In what has otherwise been a fairly dismal year, there is some good news, at least as far as Pakistani start-ups go. According to information complied by the appropriately (and hilariously) named startup monitoring website ‘Data Darbaar,’ Pakistani startups have bagged $120 million in investments in just the first half of the year. If that doesn’t seem like a big deal to you, then note that in 2016, investments were less than $30 million and even last year, in pandemic-stricken 2020, investments didn’t breach the $70 million mark.
This year, that investment amount has been doubled in just half a year which, coming as it does in the pandemic years, is a serious vote of confidence in this growing sector. E-commerce startups led the charge in terms of both deals (a deal is defined as an investment made in a start-up) and total investment value, with 31.4% of all deals taking place in that sector. FinTech follows close behind with 28.6%, and the fact that these sectors lead the pack makes sense when you look at the gap between supply of financial services in Pakistan and the demand for such services. For example, note that Pakistan has the third largest population of unbanked citizens in the world, given that we are home to over 100 million adults who do not have a bank account. At the same time, we have one of the highest levels of mobile phone penetration in the world, with 173.2 million mobile connections in Pakistan in Jan 2021, which is an increase of 6.9 million from January 2020. In percentage terms, the number of mobile connections in Pakistan in Jan 2021 is equivalent to 77.7% of the population.
While one should note that many people have more than one connection and so these are not absolute numbers, you can see that there is a huge gap that’s just waiting to be filled, and e-commerce and FinTech startups are doing just that. There are profits to be made in identifying such gaps and finding solutions; take Tajir for example, a Lahore-based business to business e-commerce marketplace mobile application which was founded in 2018. The concept is simple: Tajir sells inventory to kiryana stores (small neighborhood shops) in
As for how the government can help facilitate this start-up boom, what would be helpful is for new start-ups to be given a tax-free status for at least a few years, and for tax breaks to be given to investors, both local and foreign.
Zarrar Khuhro
Lahore and some of Northern Punjab through its mobile app, making it a one-stop shop for all inventory needs, ranging from toiletries and food staples to soft drinks and shampoos which promises next-day delivery and competitive prices. The concept is a simple one, and just by providing a solid service with next-day delivery and competitive prices bridging this gap, Tajir has managed to raise close to $20 million from foreign investors. They’re not the only ones in this game, of course, and other similar service providers like Retailo, Bazaar and Dastgyr have also collectively raised $20 million from international investors so one can see that there’s plenty of space here for all. Another ‘obvious when you think about it’ style start-up is Airlift, an ‘app-based decentralized urban mass transit startup that allows customers to book fixed rate rides on buses and vans in their network.’
In simple English, this means they provide mass transit to their customers, a sort of Careem for buses, that fills (and profits from) the gaps in the city’s mass transit system. Airlift is another Lahore-based success story that is also a top investment magnet, having netted over $24 million since its founding in 2019.
Ideas are good to have but they’re not enough, according to Jehan Ara who is rightly dubbed the founding mother of Pakistani startups. Grit, determination and flexibility are the key ingredients that spell success, she says, and you have to be able to learn and adapt in real-time as an idea that looks good on paper may not actually work in reality. And then there are predators in the guise of investors to watch out for as well who are only in it to take a major stake in your business while giving you pennies in return. In some cases, you may even find your idea stolen and adapted by someone you thought was there to help you. Nevertheless, if you keep your eyes open and keep your nose to the grindstone while seeking help from legitimate experts and institutions, like the many start-up accelerators and incubators that now abound in Pakistan, success – while never inevitable – becomes a real possibility. Just be prepared to fail, and to learn from each failure.
As for how the government can help facilitate this start-up boom, what would be helpful is for new start-ups to be given a tax-free status for at least a few years, and for tax breaks to be given to investors, both local and foreign. Beyond that, a little consistency in policies goes a long way because the last thing any business or investor needs is the kind of arbitrary and sometimes, frankly schizophrenic decision-making and regulator and court-inspired bans, that plague Pakistan. Nevertheless, if the government can’t or won’t lead, then the best it can do is get out of the way, allowing Pakistani innovation and enterprise to, at long last, achieve its well-deserved place in the sun.
– Zarrar Khuhro is a Pakistani journalist who has worked extensively in both the print and electronic media industry. He is currently hosting a talk show on Dawn News.
Twitter: @ZarrarKhuhro
