“Though it’s too early to say that recovery is in process, momentum is expected to pick up as economic conditions stabilize”– Burhan Mirza, Investor, IT Tycoon and Entrepreneur.
Over the past few years, Pakistani businesses have been struggling to get the targeted investment from foreign investors and VC’s due to many challenges. Despite these challenges, the startup ecosystem has shown gradual recovery and some managed to grow as well. While the first half of 2024 was relatively slow in terms of investment due to cuts in global VC funding and economic challenges, the last two quarters have brought a beacon of hope. “Though it’s too early to say that recovery is in process, momentum is expected to pick up as economic conditions stabilize,” said Burhan Mirza, entrepreneur, angel investor and IT Tycoon.
In Q3 of 2024, the funding landscape witnessed a partial recovery with a massive increase of over 400%. The startups were able to attract over US $15 million in investments in four deals. This revival can be credited to the improving macroeconomic indicators like inflation, monetary policy and stability in the currency. Furthermore, Pakistan’s credit rating was also upgraded by Fitch and Moody’s which signaled an increase in confidence in the country’s investment landscape. Four companies were able to secure funding during this time, including DealKart, Zyp, PostEx and QistBazaar and many others are now becoming more confident on it.
The increase in investment is also fueled by other factors like the recent performance of the stock market, which as per Bloomberg is termed as the world’s best-performing stock market in 2024. With the listing of 4 different companies in PSX this year, there has been a revival in the IPO market. The trends indicate that investors are opting for more risk averse and mature investments and we might see the same pattern in 2025. Once these startups operations become stable, they are well poised for a lucrative exit via other markets thereby increasing chances of other startups to get investments.
As we step into the New Year, there are many positive indicators for startups to anticipate what the future holds. Given the recent influx of VC investments and also the launch of initiatives like Shark Tank Pakistan it seems that we are finally heading in the right direction. We also spoke to Mr. Burhan Mirza, entrepreneur and investor for his views on the future of the investment landscape in Pakistan. Burhan highlighted that the economy has slowly started to stabilize which is a positive for many investors. He also stated that the rupee to dollar volatility was one of the primary reasons for investors to stay away from the Pakistani market because their investment would devalue even if the company was performing well. Now that it is slowly becoming less of a concern for major investors, we will see more stability and trust by the investors in 2025.
Moreover, the combination of a flourishing capital market, IT export growth, and an expanding tech sector, positions Pakistan as an attractive investment destination. It is still too early to say that the market is on its way to pre covid level recovery but signals a positive trajectory. There are a few factors which have to be evaluated before actually considering what the future will look like. First things first, the currency stability as mentioned by angel investor and entrepreneur Burhan Mirza, secondly the economic outlook of the country and more importantly the ever changing tax laws in the country.
If the contradictory factors stay intact, the overall landscape looks positive in the future. Recently, we saw a Pakistani startup, SadaPay acquired by Papara which is a renowned Turkish Fintech company and this was one successful exit in the past few years. If things go as they are, we can see many more startups getting successful exits in 2025 and many more getting investments and out of market expansions.
The stories coming out of the country illustrate the incredible potential that exists for founders in Pakistan. As more of these emerge, it will inspire a new generation of founders to take risks, solve problems and make it big to contribute towards the country’s economy. With sustained growth and innovation, the future of the investment landscape in Pakistan looks brighter than ever, paving the way for future generations.
