Deal Flow Roundup | Q4 2021

Introduction

Pakistani startups raised $69 million in Q4 2021 across 22 deals. This brought the total amount raised by Pakistani startups in 2021 to $350 million across 81 deals, marking a more than fivefold increase from 2020. The Pakistani startup funding landscape has reached an exciting inflection point, with international VCs writing significant checks into the country. Here are some key takeaways worth noting:

E-Commerce and Fintech Funding

Overview of Sector Funding

In 2021, e-commerce raised $202 million in 23 deals, while fintech raised $95 million in 25 deals. However, in Q4, fintech startups outpaced e-commerce startups for the first time. This shift is due to a favorable regulatory environment opening up the sector significantly. In 2022, fintech startups are expected to raise later and larger funding rounds, potentially surpassing the growth of the e-commerce space.

Average Ticket Sizes

Average ticket sizes in fintech have been on the rise since 2016. In 2021, the average ticket size in fintech stood at $4.8 million, compared to $6.5 million in e-commerce. This increase is expected to continue as current fintech companies raise later rounds of funding. Notably, the average ticket size for fintech deals grew from $2.6 million in 2020 to $4.8 million in 2021.

Female-Founded Startups

Investment in Female-Founded Businesses

Although no female-founded startups raised investment in Q4 2021, female-founded businesses raised a total of $4 million in 2 deals (Oraan and Sehat Kahani) in 2021, the highest ever so far. Female co-founded startups raised the highest amount ever, totaling $114 million this year. Notably, Airlift, which raised $85 million in their historic Series B, has a female co-founder.

Stage-Wise Ticket Sizes

Growth in Average Ticket Sizes

Startups also saw an increase in average ticket sizes by stage. The average ticket size for pre-seed deals jumped from $1.3 million in 2020 to $2.4 million in 2021. Similarly, the average seed deal increased from just under $1 million in 2020 to $3.9 million in 2021. Series A average ticket sizes grew from $7 million to $8.1 million, and Series B went from $13 million to $18 million (even excluding Airlift’s $85 million round).

Conclusion

The surge in funding and increase in average ticket sizes across different stages highlight the growing confidence of investors in Pakistani startups. With a supportive regulatory environment and an increasing number of significant deals, the future looks promising for the Pakistani startup ecosystem.