Good things come to those who wait and for Pakistan’s tech ecosystem, the wait finally seemed to be over in 2021. Funding surged over 5x to $366 million and tech exports crossed $2 billion. Big shot investors entered the market, things were on the go and optimism was all abound.
But that cliched saying doesn’t really mention anything about good things lasting, and that’s exactly what happened in 2022. Despite a solid start which saw almost $173m raised in Q1, investment activity plunged and reached a 10-quarter low. The annual total still came in at over a healthy $351m, but the slowdown was glaringly obvious.
The change in global macros and the subsequent carnage in venture capital cut short the newfound love for Pakistani startups among foreign investors, as the country’s risk premium became too high for the available return potential. The doomsday peddlers and default mongers would tell you this might be the end of a rather short-lived era. And perhaps we might not return to the 2021-2022 levels, but would still stay reasonably above our 2020 total of around $65m.
However, for the near future, the deal flow will remain depressed, especially for relatively later-stage startups — as per Pakistani standards, those looking for Series A or further. Based on this criteria, there are at least 14 companies that might need to raise follow-on rounds soon (ignoring all those who had seed deals in 2021). For the remaining, the deals might still continue, albeit at much lower...
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