Pakistan’s startup funding faced a challenging year in 2023, with startup investments plummeting to $75.6 million, marking a substantial 77.2% year-on-year decline.
Pakistan’s startup funding faced a challenging year in 2023, with startup investments plummeting to $75.6 million, marking a substantial 77.2% year-on-year decline, as per data released by Data Darbar. This downturn paints a concerning picture of the country’s entrepreneurial landscape, raising questions about the factors contributing to this significant drop.
The data reveals that over half of the funds were raised in the last quarter of 2023, with 15 investments totaling $38.6 million. Ten of these investment announcements were made during Katalyst Labs’ +92 Disrupt event, indicating a concentrated effort to boost funding towards the year-end.
The overall deal count for the full calendar year stood at 37, reflecting a substantial 47.9% YoY decrease. The average ticket amount for these investments also experienced a sharp decline, falling to $2.4 million—a staggering 60% decrease compared to the same period in the previous year.
Seed funding rounds took the lead, accounting for 21 out of the 37 deals and raising $46 million over the year. Accelerator rounds were less prominent, numbering only six and securing a total of $1.8 million. The report highlights a concerning trend at the growth stage, where deals faced challenges or investors defaulted on their commitments.
In terms of sectors, e-commerce emerged as the frontrunner, attracting the most funds with a total of $23.95 million. Retailo’s funding round notably contributed to this figure, although it doesn’t necessarily reflect the overall health of the country’s fundraising environment.
Fintech dominated in terms of deal count, with seven deals valued at $19.6 million, showcasing the continued interest and potential within the financial technology sector. Meanwhile, the transport and logistics sector secured $13.6 million across six funding rounds, indicating a diverse investment landscape.
A notable highlight amidst the challenging year was the performance of female-founded startups. 2023 emerged as the best year for these startups, attracting $10.5 million in funding. This represented a significant increase in their percentage of total investment, reaching 13.9%. This figure stands in stark contrast to the average of 1.34% observed in the years 2019-2022.
Conversely, startups co-founded by women saw a decline in absolute dollar value to $11 million, yet still accounted for 14.5% of the total funding for the year. This suggests that while there is progress in supporting female entrepreneurs, there is room for improvement in ensuring their sustained growth and success in the startup ecosystem.
As Pakistan navigates the challenges faced by its startup ecosystem, industry stakeholders and policymakers may need to reassess strategies to create a more conducive environment for entrepreneurial growth and investment in the coming years.