[I wrote this article in March 2014 for Aurora.]
The tech industry of Pakistan has grown exponentially over the past decade and one of the game changers arose in 2008 and 2009 when the sector moved away from being primarily services-based to becoming a product-based one.
The implications of this shift have been multidimensional. Low initial investment, a small team of founders and a great idea was all that was required to establish a product-based tech startup. Added to this was the fact that the process was ‘simpler’ in terms of cost and time, compared to setting up a large scale services-based company.
Another contributing factor to the rise of tech startups was the popularity of platforms such as Facebook and Twitter which provided a new perspective to the local tech community about how apps and similar platforms (if they clicked) could become lucrative technology businesses, irrespective of the geography or physical location of the company.
For Pakistani expats who had left the country in the late 80's and early 90's, this was an opportunity to reconnect with the local industry by becoming investors and sharing their experiences as mentors to these product-based startups.
Although the role and importance of a mentor was neither recognised nor appreciated in the earlier half of the decade, recent local success stories in the tech space, such as Convo, Eyedeus Labs, HomeTown Shoes and iKnowl, have brought to the fore the positive correlation between mentorship and success.
Having access to mentors brings with it ‘better’ decision making based on technical learning and a deeper insight of the domain in question. Mentors bring a new perspective to a startup; their experience gives them a better understanding about how a startup will be perceived by different stakeholders, including customers, investors and partners.
Many organisations and institutions have also played a significant role in developing the foundations of an entrepreneurial ecosystem that facilitates the process of mentorship and networking in Pakistan.
For example, the Punjab Information Technology Board under the chairmanship of Dr. Umar Saif has driven home the importance of technology in public sector governance by successfully introducing technology in areas such as health and education as well as in policing.
Similarly, the Pakistan Software Houses Association for IT & ITES (P@SHA), headed by Jehan Ara has played an essential role in creating a collaborative platform for all stakeholders. Furthermore, by collaborating with Google Pakistan, P@SHA has facilitated the access to international markets of a number of technology startups.
The existence of facilities for early-stage entrepreneurial ventures, such as business incubators, accelerators and co-working spaces, although a new concept in Pakistan, have reduced the fear of risk-taking often associated with startups. Added to this they offer multiple perks, including access to a pool of mentors and speakers.
For example, Plan9, Pakistan’s largest tech incubator, and Invest2Innovate, an accelerator for social entrepreneurship, have a strong network of in-house ‘coaches’ and a pool of mentors to guide startups throughout the cycle.
Pakistan now has three significant co-working spaces - DotZero operates in Karachi, Basecamp in Peshawar and Plan9 TechHub (now TechHub Connect) in Lahore. Each one provides individuals and small groups the opportunity to work on their startups/products without having to bear exponential operational costs. The increased margin of profitability these spaces afford act as a motivator to develop one’s own startup. An added benefit of such co-working spaces is network opportunities, peer learning and interacting with speakers.
One of the challenges faced by local startups was the validation and authentication of their products. A startup cannot enter the global market without there being prior acceptance that the quality of the product being offered is at par with global benchmarks and that the market itself (for example the tech industry in Pakistan) is recognised for the quality it produces.
The role of mentors is crucial here as their direct interaction with the local startup adds to the validation of the market and talent thereby creating opportunities for local startups to enter the global market. Mentors give direction to startups, help them make better decisions by sharing their experiences. They also, on occasion, manage to acquire the first client.
Adding to the rise of an entrepreneurial culture are the emergence of ‘competition’ platforms, where individuals or teams are invited to present their business idea to a group of mentors. At the end of the exercise (these competitions are usually held over a weekend) the winning business idea is awarded a cash prize.
Pakistan StartUp Cup, Startup Pirates and Startup Weekend are examples of such events. These competitions serve the added purpose of helping participants become accustomed to the concept of sharing and taking feedback on board. They also impart a much needed sense of direction and reassurance and the sheer fact that their business idea receives validation increases the likelihood of it turning into a viable business proposition, as once validated the focus shifts to product development and going to market strategising.
Academia’s role in allowing mentors to act as agents of evolution has also been significant. Until now educational institutions focused on producing managers and engineers. Students were ‘trained’ to become ‘perfect employees’.
It is therefore encouraging to see a trend whereby universities are setting up their own incubation facilities, and this could signal a major paradigm shift. The National University of Sciences and Technology (NUST) is a good example of a university that has focused on entrepreneurship and has produced engineers with an entrepreneurial streak.
The recently opened Information Technology University (ITU) in Lahore is another example of an institution created to foster a culture of high-tech research and entrepreneurship. Graduates from such universities enter the market with the determination, knowledge and passion to set up their own startups.
An important hurdle in creating a strong entrepreneurial ecosystem has been the absence of venture capitalists, and raising seed funding has always been a major challenge; as a result co-founders have usually had to resort to personal loans or investments made by family and friends. However, a localised solution is being offered now with the introduction of angel investors. Affiliation with angel investors brings with it direct and consistent mentorship from the ‘angel’ and promises a long lasting relationship.
Although an entrepreneurial ecosystem is beginning to develop in Pakistan, it will require further cementing and will most of all need new heroes and new sources of inspiration. Mentors, angel investors, incubators and academia must all play their part in achieving this.