Pakistani Startups Funding Remains Passable Despite A Slight Decline
Global Venture Capital (VC) funding has already gone down by 50 percent to below $300 billion – steepest decline recorded in history of global VC funding.
Despite a challenging 2022 for the global and domestic economies, funding for startups of Pakistan remained adequate, with a slight decline of 7% in 2022 compared to the previous year, according to a report.
Startup funding fell to $347 million in 2021 from around $375 million. Political challenges, currency volatility, devastating floods, high inflation, and interest rates amid the Russia-Ukraine war, which caused energy and food price shocks, were followed by global recession fears due to massive tightening, according to Alpha Beta Core’s report.
Startup funding globally was down by 50 percent in 2022, it added. “Global Venture Capital (VC) funding has already gone down by 50 percent to below $300 billion – steepest decline recorded in history of global VC funding,” the report said, adding that Indian startups had seen a decline of 30 percent in funding to $24 billion in 2022 from record $36 billion raised last year.
The year 2022 had fewer deals than 2021, but the average deal size was $8.7 million, which was 57% higher than the average deal value of $5 million last year. According to the report, the top deals closed in 2022 included Bazaar for $70 million, Dastgyr for $37 million, Retailo for $36 million, Jugnu Tech for $22.5 million, and DBank for $17.6 million.
In the previous year, the major sectors were e-commerce, fintech, edtech, health tech, and mobility. The total deal value of funding of Pakistan startups reached $14 million in the fourth quarter of 2022, with five deals in total.
The year 2021 aided Pakistani startups in breaking into the big league, as they received up to $375 million, which was not only more than 450 percent higher than a year before but was also more than ever recorded in a year.
“While the economic downturn posed challenges in 2022, 2023 still offers many opportunities for innovative entrepreneurs to address issues in Pakistan’s legacy sectors, such as finance, education, and health,” the report said.
According to the report, momentum will be muted in the first quarter of 2023 but will pick up in the second quarter as the global economy begins to recover and some clarity emerges on the political and economic fronts at home.