In a bid to facilitate dwindling startup investment in the country, the interim government has formally launched the ‘Pakistan Startup Fund’ (PSF) under which the government will invest up to Rs2 billion a year in the sector.

“Today we launched the Pakistan Startup Fund (PSF) which will invest up to Rs2 billion every year in Pakistani startups,” said Dr Umar Saif, caretaker minister of IT & Telecom, and Science & Technology.

“The PSF is designed to help a startup raise its first external investment,” he added.

The caretaker minister shared that over $800 million had been invested in Pakistani startups in the last few years. “Some of these startups are certainly on a journey to become unicorns.”

“Pakistan is the fifth largest country in the country, every household has a smartphone. There is no reason why we won’t have them (unicorns),” said Dr Saif.

Last year in October, Dr Saif, in a conversation with Business Recorder on the sidelines of GITEX GLOBAL 2023, said the caretaker government is establishing a ‘Pakistan Startup Fund’, using revenue from IGNITE – which in turn is funded by a portion of the federal government’s telecom receipts.

“We will use IGNITE, which gets a portion of the telecom revenue and a few billion rupees go into it every year,” Dr Saif had told Business Recorder at the Dubai World Trade Centre.

“This funding will be converted into a ‘Pakistan Startup Fund’.”

Dr Saif back then said the government would then become the “last check of equity-free capital in a venture capital round”.

What is PSF?

Explaining the PSF, the caretaker minister, in a tweet post on Tuesday, said that the fund is structured as an equity-free capital to help close a VC (Venture Capital) round for a startup.

“If you are a startup in Pakistan and a foreign VC is evaluating your startup for a $1 million investment, the VC only needs to invest $700,000 — the Pakistan Startup Fund will give you a grant of $300,000 to help close the round,” Dr Saif wrote in a tweet post.

“We won’t take any equity/shares in your startup or a board position etc. PSF is designed to lower the risk for international investors to invest in Pakistani startups; once we have written you a cheque, we won’t hassle you at all .. betting on you and your VC investors to drive your success,” he added.

“With PSF we hope to create a value of at least Rs50 billion per year in the startup ecosystem in Pakistan.”

Startups dismal run in 2023

Pakistan’s startups attracted a meagre $75.6 million in 2023, 77.2% lower year-on-year, as experts termed the drastic fall to the ‘normalising’ situation where high-interest rates and a global tight-fisted environment took toll on fund-raising endeavours.

The amount was in stark contrast to the funds attracted in 2021 and 2022 when they stood at $365.8 million – the highest ever – and $332.4 million, respectively.

Experts said the decline in startup funding was not just restricted to Pakistan, attributing the fall to a global phenomenon amid rising interest rates as the world started to recover from the pandemic from 2021 onwards.

Higher interest increases the opportunity cost of investing in startups. Simply put, investors tend to invest in much-less risky government and private interest-based instruments such as T-Bills and bonds.

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Hasnain Jan 09, 2024 01:53pm
Wow..what planet these dudes are living on...start up fund from scratch?
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Sugon Dzntz Jan 09, 2024 01:53pm
Before spending from an already cash strapped exchequer, someone should have done an analysis of what material progress made and successful startups as a result of public and private sector movement of entrepreneurship and startup incubation that started around 2006-07
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TimetoMoVVeOn Jan 09, 2024 01:59pm
This is one of the worst ideas any govt can do, not just pakistan i.e. give start up funds. If the start ups have potential, investors everywhere world wide who are looking for returns will invest. If the private sector is shy about investing, there is a reason. What does the govt know about investing. Eventually this will also be handed over to Munir's minions and we know where the funds will go.
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Haq Jan 09, 2024 03:02pm
To distribute among few selected individuals.... Once caretakers are gone, tracks of these funds will disappear in thin air !
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KU Jan 09, 2024 03:22pm
Someone somewhere has their heads wrapped around something very contagious, and leading to nowhere. If they are mentally challenged, at least benchmark your non-efforts with that of others to learn how it is done. In todays BR news, ''India’s Tamil Nadu state has signed pacts totalling 6.64 trillion Indian rupees ($80 billion) in investments, ranging from Microsoft and suppliers to Apple to auto giants such as Hyundai Motor''.
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Parvez Jan 09, 2024 03:54pm
Before launching such a venture they need to ask themselves....why would someone start a venture in an environment that is unstable, high risk and completely unpredictable for doing business.
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Muhammad Firoz malik Jan 09, 2024 04:24pm
Our beloved country is facing instability due to political unrest and uncertainty, in this circumstances to attract investment is very very difficult. Our own people and business men are investing in other countries. Only way to attract investment is free and fare election. All parties specially PTI must be allowed to contest elections as it is largest party in Pakistan which have roots in all provinces. Our establishment should revisit their responsibility to ensure a free and fare elections in country.
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Twadi pehn di Jan 09, 2024 04:57pm
another idiotic step and another opportunity to beg.
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Hassan Jan 09, 2024 05:38pm
Does this mean that the internet will not be blocked on Sundays ?.
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TimetoMoVVeOn Jan 09, 2024 06:31pm
@Muhammad Firoz malik , "Our establishment should revisit their responsibility to ensure a free and fare elections in country." Not going to happen in Pakistan for another 50+ years. Today, Pakistan is split in 4 different directions and even India could not have planned something sinister like this. The military is taking Pak in one direction, the people are in another direction, the political parties are in a third directionless place, and the judiciary is in a fourth direction, depending on which party you belong to. Where is the solution to this? Two states in India capture more FDI than the entire country of Pakistan!
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Samin Husain Jan 09, 2024 08:31pm
Very good beginning but what really needs to be done is to make sure once a year how the fund is being utilized with an annual audit by the state bank plus the ministry of finance to confirm to the caretaker prime Minister the actual facts and figures. This should also be made public for the people to see the proof of development by releasing this to the press and social media which will contribute to the goodwill and trust in the government
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Samin Husain Jan 09, 2024 08:49pm
People will only trust the government if all out efforts ate made to provide proof of all the investments by independent audit reports and clear press reports
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Nouman Tariq Jan 09, 2024 10:08pm
I am a student and i need bike to traveling the university
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Rehman Jan 10, 2024 01:38am
Sir I need this bike plzzzzz
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Conservative Jan 10, 2024 09:43am
Unfortunately our super heroes who have ruthlessly looted and plundered our beloved country and have been equitted by NAB, courts and dry cleaned by the authorities concerned. They are back with full force claiming that they would lead the country to unprecedented progress abd development. Champions and guardians of our brand of democracy are supporting them opening to maintain status quo. Mir kia sada hae bemar hua jiss kay sabbbab Ussi attar kay londay say dawa leta hae.
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