Where do we stand in terms of startup funding?

While Pakistan is increasing its attempts to digitize its retail food sector, which ranges from rapid commerce to stringent B2B business models, the startup financing market is seeing a decline. As investment and transactions stagnate throughout startup ecosystems, it is difficult for entrepreneurs to get cash.

In terms of worldwide finance, the most recent quarter was the weakest since 2020, due to the global economic slump. In consequence, even in the tech startup sector, investment, which surged to record levels following COVID in 2021, has decreased in 2022.

Domestically, the startup ecosystem suffers the same obstacles. For instance, the recent announcement that Airlift has completely shut down has produced a dismal environment since it was one of the most heavily backed businesses in Pakistan and recently received its most recent round of investment in 2021.

However, invest2innovate’s Deal Flow Roundup for the second quarter of 2022 reveals that the situation is not that dire. Despite the fact that the second quarter of 2022 was 40 percent slower than the first quarter, the overall YTD progress for 2022 is that startups have raised about 80 percent of what was raised in total in 2021. Moreover, the first quarter of 2022 was the strongest quarter for Pakistan in terms of fundraising. According to the tracker, the amount raised in the second quarter of 2022 was $102.7 million across 15 agreements, while the overall amount raised in 2022 so far was $274.7 million across 37 deals. The total amount raised between January 1, 2022 and June 30, 2022 was $275 million, compared to $350 million in 2021.

The significant sums generated by several transactions, such as Dastygr’s $37 million Series A, Abhi’s $17 million Series A, and MedznMore’s $11.5 million Pre-Series A, were the highlight of the second quarter’s performance. E-commerce was the industry with the highest growth rate, followed by fintech and healthcare.

Startup participants must recognize that what occurred with Airlift is not out of the usual for the startup industry. Some startups are successful, but the majority fail. Startups are high-risk investments for this reason. Mohib Hassan, COO of Sastaticket.pk, emphasized in a that rising inflation exerts contractionary pressure on riskier investments such as startups. He also noted that startup ecosystems have grown globally and expressed optimism that Pakistani businesses would be able to attract further money. He also pointed out an expanding trend of local investors participating in Series A and Series B rounds of investing in firms, with local angel investors becoming more involved in later-stage investments.