Pakistani start-ups secured a total of $55.4 million across 18 deals in the July-September quarter, marking a 46.2% drop from the previous quarter, when the total reached $102.9 million. Data compiled by Data Darbar, a platform tracking investment in Pakistan’s tech ecosystem, shows the average deal size was $4.6 million, slightly down from $4.9 million in the preceding quarter.
Mutaher Khan, co-founder of Data Darbar, explained in an interview with Dawn that the decline can be attributed to a global slowdown in start-up funding due to macroeconomic uncertainties and changing monetary policies. Additionally, the shutdown of a prominent start-up, Airlift, and fraud allegations against the fintech company TAG have had spillover effects, adding to the challenges.
Pakistan’s startup ecosystem is facing financial distress, with notable players like Careem, Swvl, Truck It In, and VavaCars laying off staff and cutting back services. This environment, combined with Pakistan’s economic troubles, has raised the country’s risk profile, making it more difficult to achieve favorable valuations, Khan noted.
In the latest quarter, the year-on-year decline in start-up funding was even more severe, dropping 68.3%. Both the total funding amount and the number of deals were the lowest since the first quarter of 2022.
Major Sectors
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Fintech led the way in the July-September period, attracting $35.85 million across eight deals. E-commerce was the second-largest sector, with $18.9 million raised across five deals. The top five funding rounds were completed by fintech companies DBank ($17.6m) and OneLoad ($11m), and e-commerce start-ups PriceOye ($7.9m), 24seven.pk ($6m), and DealCart ($4.5m).
Venture capitalists are becoming more cautious, no longer providing unchecked funding for rapid customer acquisition. Instead, investors are now pushing entrepreneurs to focus on achieving early break-even points rather than purely driving revenue growth. In terms of funding stages, start-ups raised $9.8 million across six pre-seed rounds, $28 million in four seed rounds, $6 million in two pre-Series A rounds, and $11 million in a single Series A round during the quarter.
Further Slowdown Expected
One female-founded business raised $0.5 million, while four female co-founded companies secured $20.1 million in the same period. The number of investors involved also dropped from 81 in the previous quarter to 52.
Khan anticipates a continued slowdown in funding as many delayed rounds are now reflected in the current figures. Although investors have capital reserves, many are choosing to wait one or two more quarters before deploying funds. Early signs of consolidation are emerging, with three mergers and acquisitions taking place in the quarter. These include Emerce.pk by Bagallery, NexDegree by Venture Dive, and Call Courier by PostEx, although none of these deals disclosed financial details.
