Comment by Riaz Haq on September 25, 2012 at 4:59pm

US AID promoting private equity investment in Pakistan's SME sector, reports Express Trib:

..$80 million, earmarked by the Obama administration under the Kerry-Lugar-Brahman Act for the Pakistan Private Investment Initiative

Crowding-out of the private sector from credit channels due to reckless government borrowing has provided a unique public relations opportunity to the US. The US has said it will offer loans ranging from $500,000 to $5 million to small and medium sized business in Pakistan, to help the latter expand and create jobs.

In total, $80 million, earmarked by the Obama administration under the Kerry-Lugar-Brahman Act for the Pakistan Private Investment Initiative, will go towards providing cheaper financing and equity to small and medium enterprises (SMEs) in Pakistan.

“The United States Agency for International Development (USAID) will provide up to $24 million for an equity fund, and fund managers will be required to match the requested funding to take the size of each equity fund to at least $45 million,” said Theodore Heisler, the project manager and senior economic growth advisor to USAID.

Heisler said that co-investment was essential in bringing the size of each fund to a level where it can cover operating expenses. The US intends to create at least three funds, but is, as yet, noncommittal to the total number. US authorities are on the lookout for good fund managers, and the availability of quality managers will determine the numbers of the funds, officials have said. During the last fiscal year, the federal government borrowed Rs1.77 trillion to finance the budget deficit. The State Bank of Pakistan has already warned that due to increasing government borrowing, there is little credit available for the private sector to grow.

“Having access to finances is a challenge for SMEs, as there is little equity and debt available for the sector,” said Heisler. “The longer term goal is to help expand the market for private equity investment and provide money that is not available through banks and other international lending agencies,” he added. He said the real job growth potential lies in the SME sector, as the corporate and public sectors cannot create unlimited jobs.

Heisler said each fund will have a 10-12 year lifespan. Individual investment sizes will range from $500,000 to $5 million, but could vary depending upon requirements. The initiative has been modelled on the Polish American Enterprise Fund, which was started with $140 million and has now grown to a multi-billion dollar fund.

Heisler said the US is looking to create a private equity industry in line with global standards, as there is hardly any private equity investment fund in Pakistan. He said the other purpose was fetching foreign investment through co-investment, as investment in Pakistan is dwindling.

The US is currently looking for fund managers who have a successful history, and Heisler said that both local and international fund managers have expressed interest in the project.

To a question whether Pakistani fund managers have expressed reluctance due to doubts over long-term commitment issues with the US, the US embassy replied “we believe there will be substantial interest from local, regional and international investors”.

It further said that “the US government designed the Pakistan Private Investment Initiative after a year of research and consultations with numerous stakeholders, including the Pakistani private sector and regulatory authorities.” It added that USAID will structure the funding to ensure that it is sustainable.

http://tribune.com.pk/story/442469/credit-crunch-as-banks-turn-thei...

Comment by Riaz Haq on November 2, 2017 at 8:41am

#US-based 1839 Ventures partners with #PTIB to launch $20m #Pakistan-focused #VC fund. #Punjab #Lahore #Technology

https://www.dealstreetasia.com/stories/1839-ventures-partners-with-...

Punjab Information and Technology Board (PITB) of Pakistan has partnered with US-based investment firm 1839 Ventures to launch a $20 million venture capital fund for the technology startups in Pakistan. “1839 Ventures announces its international expansion and the start of a $20-million venture capital fund that will be dedicated to investing in technology-oriented startups operated by exceptional entrepreneurs who are based across Pakistan,” the company said, in a social media post. Austin-based 1839 Ventures specialises in Series A, early stage and growth capital investments in technology oriented companies working in commerce, communication and business intelligence. It invests primarily in Texas-based companies. The announcement was made last week by the venture capital firm at the Atx+Pak Launch Entrepreneurship Program launch ceremony in Austin city. Pakistan has been trying to boost its local entrepreneurship base. Earlier in May, Pakistan’s federal government announced that it will set up a $20 million venture capital fund for local startups. The startup programme was to be open to all startups – not just in IT – since Pakistan needs innovative startups in all sectors such as agri, textiles, logistics, and manufacturing, Pakistan’s Planning Commission Member Athar Osama had said in a blog post at the time. In June, Lakson Investment was granted Pakistan’s first venture capital licence in the South Asian nation. Its application for a private equity and venture capital fund had been approved by Securities and Exchange Commission of Pakistan last year. Lakson had set up Lakson Investment Private Equity (LI PE) in the end of 2014 and is still in its pre-launch phase. It had proposed to start making investments by late 2017.

Read more at: https://www.dealstreetasia.com/stories/1839-ventures-partners-with-...

Comment by Riaz Haq on December 1, 2019 at 10:24pm

#SoftBank's next big crisis may be brewing in #India. No investor has written bigger checks than SoftBank's Son in giving young #startups the financial firepower to out-compete their rivals while pumping up their valuations. #WeWork collapse has ended it. https://asia.nikkei.com/Spotlight/Cover-Story/Fallout-SoftBank-s-ne...

Overfunding and bloated valuations have destabilized the country's startups

In 2014, Kunal Bahl and Rohit Bansal, the founders of Delhi-based e-commerce company Snapdeal, boarded a plane to Tokyo. Their company had just struggled through a transition from a Groupon-like discount voucher seller to a full online retail marketplace, and had nearly failed -- but Bahl and Bansal had managed to turn it around. They brought in $850 million from major investors, including sovereign wealth fund Temasek Holdings, Ratan Tata, the head of Tata Group, and U.S. chipmaker Intel. EBay even approached Snapdeal with a proposal to acquire the business.

Instead, Bahl and Bansal flew to Japan to meet the global tech sector's kingmaker -- Masayoshi Son, the founder and CEO of SoftBank Group. Even though Snapdeal had pulled in hundreds of millions, investment flows into India were still just a trickle. Chinese giants Alibaba Group Holding and Tencent Holdings were yet to enter the market at scale, and there were few local funds investing in technology. SoftBank was just starting to seek out deals in India, in an early display of its now-familiar playbook: offering to inject vast sums of money, and driving valuations higher than any other investor could offer young entrepreneurs.

Warned that Son had a short attention span, Snapdeal's founders brought only 10 slides to accompany their presentation. They had got through just three when Son cut off their pitch. "I have heard enough," he told them. "I will give you $1 billion for 49% of your company."

The amount was far more than the pair sought, or could even use. Ultimately, the two sides agreed on an infusion of $650 million for more than 30% of the company. "It was Snapdeal's first rodeo with so much capital," says one insider.


SoftBank's Vision Fund, with nearly $100 billion of capital, has become perhaps the most powerful funder in global technology. (Photo by Ken Kobayashi)
Dozens of entrepreneurs all over the world have had a similar experience. No investor has been more obliging than SoftBank's Son in writing massive checks to young companies, giving them the financial firepower to out-compete their rivals while pumping up their valuations. And that same pattern has played out in India, where, until recently, there was virtually no domestic risk capital, making SoftBank the biggest game in town. "SoftBank did put India on the global map," says Vinish Kathuria, a Delhi-based venture capitalist.

Since then, SoftBank's Vision Fund, with nearly $100 billion of capital supplied by major sovereign wealth funds, tech companies and private investors, has become perhaps the most powerful funder in global technology. It has fueled a wave of disruptive companies, from ride-hailers Uber Technologies and Grab to office communication business Slack Technologies.

Now, the wheels are coming off. WeWork, the office rental company into which SoftBank had invested billions, announced in September that it would list in New York, seeking an extraordinary valuation of $47 billion. The company's prospectus revealed a business model and a highly unusual governance structure that rattled investors. Its valuation dwindled, and eventually the listing was pulled.

Comment by Riaz Haq on December 2, 2019 at 7:38am

Why Pakistani Startups Are The Next Big Thing
Published on December 1, 2019
Aatif Awan
Aatif Awan
Founder & Managing Partner at Indus Valley Capital

https://www.linkedin.com/pulse/why-pakistani-startups-next-big-thin...

Last 18 months saw more acquisition & fundraising activity for Pakistani startups than the previous 10 years combined. That's a clear sign of the Pakistani startup market having hit an inflection point.

Firstly, the acquisition of Daraz by Alibaba for somewhere between $150M-200M highlighted the potential of ecommerce in the country. Six months later, EasyPaisa getting valued at $410M+ in the 45% buyout by ANT Financial, showed how valuable the fintech sector was. Both Daraz and EasyPaisa had only captured a fraction of these markets at the time of these deals.

At the same time, three unicorns with Pakistani founders and a significant team presence in Pakistan, all hit massive new milestones. Afiniti, a startup developing artificial intelligence for use in customer call centers, was valued at $1.6B in its series D round late last year. KeepTruckin, building trucking fleet management solutions, raised $149M in its series D round, valuing at $1.25B in Apr 2019. And the most exciting development was Careem's $3.1 Billion acquisition by Uber in March 2019. Careem's early tech and product was developed in Pakistan, the CEO Mudassir Sheikha is a Pakistani and Pakistan is one of its largest markets. One of the largest tech acquisitions of all time, slightly ahead of Apple's acquisition of Beats, this was a seminal event that has galvanized the Pakistani startup ecosystem. Ex-Careem employees are already out there starting new companies and joining high-growth startups.

Zameen/EPMG, one of the earliest and largest Pakistani startup success stories, raised a massive $100M series D round in February 2019. They have now expand to 40 cities across the UAE, Pakistan, Bangladesh, Morocco, Spain and Romania, and have over 2,000 employees.

Finally, what's most exciting is that Pakistani startups have crossed the seed to series A chasm. Three of the largest series A rounds in Pakistan have all happened in the last 8 months: Bykea's $5.7M series A in April, Cheetay's $7.8M series A in September, and Airlift securing $12M in series A funding in November. Airlift's large series A is particularly amazing because the startup only launched 8 months ago. This would be remarkable even for a Silicon Valley startup and is illustrative of how quickly startups can capture share in the completely untapped Pakistani market.

Airlift series A round is led by First Round Capital, a leading Silicon Valley VC, known for early bets on Uber and Square. First Round has not invested in Asia in more than a decade, not in China nor in India nor in Indonesia. Yet they chose to invest in a Pakistani startup given the opportunity they saw. I believe this is not a one-off event and is reflective of how primed Pakistani startup ecosystem is to take off after a long time of slow build-up.

What's Ahead: Wapistanis and VC Dollars flowing to Pakistan
To sum it up, Pakistan is the largest market untapped by startups and venture capital today. Pakistanis form one of the biggest tech talent pools in the world and have done well across the globe, founding several unicorns (at least six by my count) and having played a leading role in many others. With this talent advantage, Pakistani startups are well positioned to dominate all major industries in Pakistan and also expand to MENA, a $3.6 trillion economy that's also relatively early in the startup cycle.

What took Indonesia a decade, Pakistan will do it faster because the broadband penetration is at a much higher baseline, because capital moves faster to global opportunities today than it did a decade ago and because Pakistan has a larger talent base both at home and among the diaspora.

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