Mohsin Siddiqui (Chief Reporter)
In a proactive move to address declining startup investment, the interim government has officially rolled out the ‘Pakistan Startup Fund’ (PSF), committing an annual investment of up to Rs2 billion in the country’s startup sector. Dr. Umar Saif, caretaker minister of IT & Telecom, and Science & Technology, announced the launch, emphasizing the fund’s objective to support startups in securing their initial external investments.
Dr. Saif shared insights into the robust investment landscape, citing over $800 million invested in Pakistani startups in recent years. He expressed optimism, stating that some of these startups are poised for unicorn status. Emphasizing Pakistan’s potential as the fifth-largest country globally, with widespread smartphone usage, he asserted that the emergence of unicorns is within reach.
The genesis of the Pakistan Startup Fund traces back to October when Dr. Saif discussed its establishment during GITEX GLOBAL 2023. The fund utilizes revenue from IGNITE, funded by a portion of the federal government’s telecom receipts. Dr. Saif clarified that the government aims to become the “last check of equity-free capital in a venture capital round.”
In a recent tweet, Dr. Saif elaborated on the PSF’s equity-free structure. If a foreign VC is evaluating a Pakistani startup for a $1 million investment, the VC only needs to invest $700,000. The PSF will grant $300,000 to facilitate the VC round closure without acquiring equity, shares, or board positions. Dr. Saif highlighted the PSF’s purpose—to lower risk for international investors, fostering a hassle-free investment environment.
The caretaker minister expressed the hope of creating an annual value of at least Rs50 billion in Pakistan’s startup ecosystem through the PSF. This initiative comes at a crucial time when Pakistan’s startups attracted only $75.6 million in 2023, a significant 77.2% YoY decrease attributed to high-interest rates and a global tight-fisted environment.
Experts noted that the decline in startup funding is a global phenomenon, linked to rising interest rates post-pandemic recovery from 2021 onwards. The PSF, with its equity-free approach, aims to counterbalance these challenges, providing impetus to Pakistan’s startups and contributing to the growth of the overall startup ecosystem.
