In the first quarter of the calendar year 2023, Pakistan’s startup funding grew by 55% to $23.1 million from the previous quarter. (October-December 2022). However, when compared to the same period the previous year, financing has dropped by 86%, with startups receiving $172 million in the first quarter of 2022.
Pakistan’s startup funding status
Since the first quarter of 2022, quarterly financing has been declining, reaching a low of $15 million in the fourth quarter of 2022. According to experts, this downward tendency is due to economic issues in Pakistan as well as global developments such as central banks, particularly the Federal Reserve, raising interest rates.
Because interest rates were virtually zero in 2021, venture capitalists invested in markets such as Pakistan, Egypt, and Nigeria in search of yield in the global economy.
Pakistan’s startups raised $366 million in 2021, according to data compiled by Data Darbar, a website that monitors funding flows into the country’s tech ecosystem.
The year 2022 began well, with an investment of $172 million in the first quarter, but fell to $15 million in the final quarter. The total came to $347 million, which was 5% less than the prior year.
Pakistan’s startup funding was skewed towards late-stage startups, with high-value deals in B2B sectors such as Bazaar, Retailo, and Jugnu, with an average deal size of $15 million at Series A and B levels in the first quarter of 2022.
In contrast, the pattern so far this year indicates that investors are increasingly interested in funding early-stage startups. As a result, the average deal size during the quarter was $3.3 million, as investors stayed wary of larger deals in late-stage startups.
Fintech remained the most popular industry, sharing the spotlight with logistics, e-commerce, edtech, and hospitality this quarter. AdalFi ($7.5 million) and Trukkr ($6.4 million) were the top two transactions.