In a significant move for Pakistan’s burgeoning startup ecosystem, Sai Venture Capital Pvt, a Lahore-based company, is on the cusp of introducing the country’s first venture capital (VC) fund denominated in local currency. This initiative aims to target Pakistan’s tech sector and various startups, providing a much-needed boost to the local entrepreneurial landscape.
The Quest for Local Smart Capital:
In a recent interview, Ahsan Jamil, co-founder of Sai Venture Capital, revealed that the fund is actively seeking to raise $10 million, primarily from local investors. He emphasized the importance of local participation, stating that an ecosystem doesn’t truly develop until there is a presence of “local smart capital.” This sentiment underlines the critical role that domestic investors play in fostering innovation and business growth.
Investment Commitment and Regulatory Approvals:
An encouraging sign for this emerging VC fund is that it is already 40% committed, demonstrating a strong interest from potential investors. Moreover, Sai Venture Capital received approvals from Pakistan’s regulatory authority, the Securities and Exchange Commission of Pakistan, in October. These regulatory clearances ensure a solid foundation for the fund’s operations.
Challenges in Pakistan’s Startup Landscape:
Sai Venture Capital’s endeavor comes at a pivotal moment for Pakistan’s startup scene. Recent challenges, such as high-interest rates and global economic uncertainties, have led to a drying up of funding opportunities. This situation starkly contrasts with the record-breaking performance the Pakistani startup ecosystem enjoyed in 2021.
Devaluation and Growth Imperatives:
The Pakistani currency’s devaluation, falling by more than 40% over a specific period, has put pressure on startups to achieve rapid growth to maintain the interest of foreign investors. To provide a clearer perspective, some startups had to achieve 100% growth just to keep foreign investors at breakeven.
Investment Sectors and Past Endeavors:
Sai Venture Capital has made investments in enterprises offering services to developed markets, along with startups focused on crucial sectors like health, agriculture, and education. For instance, the company invested in Truckistan, a logistics platform that secured $1 million in funding.
The “Pakistan Startup Fund” and 5G Rollout:
Despite the recent setbacks in Pakistan’s startup funding landscape, Dr. Umar Saif, Pakistan’s caretaker IT minister, is committed to helping the country attract investment through the launch of the Pakistan Startup Fund. This initiative aims to reinvigorate the local entrepreneurial ecosystem, foster innovation, and drive economic growth.
Pakistan’s 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 April-June 2023 quarter, 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. This context makes Dr. Umar Saif’s Pakistan Startup Fund all the more vital in rekindling the local startup ecosystem and its appeal to both local and international investors.
