Pakistani Startups Raised 5x More Funding in 2021 than 2020: CEO Ignite

Pakistan’s nascent startup ecosystem raised $373 million in investments in 2021, which was a growth of almost five times over $77 million in 2020. A total of 95 percent of this investment came from foreign investors, including very well-known international venture capitalists. Also, with investment news almost every other week, it would not be wrong to call 2021 ‘the Year of Pakistani Startups’. The growth of the investments in the Pakistani ecosystem has been driven by ‘Wapistanis’ or Pakistani expatriates returning to the country to launch new startups by harnessing local talent at a lower cost than abroad. Over 50 Pakistani startups have raised investments at a combined valuation of $1.5 billion. On average, 25 percent equity has been taken by investors in Pakistani startups in 2021. The CEO of Ignite, Asim Shahryar Husain, spoke about the situation and declared, “This is a remarkable achievement for Pakistani startups, and it certainly reflects the confidence of foreign investors in the future growth potential of Pakistani startups. Pakistan’s startup ecosystem is now where near Indonesia was in 2014. So, we can expect some unicorns from Pakistan within the next couple of years, if not by end of 2022″.   The shift towards series A and B fundings by many startups illustrates the growth and planning of the national and international expansions of their operations. The average deal size has grown five times from $1.2 million in 2020 to over $6.2 million in 2021. Eight startups raised multiple rounds of funding in 2021. Additionally, startups with foreign-educated founders attracted a majority of the investment (around 87 percent). More than 34 percent of the startups that had raised funding were either female-founded or cofounded, which indicates the increasing impact female entrepreneurs have on Pakistan’s startup ecosystem. Leading international venture capitalists from the USA, China, UAE, and Singapore (namely Kleiner Perkins, Y Combinator, 500 Startups, Draper Associates, 20VC, Visa, Stripe, Tiger Global, Prosus, Buckley Ventures, Next Billion Ventures, SparkLabs, Golden Gate Ventures, Hustle Fund, First Round Capital, Global Founders Capital, Raptor Group, MSA Capital, and Shorooq Partners) had invested in Pakistani startups last year. Leading local investors, including Indus Valley Capital, Fatima Gobi Ventures, 47 Ventures, KASB Securities, BitRate, Invest2Innovate, Zayn Capital, Sarmayacar, HBL Ventures, and Systems Limited participated throughout the year. A majority of the investments were made by foreign venture capitalists and angels. With the constant growth of the Pakistani startup ecosystem, it is a good time for local investors to start exploring investment options in Pakistani startups that can generate much higher returns over the long periods as compared to other investment options such as the stock market and real estate.