Ayesha Saba

Pakistan is fast becoming a hub for startups, and even amidst political uncertainty, currency volatility, high inflation and interest rates, investments in startups continue to grow. Talking to WealthPK, Jehan Ara, founder and chief executive officer of Katalyst Labs startup, said venture capital had played a major role in the success of enterprises, especially small and medium enterprises (SMEs) worldwide. “In emerging as well as developed markets, venture capital is becoming an increasingly significant source of financing.”

She stated that Pakistan’s population of over 220 million people represented a large and growing market for startups. “As the country’s middle class expands, demand for a wide range of goods and services increases. Also, the popularity of these startups has increased due to the increased use of the Internet for advertising.”

Jehan Ara said a number of startups have emerged in the recent past, catering to needs of multiple segments of society, including travel, trade, ride hailing, currier, and e-commerce. She said startups like Tajir, Dawaai, Cheetay, SadaPay, Baazar, Daraz.pk, Zameen.com had established their name in the Pakistani as well as global market.

However, she said the lack of venture capital funds was a major barrier to the growth of the startup ecosystem in Pakistan. “The government should encourage the creation of more venture capital funds by offering tax breaks and other incentives.” She pointed out that persistent political instability in Pakistan was also making it difficult for venture capitalists to make long-term investment decisions as they were not sure about the future of the country’s economy and political climate. “It is important that we have political stability, and a more stable and predictable investment environment.”

Rabeel Warraich, founder of Pakistan-based venture capital fund Sarmayacar, told WealthPK that venture capital firms invested in companies on behalf of partners, who were mostly large institutional investors. “Venture capitalists provide not only financing, but also non-financial support such as mentorship, strategic guidance and network access. While most venture capital-funded companies fail, some become runaway successes,” he noted.

He said five private equity and venture capital firms were enrolled in Pakistan, out of which, Lakson and Sarmayacar provided a leading platform for innovative startups. “Lakson has made investments in Mandi Express, Knowledge Platform (Private) Limited, Bookme Tickets (Private) Limited, Bagallery (Private) Limited and Roomy.”

“Sarmayacar holds the portfolio of Bykea, Dawaai, Simpaisa, and TruckSher. These venture-funded innovative startups are run with meaningful bonding between investors and entrepreneurs.” Rabeel Warraich stated that tech startups that were once considered risky investments were now being looked upon by venture capitalists as high-yield opportunities.

“At the moment, Pakistan’s venture capital sector is in its infancy and faces challenges such as the risk-averse attitude of entrepreneurs, family-owned business mindset, and limited support from the government and listing regulations for SMEs.” He said now is the ideal time for the venture capital industry to take off, provided both the government and industry play their due role.

Credit: Independent News Pakistan-WealthPk