Experts say Pakistani startups will need to work harder to raise money in 2023, due to the slow global economy.
Pakistan ought to improve access to finance in the startup business, according to P@SHA Chairman Badar Khushnood. For the framework to secure investment, commercial banks and startups must work together. For startups to receive early-stage funding and begin implementing their ideas practically, public-private collaboration is also crucial.
P@SHA Chairman Badar Khushnood claims that, despite operating in a difficult environment, the startup business exhibits commendable performance. He asserted that the government ought to impose a flat tax rate of 5% when founders or employees sell stock or options in order to encourage the flow of more remittances into the nation.
Due to the slow global economy, experts say Pakistani startups will need to work harder to raise money in 2023.
A startup business consulting company called Invest2inovate reported that only $65.5 million finance could be raised for Pakistani startups in the third quarter (July-Sept) of CY2022, compared to $177 million in the same period of 2021. Syed Azfar Hussain stated.
According to the project director of Hyderabad’s National Incubation Centre (NIC), both unfavourable regional circumstances and the slowdown in global funding for startups in Pakistan are to blame. Startups clearly raised respectable amounts of money in the first half of the year.
However, as funding from major venture capital firms like Tiger Global decreased in the latter part of 2022, the funding decreased, he added.
Azfar Hussain stated that in 2023, the sector’s participants and founders must develop ideas that entice foreign investment. “If we examine the local ecosystem, we find that the vast majority of products are only meeting the needs of the community. Venture capitalists and investors frequently back concepts with global scalability.”
Speaking of Airlift and SWVL, he said that despite the fact that both startups had initially received sizable amounts of international funding, they had both ceased operations in Pakistan for a variety of reasons. As these ventures are high-growth, scalable businesses for which the adoption of technology plays a significant role, Hussain observed that “attracting funding in the current scenario is becoming a difficult task for the startup founders.”
To make technological products scalable and sustainable in Pakistan, the government must facilitate easy and smooth access to technology and its allied products at lower costs, he continued. According to Azfar, e-commerce startups dominate the nation’s ecosystem in terms of funding.
The founders must look beyond e-commerce and lay the groundwork for concepts and goods in industries like fintech, education technology, and health technology. But rather than focusing on a particular group of people, he continued, “for the success of these startups, it is essential that the founders come up with ideas that resolve the majority of consumers’ issues.”