ISLAMABAD: The increasing frequency of start-ups in Pakistan raised several rounds of investment in a single year (eight such cases in 2021) which is evidence of healthy industrial activity. In 2021, Pakistani entrepreneurs jointly raised a record $365.87 million, an increase of 450 percent over the $66.44 million raised in 2020, according to the data obtained from the Pakistan Venture Capital Association.
During the year 2021, Pakistani entrepreneurs raised a record $365.87 million, which was not only 450 percent more than the $66.44 million raised in 2020, but also more than the total amount raised in all preceding years put together. As a result, the total number of deals increased by 67%, rising from 49 to 82 in 2013. Airlift’s massive $85 million Series B funding majorly contributed to the rise in the funding percentage. In addition, the average ticket size increased from $1.36 million in 2020 to $5.30 million this year.
Bazaar, Jabberwock (Cheetay), TAG, Tajir, QisstPay, Creditbook, and Bridgelinx all raised more than $10 million in funding this year. These firms accounted for 57.85 percent of all capital invested. While ticket sizes have increased, the majority of the activity has been centered in the early stages, with 46 seed transactions, 15 pre-seed rounds, and nine Series A rounds, accounting for the lion’s share of the activity. There were only two rounds in the second series.
The e-commerce industry raised the most money, bringing in $174.6 million from 20 agreements. However, only one business — Airlift — provided nearly half of the funding.
On the other hand, the number of deals (24), totaling about $97 million, put Fintech at the top of the list for the first time. Payments, credit/lending, and ledger space accounted for the majority of the deals. However, the transportation and logistics sector fell to third position with only eight acquisitions for $35.4 million in the quarter under review.
Pakistani businesses began to strive to streamline the kiryana ecosystem in 2020, and this tendency has continued into 2021. There were at least 11 agreements totaling over $87 million in the Dukan Tech industry, which largely focus on fintech and e-commerce. As a result, Bazaar and Creditbook, Abhi and TAG raised funding at two distinct levels while Truck It In, PostEx, and Taazah went for extension rounds.
However, this does not necessarily mean that the business market is becoming more accessible to everyone. When compared to the $250.8 million raised by male-led companies in three deals, women-led start-ups were able to raise only $4 million. It highlights the gender discrimination in Pakistani Market when it comes to women led businesses. Start-ups co-founded by mixed-gender teams received the remaining $111 million (13 transactions). Similar to this, firms whose founding teams possessed at least one overseas degree accounted for nearly 87 percent of the monetary value ($317.3 million) during the year, in keeping with the expected trends for 2020.
Tiger Global, Kleiner Perkins, Global Founders Capital, and Stripe were among the significant investors to enter the Pakistani industry in 2021 and lead a number of deals. The deal sizes were boosted by these foreigners. An examination of the 49 transactions worth over $1 million each shows that overseas corporations were alone responsible for 27 of them and were jointly responsible for 11 of them with local investors. As a result of the small-scale investment vehicles raised by Pakistani venture capitalists, some firms may not be able to raise enough money to succeed.
