The Startup Boom in Pakistan: A Quest That Will Soon Transform the Country.
It is undeniably true that huge amounts of funding have been pouring into almost every industry in Pakistan. From social-economic factors to the rapidly changing dynamics of the world, many elements are working together when it comes to enlightening the startup boom in Pakistan. McKinsey & Company estimates that the country’s economy is expected to grow 6% per year through 2026.
According to the majority of current market facts and insights, the total number of small-scale investments in 2021 is at an all-time high in Pakistan. Not only in Karachi and Lahore but emerging entrepreneurs can be seen in almost every corner of the country. From sports, science, technology, and health to automobile, agriculture, development, and even services sector, the youth has started to show its impact on a national as well as international level.
Surprising Insights from The Current Local Market
In the past few years, it has been widely observed that eCommerce gained huge fame in Pakistan. Along with that, the novel coronavirus further pushed the nation to move on to online platforms which created significant awareness on a national level and a chance for entrepreneurs to introduce their ideas in the form of modern-day businesses that sell products and offer services.
To get a better idea of what’s going on in the current market, take a look at the below-mentioned latest insights:
· Airlift, a famous shopping delivery service raised $85 Million in investment.
· Bazaar, a B2B marketplace in Pakistan raised $17 Million in funding.
· Artie, a mobile game development startup raised $10 Million.
· Pakistani fintech, SadaPay raised $7.2 Million in a seed round.
· Fitoor, a Pakistan based art marketplace raised Rs. 2.55 Million in investments.
· An online trading app by Seeds Labs raised $6.4 Million in seed funding.
· Aly Fahad, a Pakistani-American at Amazon brought $6 Million in startup investments.
· Another Pakistani fintech startup, Creditbook raised $1.5 Million in seed funding.
· Pakistan’s trucking company, Truck It In raised $1.5 Million in a seed funding round.
· Marham.PK, a Pakistani health startup raised $1 Million in seed funding.
· Sehat Kahani, a telemedicine network startup based in Karachi raised $1 Million.
The list of such startups will not stop at all. There are countless small-scale businesses that have rapidly emerged from zero. The majority of startups in Pakistan are eagerly looking for funding from abroad. But there is a huge challenge and that’s all about the existing law of the Islamic Republic of Pakistan.
Prominent Challenges Against the Startup Boom in Pakistan
The aforementioned latest industry facts and figures show that the startup segment is thriving in Pakistan which is certainly a good reason to celebrate. On the other hand, there are many complex challenges as well.
The Law Prohibits Foreign Investments
According to the law, not all foreign companies are allowed to invest. Startups are prohibited to get investment and funding from only Pakistani organizations which is indeed a big hurdle. Therefore, the Government of Pakistan should look into revising the law and policies to encourage entrepreneurship.
Lack of Technology, Innovation, and Industrialization
It is also being observed that countless intelligent and skilled people have got unique business ideas but due to the lack of technology and innovation, they are unable to transform their goals into realities. In order to encourage the startup boom in Pakistan, the government requires to take strategic steps and allow the introduction of state-of-the-art technologies from other countries. Whether it is about science or creative digital artwork, there is a lot of development required.
Development of Incubation centers and Mentors
Countless startups kick off each year in Pakistan, but not all of them succeed in their strategic business goals. One of the core reasons behind this is that there are no incubation centers in the country. The purpose of these centers and related mentors is to provide help, support, and expert guidance to the entrepreneurs.
The Role of Stable Money Market
By looking at the dynamic money market in Pakistan where even a community level issue can drastically impact the money and shares market, it is very difficult for the government to control and manage the economy effectively. It gives rise to inflation which is why businesses find it difficult to manage their variable and fixed costs.
Lack of Talented Human Resource & Gender Inequality
Another big challenge that many startups face in Pakistan is that they are unable to acquire the best human resource for their business. Most of the industry surveys show that the majority of capable and talented people opt to join well-established and high paying organizations within their niche. This gives rise to the scarcity of experienced and talented human resources.
In addition to that, gender inequality is also another key issue that needs to be addressed. In many cases, it has been observed that women can work pretty well compared to men but they are not provided with equal employment opportunities. This creates discrimination and discouraging the right person to be on the right job post.
Higher Interest Rates and Fewer Banks That Support Startups
No matter how big and astounding the idea is, it requires a huge amount of money to kickstart any type of business in Pakistan. When there is a unique project that has never been introduced in the country, then the costs may rise further.
Commonly, startups look for fundraising and taking loans from private and public banks. When it comes to Pakistan, the government isn’t able to offer attractive and helpful loan schemes. Whereas, the private banking sector charges incredibly higher interest rates that are almost out of reach for most entrepreneurs.
Despite All Challenges, The Youth Is Motivated and Dedicated to GrowPeople with entrepreneurial mindsets in Pakistan are highly motivated and passionate about the struggle that they have started for their respective businesses. Despite all types of minor and major challenges, the industry is on an unstoppable journey towards success.
If the Government of Pakistan pays more attention as it has already started to take strategic steps to increase entrepreneurship in the country, then the future of the industry seems bright. In most cases, startups are unique ideas that address the new and unique needs of the end-users. If they are backed well, then nothing can stop them from witnessing exponential growth and adding more value to the startup boom in Pakistan.