Frank Islam
THOUGH Pakistan has recently improved its ranking in World Bank Doing Business Index 2020, jumping up 28 positions to 108 out of 190 countries, still various reports indicate that large number of Pakistani small and medium enterprises (SMEs) collapse at very early stages after their startup. But it would be helpful to review the startup landscape of Pakistan in 2019 before digging out the major bottlenecks causing failure of startups and some secrets to ensure their success. Pakistan is the 6th largest country in the world with a population of 220 million, and interesting thing is around 75 million people have broadband subscribers, more than whole population of Nordic countries. Bloomberg reports Pakistan as the fastest growing retail market in the world. Uber’s CEO Dara Khosrowshahi labeled Pakistan as one of the fastest growing markets in the region, after his firm’s $3.1 billion acquisition of Careem, a ride hailing unicorn founded by a Pakistani entrepreneur. Startups in Pakistan have got many exciting things in 2019, some of which are as follow: A large number of startup events gathered, energized and helped entrepreneurs to get valuable knowledge, skills and mentorship. Local chapters of Startup Grind, TEDx, Startup Weekend, along with a number of mega events like LIFT Pakistan (250+ Overseas Investors, 500 + National & International speakers, 50+ Universities from all over Pakistan, 500 startups and 200+ SMEs), Momentum Ecosystem Conference and Exhibition (with 100 startups got the launching pad), 021 Disrupt (host of 1000+ innovators, 600+ startups, and 20+ investors) and others. A big benchmark for Pakistan startup ecosystem in 2019 is landing of its biggest series A round investment. First Round Capital’s – which has previously invested in companies like Uber and Square – first investment in Asia in more than a decade is leading a $12M series A round in a Pakistani startup, Airlift, that is building the decentralized mass transit. The rise of three unicorns, with Pakistan founders and strong team presence, also marked 2019.
Aatif Awan Founder & Managing Partner at Indus Valley Capital shed some light on the developments writing, “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.” How could we forget Zameen, one of pioneers in startup ecosystem in Pakistan? The startup raised a whopping $100 million series D round in February 2019. Now it has more than 2,000 employees and it has operations in many countries including the UAE, Morocco, Spain, Romania and Bangladesh. Bykea, a motorbike-hailing app, raised $5.7M series A in April. As of April 2019, the company claims to have over 200,000 motorbike riders working for them with2 million plus customers across Karachi, Islamabad and Lahore. Cheetay Logistics, a fast-growing tech-based logistics startup, raised $7.8 million in a Series A round in September from US-based investors. Now total funding for the company is over $11.5 million. Swvl, an Egyptian bus transportation network company based in Cairo, announced that it would invest $25 million in Pakistan in the next two years. The plan involves to mobilize 500,000 commuters, create 10,000 jobs per year, and to build an off-shore support office. Pakistan’s first homegrown messenger TelloTalk announced to get Seed Funding Round of $1.2 million led by Spark Labs and multiple global investors who are investing in Pakistan for the first time; Another startup PriceOye closed a seed funding round of $450,000 led by Fatima Ventures, Artistic Ventures, and Kinetico. Besides announcement of launch of an Investment Fund for FinTech Startups by January 2020, the year also marked formation of Venture Capital Association of Pakistan (VCAP), an association of 12 VCs fueling the investment landscape of Pakistan. State-based resources have also ballooned for startup ecosystem in the meanwhile; National Incubation Centers across the major cities have 393 total startups, 11741 and Rs.975.33million on their credit.
Though the 2019 landscape for startups is fostering at an exciting rate, there are some serious challenges and bottlenecks which are causing failure to startups. Pakistan Startup Ecosystem Report 2019 states dearth of hubs and labs, which could play a vital role in supporting innovation and providing environment needed for ideation and creativity, as major challenge for startup survival. This means lack of innovation and environment for creativity is a killer for startups. The lacking is adverse in cities other than five major cities of the country. Some other major issues for survival of startups are regulatory and financial restrictions. The point now is how to reduce that number of failures. What are the secrets to success for Pakistan’s promising entrepreneurs and their start-ups? There are many. From a collective point of view, resolving regulatory issues faced by local and foreign investors is the key; and the government grants for investment in early-stage startups are vital for reducing chances of failure.
Ongoing measures – including tax reforms, improving legislation for local fund registration and licensing, catering payment issues as well as flow of money from and to Pakistan – should be accelerated too. From an entrepreneur’s point of view and based upon my experience as an entrepreneur, who purchased a technology firm, the QSS Group, in 1994 for $45,000 and started from one employee – me – to sales of over $300 million and 3,000 employees when I sold it to Perot Systems in 2007, I would recommend incremental innovation. I stress the incremental entrepreneurial innovation should be improving all areas known as 7 P’s of services marketing: Product, Pricing, Place, Promotion, People, Process and Physical Evidence. In closing, let me add one other thought that personal belief and tenacity are essential and central to being able to apply the secrets outlined here in order to grow the small, start-up business of today into the big business of tomorrow.
—The writer is an Entrepreneur, Civic Leader, and Thought Leader based in Washington DC.
