As we close out the first quarter of Pakistani Startup Funding in Q1 2023, it’s time to dive into Invest2Innovate’s Quarterly Deal Flow Update. This quarter has seen significant global interest rate hikes as countries tackle inflation concerns. The question remains: will these monetary policies curb inflation effectively, or will they lead to an economic downturn? Additionally, Pakistan’s regional instability could further impact its startup ecosystem. Let’s explore this quarter’s investment landscape to assess the resilience of Pakistan’s startups in these challenging times.
Investment Overview: Pakistani Startup Funding in Q1 2023
In Q1 2023, Pakistani startups raised $23.1 million across 7 deals. Since 2015, startup funding has reached $945.4 million across 321 deals.
- Q1 2023 vs. Previous Quarters: The amount raised this quarter represents a 55% increase from Q4 2022 but is down 86% compared to Q1 2022. This drop highlights the adverse effects of economic instability on business activity. In comparison, neighboring regions reported:
- Bangladesh: $31 million across 3 deals
- Egypt: $31 million across 26 deals
- Saudi Arabia: $515 million across 26 deals
- UAE: $129 million across 30 deals
Notable Deals: Pakistani Startup Funding in Q1 2023
- January: Befiler raised $1.5 million.
- February: Swagkicks secured $1.2 million, Adalfi raised $7.5 million, and Lokal obtained an undisclosed amount.
- March: Maqsad raised $2.8 million, Trukkr secured $6.4 million, and Trax obtained $3.7 million.
All disclosed deals were at the seed stage, except for Lokal, which was at the pre-seed stage.
Sector Highlights: Pakistani Startup Funding in Q1 2023
The highest funded sectors this quarter were:
- Logistics: $10 million
- Fintech: $9 million
Fintech continues to attract substantial investment in the MENAP region and is expected to secure more funding in the near future.
Founder Gender Insights: Pakistani Startup Funding in Q1 2023
In Q1 2023:
- Male-founded startups: $23.1 million across 6 deals
- Female co-founded startups: An undisclosed amount across 1 deal
- Female-founded startups: No funding announcements
Mergers and Acquisitions (M&A): Pakistani Startup Funding in Q1 2023
Global M&A activity was anticipated to rise in 2023, and Pakistan saw notable acquisitions this quarter:
- S4 Digital: Acquired a 70% stake in Pakistani digital marketing firm Bramerz and a majority stake in HR Ways, a women-led company.
- Arbisoft (Edly): Acquired assets from French company Overhang, including Tutor, for Open edX.
- Abhi: Acquired a minority stake in BlueEx, enhancing its fintech and logistics capabilities in Pakistan.
Despite a slowdown in deal flow compared to last year, M&A activity indicates strategic shifts within businesses aiming for growth in the current economy.
Investor Activity: Pakistani Startup Funding in Q1 2023
Compared to last year, investor activity has shifted notably:
- Q1 2022: International angels represented 9% (8 out of 89 investors) of total disclosed deals.
- Q1 2023: This increased to 26% (7 out of 27 investors).
The rise in international angel participation suggests that despite macroeconomic and regional challenges, there is continued interest in Pakistani startups, particularly at the pre-seed and seed stages.
Conclusion
As we conclude our Q1 2023 investment roundup, we hope this update provides valuable insights into Pakistan’s startup ecosystem. While deal flow has slowed compared to previous years, the resilience of Pakistani startups is evident through M&A activities and the ongoing interest from international investors. As we navigate uncertain economic conditions and regional instability, we encourage you to stay optimistic about the future. Thank you for joining us, and we look forward to bringing you more updates in the next quarter.