Pakistan’s startup ecosystem faced significant challenges in 2024, with funding dropping to $37 million compared to $355 million in 2022, according to the Pakistan Startup Ecosystem Report (PSER) 2024 by Invest2Innovate. Despite this, there is cautious optimism among entrepreneurs and venture capitalists as the country’s macroeconomic fundamentals stabilize. Misbah Naqvi, co-founder and general partner at i2i Ventures, emphasized the need for the government to minimize interference at the report launch event.
“Sometimes the government just needs to get out of the way,” she said. Recent ecosystem activities reflect a positive shift. The +92Disrupt event by Katylst Labs created enthusiasm, with a $15 million funding injection across four key deals in the third quarter.
Gobi Partners launched a $50 million Techxila Fund II, and Sarmayacar announced a $40 million Climaventures Fund.
Pakistan’s funding drop and optimism
Notable deals include Laam raising $5.5 million, SadaPay’s acquisition by Papara, PostEx’s $7.3 million pre-Series A round, and COLABS raising $2 million for expansion.
However, challenges persist, such as internet restrictions causing $23 million in losses, regulatory complexities, low R&D investment, and limited access to capital. Gender disparity is also evident, with women making up only 39% of the workforce and receiving just 18.75% of funding since 2015. Usman Malik, co-founder and CEO of Grenlit Studios, emphasized the importance of normalizing entrepreneurship, citing examples from Shark Tank Pakistan.
The end of the ‘free money’ era requires startups to focus on unit economics and profitability. PSER 2024 identifies the digital economy as a significant opportunity, with the potential to generate Rs9.7 trillion in value by 2030. It calls for coordinated action from all stakeholders to harmonize regulations, improve infrastructure, and support women entrepreneurs.
The report also highlights the urgent need for investment in digital infrastructure to address connectivity challenges that disproportionately affect startups in sectors such as e-commerce, fintech, and digital services.
