As Q3 of 2024 comes to a close, Pakistan’s startup ecosystem is beginning to show signs of recovery after a shaky start to the year. While challenges remain, a combination of renewed investor interest and stabilizing macroeconomic conditions is aiding in the recovery. The IMF has revised Pakistan’s growth forecast to 3.2% and expects the average inflation rate to decrease to a single-digit by the end of FY 2024. The improving macroeconomic indicators is expected to contribute to an increase in Venture Capital funding.
Globally, VC funding in Q3 stood at $66.5 Billion, showing a quarter over quarter decline of 15%. However, compared to last year’s total Global VC funding of $285 Billion, this year’s funding is expected to be greater than last year’s if the current pace of investments is sustained–which stands at $212 Billion YTD.
Q3 Funding Overview
Pakistani startups raised around $15 million in Q3 across 4 publicly disclosed deals, a staggering 650% increase from Q2. This quarter alone contributed to 67% of the total startup funding in FY 2024.
Reported Deals this Quarter
July:
- DealCart: Raised $3 million in a Seed round led by Shorooq Partners and Sturgeon Capital with participation from other international and local VC firms.
- Zyp Technologies: Raised $1.5 million in a Pre-Series A round led by Shorooq Partners with participation from local VC firms.
August:
- PostEx: Raised $7.3 million in a Pre-Series A round led by Conjunction Capital with participation from other international and local VC firms.
September:
- QistBazaar: Raised $3.2 million in a Series A round led by local VC firm Indus Valley Capital with participation from Bank Alfalah and Malaysia based VC firm Gobi Partners.
Highest Funded Sectors:
Fintech and Mobility and Supply Chain Logistics remain the focus of investors, attracting $12 million of the total $15 million raised in Q3. Particularly, the Digital Lending, BNPL, and Electromobility sub-sectors are attracting a major chunk of this funding.
Founder Gender Diversity
To say that Gender Diversity took a huge slump would be an understatement. No Female Founded or Co-founded startups received funding in Q3. Of the 6 deals so far this year, 100% of the funding went to Male Founded startups. It goes on to show that access to funding for female founders still remains a distant reality.
Investor Activity
Investor confidence is on the rise compared to previous quarters. And it is expected to further increase with easing macroeconomic conditions. 67% of the funding rounds this quarter were led by international VC firms/accelerators. Which indicates that investors are positive about the potential of Pakistani startups.
Looking Ahead
As we head into the last quarter of the year, there is optimism within the ecosystem. Fueled by the falling interest rates, better performing economy, and the IMF’s first tranche of $1.03 billion, we are hoping that this optimism will translate into more deals in Q4.