Pakistan’s Startup Funding Drops Significantly

Pakistan startup funding witnessed a major decline in 2023 owing to high interest rates and a globally tight-fisted environment, as per a source. The startups were only able to raise a meager $75.6 million in funding in 2023, registering a decline of 77.2% year-on-year.

The startup funding was badly affected if we compare it with the funds raised in 2021 and 2022, when they stood at $365.8 million (the highest ever) and $332.4 million, respectively. Experts said the drop in startup funding was not just limited to Pakistan, attributing the fall to a global phenomenon because of the higher interest rates as the world began to recover from the COVID pandemic.

Moreover, according to Data Darbar, there was funding across 37 startups. It was 47.9% lower annually. The average ticket size also dropped to $2.4 million in 2023, witnessing a decline of 60% over the year before.

Moreover, the stats show that more than half of the money came during Q4, which saw 15 investments worth $38.6 million. Most startups that raised funding during 2023—21 of the 37 deals—were at the seed stage, raising $46 million. Accelerator rounds came in second, with an amount of $1.8 million that was even further behind. On the other hand, $19.2 million was raised in Series A, though $16.5 million came from Retailo’s bridge.

“This signifies the capital crunch at the growth stage where deals aren’t either closing or investors aren’t following through on their commitments, as reportedly happened with Jugnu,” Mutaher Khan, co-founder of Data Darbar, told a media outlet.

Sector-wise, e-commerce grasped the biggest chunk of startup funding at $23.95 million, continuing its dominance for another year. Once again, Retailo’s round, given its sheer size, boosted the numbers. On the other hand, fintech dominated the deal count at 7 ($19.6 million), while transport and logistics managed to raise $13.6 million across 6 deals.

“It was also the best year on record for female-founded startups, which recorded funding of $10.5 million. This took their share in overall investment to 13.9%, well above the average of 1.34% between 2019 and 2022,” Khan said.

“On the other hand, female co-founded companies saw a decline in absolute dollar value to $11 million. However, it still represented 14.5% of the annual total amid a much lower denominator.”

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