Pakistan’s startup sector witnessed the best year in 2021, as 81 deals worth $350 million were made, according to a Deal Flow Tracker by Invest2Innovate (i2i). The amount raised is more than 5x of what was raised in 2020 i.e. $65 million.
From 2015 to 2021, Pakistani startups raised $563.5 million, out of which 62% was raised last year alone showing the extent of shift in the funding landscape. Similar to other emerging markets, e-commerce, fintech and logistics attracted the most funding in 2021, revealed the data.
The Deal Flow Tracker by Invest2Innovate showcases investments made in Pakistani startups from 2015 to 2021.
Quarterly speaking, Pakistani startups raised $69 million in Q4 of 2021, less than what it did in Q3 i.e. $172.6 million, but still more than all of 2020 combined.
The top three biggest deals of 2021 were: Airlift ($85 million), Bazaar ($30 million), and Tajir ($17 million).
E-commerce emerged as the top-funded sector in 2021, attracting $202 million of funds raised in the year. Fintech was second on the list with $95 million funding raised in 2021, followed by trucking & logistics that grabbed $17.4 million.
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Kalsoom Lakhani, the Founder and CEO of Invest2Innovate said "the funding landscape has shifted significantly with startups raising significantly larger rounds at pre-seed and seed than before”.
She added that startups raising in later rounds of funding i.e. Airlift, which raised $85 million in Series B funding, is ideally not an outlier but a signal for the future.
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Talking about the emerging fintech sector, Kalsoom said that it opened up for the first time, thanks to regulatory changes made by the State Bank of Pakistan (SBP) and Securities and Exchange Commission of Pakistan (SECP) that allowed it to take off.
“This is only the beginning -- unicorn valuations are the first thing, but focus should also be on where exits will come because that will be a tipping point in this market,” she said.
Meanwhile, further analysis of the data generated by i2i’s Deal Flow tracker shows that 66.4% of the startups had a male founder, while only 1.1% of the startups were founded by female entrepreneurs, whereas, a little over 32% of the startups were co-founded by female entrepreneurs.
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Mixed investment, i.e. including at least one local and one international investor, fuelled the largest number of startup deals (36) in Pakistan and most of the deals were made at the seed stage of investment i.e. $123mn.
However, international investors were able to make larger sizes of investments ($61.7,m), despite having fewer deals with Pakistani startups (20).