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Hello reader,
The hardest lessons usually stick with us the strongest.
When we lose a job, when an investment doesn’t work out, or when we burn a bridge – these experiences yield lessons that last a lifetime. And we’d better learn from those setbacks; otherwise, we’ll be doomed to repeat them.
It seems Pakistan’s startup ecosystem has digested a tough lesson or two. As today’s premium piece explores, startups that expected funding to keep flowing like it did a few years ago have fallen by the wayside, while those that focused on saner unit economics have stuck around.
Today we look at:
- The Pakistan startup ecosystem’s defining test
- How BNPL gave Atome Financial a solid 2023
- Other newsy highlights such as Khazanah Nasional’s new fund for SEA startups and why fintech startup Bambu shuttered despite moving towards profit
Premium summary
Lessons learned in Pakistan
Image credit: Timmy Loen
VC funding for startups in Pakistan reached a high of US$352 million in 2021, but that figure fell to just US$75.6 million in 2023.
The global VC winter and internal crises have hit local startups hard, but the contraction of the ecosystem can be turned into a positive.
- Perfect storm: The funding glut of 2021 drove a lot of startups to scale fast and worry about profitability later, following the Silicon Valley playbook. When foreign VCs left the market in droves a year later amid the global tech winter and Pakistan-focused VCs keyed in on unit economics, some startups such as ride-hailing firm Airlift failed to raise money and eventually died.
- Eyes on the prize: Those still standing zeroed in on sensible unit economics, which VCs still investing in Pakistan market value highly. Fintech firms, in particular, have thrived, thanks to the cheaper operating expenses in the country and positive moves in the regulatory environment.
- Risk mitigation: Amid Pakistan’s economic slump, local founders are baking risk mitigation into their models. Some sell abroad in stronger markets like Saudi Arabia and the United Arab Emirates. Others focus on hyperlocal innovation instead of simply trying to replicate business models that have worked overseas, which many did burning the funding glut.
Read more: Pakistan’s startup funding shortage sorting the wheat from the chaff
News spotlight
Atome Financial’s awesome year
Early bird tickets are sold out – secure your seat now!
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