Today: Jun 14, 2024

Startup funding crashes 70pc as politics and economy take their toll.

5 months ago

TLDR:

  • Pakistani startups raised over $70 million in funding in 2023, a decline of over 70% compared to previous years.
  • The funding slowdown is attributed to political and economic challenges.

Pakistani startups faced a significant decline in funding in 2023, with independent monitoring firms reporting a decrease of over 70% compared to the previous two years. In 2021, startups raised approximately $360 million, followed by $350 million in 2022. However, 2023 saw a funding slowdown, with figures ranging from $71.5 million to $75.6 million, according to various funding monitors in Pakistan. This decline in funding is attributed to political and economic challenges both domestically and internationally.

Despite the overall decline, the fourth quarter of 2023 showed signs of recovery as local startups raised $38.6 million across 15 deals. This rebound was noted by Alpha Beta Core (ABC), a startup financial advisory firm, which reported a 553% surge in funding compared to the previous quarter. Retailo’s $15 million Series-A round for expansion in Saudi Arabia was one of the notable funding rounds in Q4. Other startups such as KraveMart, Edufi, Sehat Kahani, and Blink also secured significant funding amounts.

Invest2Innovate (I2I), another organization tracking funding, reported a cumulative inflow figure of $74 million through 38 deals. The organization highlighted that while investment activity in 2023 was slow compared to the previous year, the fourth quarter witnessed a significant surge in fundraising activities.

Despite the challenges faced in 2023, Pakistani funding monitors are optimistic about 2024. They expect a more promising year for local startups, with political and macro clarity following general elections in February 2024 and the implementation of key structural reforms. The ongoing economic recovery and the announcement of elections have restored investor confidence, which is expected to boost Pakistan’s startup ecosystem.