Disruption takes years. It takes persistence, resilience and undeterred belief in the larger vision of the startup. It requires bravery. After laying the foundation during the past decade, Pakistan’s startup ecosystem is taking its first steps in that direction and at a fast pace.
2021 has indeed been a momentous year for the local entrepreneurial landscape. In the first nine months alone, $305 million worth investments have been raised – higher than the cumulative amount in the past six years. Pakistan now ranks 5th across Emerging Venture Markets (MENA, Turkey, and Pakistan) by both funding and deal count; it was the only country in the MENAPT region to see deal count increase between 2021-Q2 and Q3 of the same year. From the investor’s perspective, the number of active investors in Pakistani startups in Q3 YTD 2021 was double of that in FY 2020. More VC transactions were registered in Pakistan in Q3 2021 than in any quarter before.
Let’s take a deeper, more micro view to see how it happened.
Airlift has raised financing worth $110 million to date, making it one of the most well-funded startups in the entire region. In Series B, it raised $85 million that made headlines in the local news and households. The round values the company at around $275 million. But it is the journey that matters and must be learnt from.
Founded in 2019, Airlift started off as a mass transit startup, offering services of air conditioned-buses in Pakistan on pre-defined routes yet offering the convenience of advance prepaid booking. The startup gained early traction, getting over 35,000 rides a day. However, soon after, COVID-19 hit the country and amidst lockdowns, Airlift halted its operations. Airlift presents a suitable case of pivot – at the right time. The company launched a 30-minute grocery delivery platform that is now available across eight cities of Pakistan. In addition to groceries, multiple categories have been added and are delivered from its network of multiple fulfillment centers across every city it operates in.
With 3 headquarters across Pakistan, 30 dark stores and operations in 8 cities, the platform has grown 30-50% month-over-month on average. In the past year, its cost of blended customer acquisition has reduced to $5 and unit cost to $2.5.
As a way forward, Airlift is also building a farmer-to-consumer distribution channel for fresh produce.
Launched a little over a year ago, Bazaar reflects what it means to understand customer need. A B2B ecommerce startup, it offers solutions for traditional retail in Pakistan. Its mobile-only ecommerce marketplace enables retailers in Karachi and Lahore to procure inventory for their stores. In addition, on the other hand, suppliers get a direct-to-retail channel through Bazaar, and are provided actionable insights on purchase patterns and trends.
The startup had an initial target of serving 800 retailers in Karachi by the end of 2020. They however, beat that by 10x and crossed the target with over 10,000 retailers onboarded. In terms of investment, Bazaar raised a $6.5 million seed round, followed by the country’s largest Seed A round amounting $30 million. There is much more in these numbers – Bazaar, understanding the customer need, launched Easy Khata, a digital ledger app to help retailers all over Pakistan manage their bookkeeping.
With a 90% retention rate, they are serving 750,000+ merchants, have on boarded 200+ brands and scaled to 400+ towns. It’s important to note that Bazaar was launched just less than two years ago.
BridgeLinx is a digital freight marketplace that raised Pakistan’s largest seed funding round of $10 million in September earlier this year. Headquartered in Lahore and launched a year ago, BridgeLinx connects shippers — such as manufacturing companies, cement factories, textile companies — with truckers and private fleets. It also provides its tech solutions to ensure documents validation on both ends, timely pickups, port operations and safety of cargo.
Like AirLift and Bazaar, BridgeLinx is promising and it is scaling. It has successfully on boarded 25% of Pakistan’s top exporters, has 150+ active shippers, moves over 4,000 tons per day on average, and has serviced 100+ lanes.
QisstPay stands out for introducing the Buy Now Pay Later (BNPL) model in Pakistan. Simply put, it is an installment payment service for emerging markets at zero interest. With a mix of equity and debt, QisstPay has raised $15 Million across its seed & pre-seed rounds.
Growing rapidly at a 92% week on week growth, it is currently serving over 500 retailers in Pakistan. In the future, it plans to expand services in Sri Lanka and Bangladesh.
A B2B fresh produce marketplace, Tazah is using a managed marketplace model where it guarantees the quality of the produce by screening it. Headquartered in Lahore, it has raised $ 2 Million in a pre-seed round. It is already serving around 300 businesses and individual sellers of different sizes in Lahore, helping them procure their inventory of produce it sells.
Tazah may still be in its initial stages of operations but its potential to scale is large. In terms of the market it is targeting, the agriculture and food supply chain in Pakistan represents a $ 60 Billion opportunity. At a macro level, inefficiencies result in significant food wastages, food price inflation and therefore consumers spend almost 33% of their income on food. It is precisely this challenge that Tazah is slowly overcoming.
Converting Investment into a Scalable Opportunity
There are a few common factors in the startups mentioned above – VC investment being just one.
- They converted the economic challenge COVID-19 posed into an opportunity – not just for themselves but for their customers and users.
- All five point towards an age old startup rule: solve a real user-centered problem.
- They operate in markets with huge undertapped potential.
- It’s the effort put in place by co-founders in understanding the market to the core.
The interest and risk-taking approach of investors including Aatif Awan of Indus Valley Captial, Ali Mukhtar of Fatima Gobi Ventures, Faisal Aftab of Zayn Capital, and Kalsoom Lakhani and Mishbah Naqvi of i2i Ventures is significant. It is the engagement of local investors that has given confidence to foreign VCs and has opened doors for the ecosystem.
Industry dynamics in most markets, including ours, still operate on old school and conventional methods. True, disruption takes years but Pakistan is taking its first step towards that. It takes persistence, resilience and belief. It requires bravery. Disruption calls for scale and in Pakistan, startups are scaling, scaling fast. The next phase for startups will now depend on one aspect: scaling horizontally and vertically to make Pakistan one of the strongest economies in the region.
*The article was published in Aurora Magazine on 29th of December, 2021.