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KARACHI: Startups across the world may be struggling, but in Pakistan’s case, there is an added trouble – its struggling economy that is hindering growth of high-potential companies as well.

“Pakistan’s startup ecosystem needs multiple unicorns to strengthen international investors’ interest and more importantly, their belief,” Rebecka Zavaleta, CEO and co-founder of Paismo, told Business Recorder at an event recently.

Paismo, a Lahore-based tech startup that offers companies solutions to tackle outdated HR functions, recently announced raising $1.3 million in a seed round. It also raised $200,000 in November 2022, according to data available on Crunchbase website.

The development was seen by many as a positive in the gloomy startup space that has been riddled with news of economic distress in recent times. High inflation and cost of doing business have hampered growth prospects, prompting several layoffs and shutdowns across different sectors.

At the same time, a bulging population and increasing expenses have only added to the worries of the South Asian economy that is also engaged with the International Monetary Fund (IMF) over a $3-billion bailout programme.

Zavaleta, who has moved from the US and is now settled in Lahore as she looks to scale up Paismo along with co-founder Usama Mahmud, also mentioned the country’s startup landscape at length during an event organised by Katalyst Labs in Karachi.

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While she believes there will definitely be a unicorn in Pakistan within the next five to 10 years, the ecosystem should instead focus on enabling an environment that can breed multiple unicorns.

“See all these ambitious, hardworking youth attending an event on a Saturday,” she said, pointing towards the young people present during the event. “Each one of them has the potential to start a company that can become a unicorn within a decade.”

Being of Mexican origin, Zavaleta has found many cultural and language similarities with Pakistanis while working here for the last three years.

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2023: the year of challenges, opportunities for Pakistan’s startup ecosystem

Startups should follow their North Star

Zavaleta said startups should learn to say no to their clients when the need is something outside their wheelhouse.

“(Always) have a specific problem and user in mind. Stay focused. Avoid falling into ‘doing too much, never enough for one’.”

Hybrid startups needed

Talking specifically about Pakistani startups that are facing an exchange rate crisis amid other challenges, Zavaleta said companies should serve local as well as global markets.

“When I first came to Pakistan, the rupee was about 160 to a dollar. I never thought the rupee would fall to around Rs300 for $1. But it has, which is definitely affecting startups as well as investments in the ecosystem.”

She added that although Pakistan is the fifth most populous country in the world and a big market, startups in the country must also tap the global market to keep a balance.

“I have been involved with six startups in the past and four of them were successful. I have seen the many ups and downs,” she added.

“I am definitely upbeat on Paismo’s success.”

Does the Pakistan economy need a flourishing startup ecosystem?

Zavaleta said she believes startups enable formative impact and tell stories that capture the interest of the world.

“You can have a healthy economy without startups. (Technology) Startups, from a macro perspective, may not even be necessary for the economy.

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“You can have software houses and call centers bringing export receipts for the country. But if you really want massive, monumental change, you want startups at the forefront.

“Startups tell and show stories that attract investors. And success stories from challenging places are the most exciting investments.

“In that sense, startups are very important to keep an economy on the investors’ radar, which Pakistan needs for pivotal change.”

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