A Tough Year for Startups in Pakistan 😓
2024 was a sobering year for Pakistan’s startup landscape. 🚧 According to the latest report by Data Darbar, venture capital (VC) funding plunged by 70%, falling from $75.8 million in 2023 to just $22.5 million—the lowest since 2018.
Even worse, only 15 equity deals were recorded—a 61% drop from 39 in 2023. Compared to the funding booms of 2021 and 2022, when quarterly investments routinely crossed $80 million, the numbers are bleak.
But is it all bad news? Not entirely.
Fewer Bets, Bigger Cheques 💸
While deal volume shrank, average and median deal sizes actually soared:
- Average deal size: $3.75 million (up 68%)
- Median deal size: $3.1 million (up 158%)
This indicates that while fewer startups got funded, those that did were backed with conviction. Pre-Series A rounds made up nearly half of the disclosed funding, suggesting investors are leaning into early traction rather than taking seed-stage risks. 📊
Late-Stage Funding Vanishes 😶
Here’s where things get more alarming:
- Series A accounted for just 14% of total capital—down from 25% in 2023.
- No Series B deals were reported in 2024—for the first time in five years.
This drying up of follow-on capital hints at structural issues in Pakistan’s startup funding pipeline.
Gender Gap Widens in 2024 🚫👩
Another major setback was the complete absence of funding for women-founded startups. In contrast:
- Male-founded startups: 75.6% of total equity funding
- Mixed-gender teams: 24.4%
- Female-only teams: 0% 😢
This marks a regression from 2023, when female-led ventures raised over $10 million.
Debt Financing Steps In 🧾
With equity capital retreating, startups turned to debt financing. Here’s the breakdown:
- $20.5 million raised through 28 debt deals
- Fintech: 46.7% of debt capital
- E-commerce: 37.8%
- Real estate and cleantech: 8.9% and 6.7% respectively
Notable names like Abhi and Neem leveraged debt to fund their operations. Even Islamic finance is playing a role—Abhi’s sukuk issuance raised a massive Rs2 billion.
Fintech Leads, E-commerce Struggles 📱🛒
Despite the downturn, fintech showed resilience:
- $10.5 million raised across 4 deals
- Average deal size: $5.25 million
E-commerce didn’t fare as well, pulling in just $8.5 million, down 67% year-on-year. Yet, new company registrations stayed strong—942 e-commerce companies were incorporated in 2024, nearly matching 2022’s record.
M&A Activity Slows, But Domestic Deals Rise 🔁
Mergers and acquisitions also declined:
- Only 5 M&A deals (down 44% from 2023)
- 80% were domestic, reflecting a shift from cross-border deals in earlier years
From 2020 to 2024, there were 38 M&A deals total: 25 cross-border and 13 domestic.
A Silver Lining: ICT Sector Powers Ahead 🚀
While startups faced a tough climb, Pakistan’s broader tech and ICT sector thrived:
- ICT growth: 8.5% in 2024 (vs. GDP growth of 1.73%)
- Tech exports: $3.6 billion (up 33.7% YoY)
- Computer services: $3.1 billion (up 38.5%)
- Information services: $22.4 million (up 341.5%)
- Telecom services: $550 million
The sector also saw an increase in credit and deposits and contributed to 15% of all new business registrations in FY24.
Final Thoughts: Crisis or Correction? 🤔
While the sharp decline in startup funding paints a grim picture, it might also signal a market correction. Investors are being more selective, focusing on sustainable models over hype-driven growth.
The rise of debt financing, domestic M&A, and ICT sector performance hints at resilience and adaptation in Pakistan’s evolving tech ecosystem.
