Strategy Note /

Pakistan’s start-up boom: 2021 funding trends and what to expect

  • Pakistan start-ups received cUS$330mn in 2021, this is over twice as large as the previous five years combined

  • E-commerce leads with over half of funding value and fintech coming in at second with a quarter share

  • Start-up funding should remain strong: per capita funding is still very low and late-stage deals have yet to kick in

Pakistan’s start-up boom: 2021 funding trends and what to expect
Rohit Kumar
Rohit Kumar

Global Financials/Thematics

Rabail Adwani
Rahul Shah
Tellimer Research
9 January 2022
Published by

Pakistan is a country with over 180mn mobile subscriptions; half of these have mobile broadband connectivity. This represents a huge opportunity for tech start-ups in every field, including e-commerce and fintech. This opportunity is increasingly being recognised by early-stage investors; Pakistan had a stellar 2021 with start-up funding clocking in at US$330mn, more than twice the combined total of the previous five years. In this note, we look at start-up funding trends in the country, including how different sectors and stages contributed to the funding flows. We also highlight reasons why we think funding flows will continue to rise. In addition, we present the top funding deals of 2021 and key investors active in Pakistan.

2021 has been a stellar year for Pakistan start-up funding

Pakistan tech start-ups had a record year in 2021 in terms of funding. Funds raised totalled US$328mn across 63 disclosed deals (the total number of  deals was 80, including 17 deals with undisclosed amounts). Top put this in context, the total funding amount in 2016-2020 was US$132mn, and the 2021 amount represents a 5-fold increase compared to 2020’s US$60mn figure.

Pakistan's venture capital funding

E-commerce accounts for over half of the VC funding in Pakistan

E-commerce is the largest segment, accounting 56% of total funds received. Airlift technologies was major driver behind this mammoth share, with a US$85mn Series B round. The second biggest sector is fintech, with 28% contribution in total funding value.

Pakistan venture capital funding: Sectoral split

Payments, lending and financial management dominate fintech funding

Within fintechs, payments companies take a lead, with 36% of total funding received during the year; TAG and SadaPay are two companies that scored big-ticket funding rounds last year. Lending fintechs were second favourites for investors, taking 26% of total funding; QisstPay (a BNPL provider) leads the sub-sector with a US$15mn seed funding round. Financial management platforms, like CreditBook, have also gained traction with 21% of total fintech funding.

Fintech funding in Pakistan: Segmental split

Seed rounds contribute 80% of funding deals

Out 62 deals where funding stages were disclosed, 49 (c80%) were pre-seed or seed rounds with an aggregate funding amount of US$155mn (c48% of total funding). Globally, around 45-50% number of deals are concentrated in seed rounds, hence a higher concentration for Pakistan reflects country’s relatively early stage in technology boom. In addition, there were nine Series A rounds and only one Series B round, but due to their large ticket size, they contributed around half of the total funding value.

Pakistan VC funding: Split by deal stage

3 reasons why Pakistan’s start-up funding will continue growing

We think Pakistan's stellar 2021 is just a start, and that the strong funding flows will continue over the next few years. This is because:

  1. Pakistan VC funding is still significantly behind peers. VC funding per capita stood at US$1.4 in 2021 compared to median US$8.8 for EM peers.

  2. Late-stage VC funding is yet to begin. Currently 80% of funding is in seed stages where the average deal size is usually small. As these start-ups mature and conduct their late-stage funding rounds and advanced rounds, the total funding flows will grow further

  3. Many sectors are still untapped. E-commerce and fintech contributed a combined 84% in overall VC funding in 2021. Sectors like Agritech, Edtech, Regtech, Blockchain still lag and therefore could attract investor interest over coming years as the tech ecosystem develops.

Pakistan's VC funding per capita versus EM peers

Top VC funding deals of 2021

Below we highlight Pakistan's top 10 VC funding deals in 2021.

Top ten VC funding deals of Pakistan in 202

Leading VC investors in Pakistan

Based on data compiled by KTrade, all-time notable VC investors in Pakistan are mostly domestic, with Indus Valley Capital and Fatima Gobi Ventures leading with 12 fintech deals each. The foreign VCs with the most funding deals include Global Founders Capital, Sharooq Partners and Y Combinator. We expect foreign VC firms will increase their interest in Pakistan in coming years, extending the trend seen in 2021.

All time notable VC investors of Pakistan