Startups attract $280m investment

Startups attract $280m investment

KARACHI:

Confronting the national and international economic crises, Pakistan’s booming startups have secured investments in the first half of 2022 better than the previous year.

Investments in second quarter of 2022 has been recorded at over $103 million, taking first half of 2022 funding to around $280 million, 75% of approximately $375 million recorded in entire 2021, according to data gathered by Pakistani startup funding advisory company Alpha Beta Core ( ABCore).

“Despite headwinds of global economic downturn, 2022 has so far proved to be a pivotal year for Pakistan startups, as investments in Q2 2022 were recorded at over $103 million, making the total of 1H22 funding at $280 million or 75% of the total $375 million recorded in entire 2021,” ABCore CEO Khurram Schehzad said.

With a total of 14 deals, the value of deals in second quarter of 2022 is only 5%, lower than first quarter of 2021. Series A and B funding rounds reached an average deal size of $19 million, while early-stage deals showed a decline in deal value, data shows.

Key highlights in second quarter of 2022 were e-commerce accounting for 29%, followed by fintech, healthtech and transportation. Similarly, agritech, edtech and supply chain also scored their fair share in second quarter deals.

Financial freedom is something Pakistanis has been deprived of and fintech companies have been filling up this gap with the help of partner companies getting onboard, said Abhi Pvt Ltd CEO Omair Ansari.

“As fintech has been solving real monetary issues amidst rising inflation and growing anxiety, it will fetch more investment and will be getting more traction in the years to come.”

Seed level funding rounds accounted for 43% of the total, whereas the average deal size in second quarter of 2022 stood at $7.3 million, versus $14 million in the first quarter of 2022.

Top deals were Dastgyr at $37 million, Abhi Finance $17 million, MedznMore $11.5 million, followed by SadaPay and Bykea with $10.7 million and $10 million, respectively.

“Pakistani startups were working fabulously, bringing in record-breaking investment and creating a sensation whilst blazing their trail,” Si global CEO Noman Ahmed Said told The Express Tribune.

However, startup funding is now at risk, due to multiple reasons such as downside risk, tempered growth expectations and investments, rising inflation, increased oil prices, dollar appreciation, and lack of consistency in the policies.

When interest rates were low and liquidity was high, venture capitalists were excited about growth at all costs, leading to rapid valuations for startups and the boom that we all experienced over the last few years, he said. The global community was encouraging technopreneurship, focusing on refining entrepreneurship, investments and social innovation which has helped startups raise $70 million since January 2021.

There is a need to support and create consistency and compliance on a priority basis to help Startups survive, SI global CEO said. It was profitable even the onset of Covid-19 outbreak, now it is the time to devise strategies that can help Startups to grow with consistency and increased profitability.

Mobile manufacturers have already started layoffs. If adequate measures are not taken then technology sector too will be following the same pursuit. In fact, some of them have already started layoffs as businesses and opportunities are shrinking, he predicted.

Published in The Express Tribune, July 2n/a2022.

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