KARACHI: Health tech firm MedznMore that raised over $14 million since being founded in September 2020 officially conveyed that it shut down operations in June, but remained engaged in talks with a “few large players” for its technology and consumer-facing brand Tabiyat.pk.
“We shut down operations across Pakistan in early June,” Asad Khan, co-founder and CEO at MedznMore, told Business Recorder on Friday.
“We built multiple brands under the umbrella of MedznMore. Tabiyat was our consumer-facing brand, Tezmedz was our shops-facing brand and TezOS was our software for pharmacies.
“We are actively looking for buyers for our different lines of businesses to be able to generate cash. We spent substantial resources on building a comprehensive technology solution, which can help us pivot to an asset lite, platform play.”
Saad Khawar, another co-founder, also confirmed the development.
“Pakistan’s macros nosediving for the worst over the past many months couldn’t have come at a worst time for us; coinciding with our fundraise efforts,” he told Business Recorder.
The health tech firm, a pharmaceutical delivery platform for consumers and retail pharmacies, had announced raising more than $11.5 million in a Pre-Series A funding round in May last year.
Its investors at the time included UK-based Sturgeon Capital, Saudi Arabia’s AlTouq Group, and the round featured follow-on participation from Pakistan’s Lakson Group as well as Premier Group.
In September 2020, the startup – founded by Khawar, Khan, and Lakson Investments CEO Babar Lakhani – had raised $2.6 million as well.
The startup’s business model relied on pharmaceutical companies and authorised distributors to sell products at competitive prices.
Back in May 2022, the company said it aimed at ensuring medicine is available to pharmacies and consumers through same- and next-day deliveries.
With Pakistan’s economic situation remaining volatile for months, another fund-raise remained a distant possibility.
Khawar said, however, that talks are ongoing for some of its assets. “We are in talks with a few large players who have shown keen interest in buying our technology and brand, Tabiyat.pk.”
A senior employee, who requested anonymity, said the company was expecting a significant funding of around $20 million between December 2022 and March 2023.
“But Pakistan’s volatile economic situation discouraged investors,” the source said.
The company suspended its B2B operations by March and employees received severance packages.
Impact on startup ecosystem?
The progress of Pakistan’s startup landscape, which rejoiced at a record-breaking 2021, has slowly been pushed away from headlines as fundraising dropped and replaced with news of shutdowns and cut-back in operations.
During the previous quarter (April-June 2023), Pakistan startups attracted a meagre $5.2 million, a year-on-year decline of 95%. The amount is also 77.5% lower on a quarterly basis, indicating the massive volatility in Pakistan’s ability to attract investors.
Many experts believe Pakistan’s startups needed a ‘correction’.
A founder of another health tech firm, speaking on condition of anonymity, said the business models are heavily under the scanner.
“Businesses with negative unit economics and high discounts will not survive. The B2C segment is driven by discounts,” the founder told Business Recorder.
“It’s going to shatter investor confidence. The situation is bad due to the macroeconomic situation, currency and political instability.”
Alpha Beta Core CEO Khurram Schehzad said the blame has to be passed onto Pakistan’s macroeconomic situation.
“It’s been tough for all businesses,” he said.