Pakistani startups raised a total of $6.8 million in just five deals in the July-September quarter, down 87.7% from a year ago when the sum stood at $55.4m, according to data compiled by Data Darbar.
This is the lowest quarterly funding for Pakistani startups since the first quarter of 2022. The average deal size also dropped to $3.3 million from $4.9 million in the previous quarter.
The decline in funding is attributed to a number of factors, including the global economic slowdown, rising interest rates, and the uncertain political and economic situation in Pakistan.
Despite the challenges, there were a few bright spots in the quarter. AdalFi, a fintech startup, raised $7.5 million in seed funding, and Trukkr, a logistics startup, raised $6.4 million in Series A funding.
The fintech sector remained the most popular among investors, accounting for eight of the 18 deals in the quarter. Other sectors that attracted investment include e-commerce, logistics, edtech, and hospitality.
The decline in funding is a major setback for the Pakistani startup ecosystem, but it is important to note that the ecosystem is still in its early stages of development. There are a number of talented entrepreneurs and investors in the country, and the startup ecosystem is expected to rebound in the coming years.
What does this mean for Pakistani startups?
The decline in funding is a challenge for Pakistani startups, but it is not insurmountable. There are a number of things that startups can do to stay afloat during this difficult time:
- Focus on profitability. Startups should focus on generating revenue and becoming profitable as quickly as possible. This will make them less reliant on external funding.
- Raise smaller rounds. Instead of trying to raise large rounds of funding, startups should focus on raising smaller rounds from angel investors and early-stage VCs.
- Expand into new markets. Startups should consider expanding into new markets where there is more demand for their products or services.
- Partner with other companies. Startups can partner with other companies to share resources and expertise. This can help them to reduce costs and accelerate their growth.
The Pakistani startup ecosystem is still in its early stages of development, but it has the potential to be a major driver of economic growth and job creation. The government and the private sector need to work together to create an environment that is conducive to the growth of startups. This includes providing access to funding, mentorship, and other resources.