Pakistan’s startups are struggling to break out, but here are 27 incubators that could help

Shehryar Hydri is the the director of marketing and operations at Convo, a private enterprise social network for real-time collaboration. You can find him on Twitter as @sheryhydri.

Until recently, the only incubators in Pakistan were found in hospitals or poultry farms. But now startup incubators are proliferating. This phenomenon is part of the global wave of shared office spaces, accelerators, incubator programs, and university labs that cultivate entrepreneurship and innovation in the hope of kickstarting their local tech ecosystems and becoming their region’s Silicon Valley.

Like all trends in Pakistan, entrepreneurship is a hot buzzword that’s thrown around too often and hyped beyond what the market fundamentals can support. It’s encouraging to see people get excited about running their own companies, but it’s critical to provide them the tools and most importantly the mindset to achieve extraordinary success on a global scale, rather than ending up as an ordinary local company.

Before looking at the 27 incubators that now exist in the country (embedded below), first we need to understand the environment in which these wannabe entrepreneurs are dreaming about making their first million dollars. Or, inspired by the Zuckerberg story, a billion dollars. Maybe we need a reality check first.

Ground realities

Most tech grads swept away in entrepreneurship fever follow the familiar path of two or three friends moonlighting on freelance work and then finishing their computer science degree to start a “company”, which basically means the three of them sitting at someone’s home and making websites for random clients on Odesk, Elance, or their cousin in Toronto. Once the money starts flowing in, they get a small office and hire three more people to start app development services for iOS and Android. There might be Macbooks and iPhones on the table and a Steve Jobs poster on the wall but it’s a slow, linear slog of adding “seats” and scrabbling around between between rock-bottom hourly rates, Pakistan’s image problem, and offshore client’s expectations.

This service model offers the low hanging fruit that helps get a foothold in the market but it also sucks away the time and energy needed to work on your own products. If services do well, you get more work and more money and the option of risking all that for a fantasy product with no guarantee of success is a difficult decision, one that seems harder with every passing year. It’s a bit like painting walls on daily wages and wishing that one day you’ll create the next Mona Lisa.

Even the largest tech companies in Pakistan are primarily providing services or earning from consulting focused on the typical ERP, CRM, HR, business outsourcing (BPO) solutions that a thousand other providers are vying for. Only a handful have been able to make standalone products that are profitable, let alone become leaders in their segments or globally known brands.

For any ecosystem to succeed, we need these four elements:

1. An ample supply of skilled teams with unique, viable ideas.
2. A large marketplace that’s hungry for those products and services.
3. Multiple sources of funding for those teams.
4. Bigger companies that support and ultimately acquire those startups, providing investors and founders a lucrative exit, so that the whole cycle can start again.

In Pakistan’s IT industry, two of those key elements have been missing. We’ve always had teams with ideas as well as access to local and some global markets but we’ve never had any major funding sources, solid mergers and acquisition activity, or exit options. Add to that an absence of supporting legal frameworks and a dismal R&D culture and it seems impossible to establish a self sustaining loop.

There’s a reason why Silicon Valley has not been replicated anywhere in the world – not in Japan, Europe or any emerging market with petro dollars. Even if we ignore the secret sauce and the history of how that ecosystem came to be, just the sheer volume and frequency of the deals make it an unbeatable Mecca of the tech universe.

In 2012 alone, $27 billion was invested by 530 VCs in 3,826 technology sector deals. There were 49 IPOs and 487 M&A deals. To put that in perspective, that’s more money than Pakistan made through all its exports last year.

(Read: Rocket Internet’s fashion e-store for Pakistan now delivering over 1,000 items every day)

Comparisons

The missing elements

May you live in interesting times

Incubator list