Pakistan’s Startup Funding Crashes By 70%

Pakistan’s startup ecosystem experienced a sharp decline in investor confidence during 2024, with venture capital funding falling by 70 percent to just $22.5 million in 2024 compared to $75.8 million in 2023. According to data compiled by Data Darbar, the number of funding deals also dropped significantly by 61 percent, with only 15 deals closed in 2024, down from 39 the previous year. Despite the downturn in activity, the size of individual investments increased. The average deal size rose by 68 percent to $3.75 million, while the median deal size jumped 158 percent to $3.1 million, suggesting investors are focusing on fewer but more substantial bets. Early-stage funding dominated the landscape. Pre-Series A rounds accounted for 48 percent of all disclosed capital, while seed-stage funding made up 38 percent. Series A investments contributed just 14 percent of total funding, compared to 25 percent in 2023. No Series B deals were recorded in 2024. The gender gap in funding is still big. Startups founded solely by men received 75.6 percent of the total funding, while mixed-gender teams received 24.4 percent. No funding was raised by female-founded startups during the year. Debt financing offered a partial cushion to the slowdown in equity investments. A total of $20.5 million was raised through 28 debt deals. Fintech attracted the largest share of this funding at 46.7 percent, followed by E-commerce at 37.8 percent, Real Estate at 8.9 percent, and CleanTech at 6.7 percent. Mergers and acquisitions also slowed. Only five M&A deals were recorded in 2024—a 44 percent decline from nine deals in 2023 and far below the 17 seen in 2022. In a reversal of previous years, 80 percent of this year’s M&A activity was domestic. From 2020 to 2024, there have been 38 M&A transactions, with 25 being cross-border and 13 domestic. Product-based companies accounted for 14 deals, service-oriented firms for 18, and mixed business models for six. Meanwhile, Pakistan’s tech sector posted a strong performance. The ICT sector grew by 8.5 percent, well ahead of the overall GDP growth of 1.73 percent. ICT exports surged 33.7 percent year-on-year to $3.6 billion. Computer services made up $3.1 billion of that total, growing 38.5 percent. Information services exports saw a massive 341.5 percent rise to $22.4 million, while telecom services contributed $550 million. The data presents a mixed picture: while investor caution has cooled the startup funding scene, Pakistan’s export-oriented tech sector is rising.