The past few quarters have proved to be horrendous for Pakistan’s startup sector with the country experiencing major shutdowns. Airlift – the posterchild of Pakistan’s startup ecosystem – was among the first few to go.
What followed was a queue, waiting to be filled, with Swvl, VavaCars, CarFirst, Trella and Truck It In also ceasing operations in the country. Moreover, Careem also scaled back its food delivery business.
Recent data says funding attained by Pakistani startups on a quarterly basis fell to the lowest level in three years during April-June 2023, with just eight deals over the three-month period.
During the quarter, startups attracted only $5.2 million, a decline of 95% year-on-year and 77.5% quarter-on-quarter.
Pakistan’s startup funding suffers massive fall in April-June
The startup space is witnessing a gloomy situation in Pakistan. This has also dealt a blow on the sentiments of the younger population that was highly reliant on services offered by these businesses.
With fewer options at their disposal, competition has effectively been killed, and consumers are eventually the ones that lose out.
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A prime problem in Pakistan is lack of competition which gives businesses more controlling power. Following the purchase of Careem by Uber, Pakistan’s ride-hailing segment turned into a monopoly because these were the only two services available. Moreover, no entrepreneur has since tried to compete with Airlift’s mobility segment.
In India, there are home-grown substitutes available for almost all international startups that enter the country. For instance, Paytm rivals Paypal, Swiggy competes with foodpanda, Rupay is an alternate to Mastercard and Visa, Oyo rivals Airbnb, Flipcart competes with Amazon and Ola gives tough competition to Uber.
Trucking startup Trella to cease operations in Pakistan: report
Similarly, most regional countries including China, Russia, Thailand, South Korea and Vietnam have a booming startup ecosystem and domestic alternates to international services. This saves the public from being impacted on a large scale in case international companies exit the country. The case with Pakistan is the opposite.
Pakistan is in need of homegrown solutions. The country is witnessing a huge exit of international companies as they are seeing a drop in earnings. Pakistan is no longer a profitable market for them.
Pakistan’s ‘sustainable fashion’ platform Swag Kicks raises $1.2mn seed funding
Although India’s Byju, an ed-tech startup, is going through a rough patch, it has started restructuring its debt to emerge stronger from the troubles.
Pakistan’s startups attained massive funding over the past few years but the utilisation of the amount was seemingly flawed. Rapid expansion accompanied with falling efficiency is one of the major reason behind the large scale closure of firms.
Pakistan’s logistics startup Trax says it has raised $3.7mn in seed funding
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