international investors do their debut rounds in Pakistan soon?
Many international investors are looking at Pakistan right now. Tiger Global is actively looking at the market for more deals. Sequoia Capital has been looking at Pakistan for a while. There have been rumblings about Accel investing in the country. Dragoneer Investment Group has invested in the country. Among the newer funds, Vibe Capital and Buckley Ventures have already invested, and [British VC] Harry Stebbings’s fund 20VC has done some deals. Village Global [backed by Bill Gates, Jeff Bezos, and Mark Zuckerberg, among others] has a scout on the ground. [San Francisco–based] Global Founders Capital hired their first official person in Pakistan recently. There are a lot of people who have not even been to the country themselves but are scoping out people that can join them.

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