KARACHI: Pakistani startups raised over $70 million in 2023, according to independent monitoring firms, marking a significant decline of over 70 percent compared to the major funding influx in the two preceding years, Arab News Reported.
The local startups secured approximately $360 million in 2021 and $350 million the year after that, though they experienced a funding slowdown toward the end of 2022.
Various startup funding monitors in Pakistan report different statistics for 2023, with figures ranging from $71.5 million to $75.6 million. These companies attribute the investment downturn to political and economic challenges at both domestic and international levels.
Data Darbar, a website tracking investment flows, reported that local startups raised half of the 2023 total in the fourth quarter alone, generating $38.6 million across 15 deals.
Alpha Beta Core (ABC), a startup financial advisory firm, noted a significant rebound in funding for these companies, witnessing a 553 percent surge on a quarterly basis in the last three months of 2023 after a dry spell earlier in the year.
“In Q4 2023, 12 startups disclosed funding rounds, notably Retailo securing a $15 million Series-A round for its expansion in Saudi Arabia,” ABC said in its report this week.
These rounds collectively raised over $38.7 million, constituting 53 percent of the total funds in 2023, instilling renewed confidence in the country’s startup landscape.
The other notable rounds in Q4 were KraveMart, Edufi, Sehat Kahani and Blink raising $6.25 million, $6.1 million, $2.7 million, and $2.1 million, respectively.
Invest2Innovate (I2I), another organization that keeps track of the funding, puts the cumulative inflow figure at $74 million, adding it was raised through 38 deals.
“The year 2023 was slow in terms of investment activity compared to 2022,” I2I said in a funding insight released on Thursday.
The first half of the year was marked by macroeconomic uncertainty, but the fourth quarter saw a significant surge in fundraising activities, with a 150 percent increase in both the amount raised and the number of deals compared to the same quarter in 2022.
Pakistani funding monitors are optimistic about 2024, expecting a more promising year for local startups.
“We expect startup funding market in 2024 to gain momentum with political and macro clarity following general elections in February 2024 and implementation of the key structural reforms to be undertaken by the new government, especially with the help of a new and larger International Monetary Fund program,” Sarwat Khan, investment analyst at ABC, said.
Kalsoom Lakhani, co-founder and general partner at i2i Ventures, had a similar assessment.
“We ended the year strong with a better outlook for 2024,” she said. “We will also see more companies performing fundraising activities in the new year.”
Local startup monitors noted that Pakistan’s ongoing economic recovery and the announcement of elections have restored investor confidence, which is expected to boost the country’s startup ecosystem.