- Pakistani startups raised more than $70 million in 2023, which represents a significant decline of more than 70 percent compared to the previous two years.
- Acting IT Minister says the government hopes to create value of at least Rs 50 billion annually in Pakistan’s startup ecosystem.
The government on Tuesday launched the Pakistan Startup Fund (PSF), which aims to invest Rs2 billion annually in startups, Acting IT Minister Dr Omar Saif said, after a dismal year for business activities in the country.
According to Saif, the venture fund is designed as equity-free capital that will help close a venture capital (VC) round for a startup and help it raise its first outside investment.
This development comes after a lackluster year for Pakistani startups. In 2023, they raised more than $70 million, according to independent tracking firms, which represents a significant decline of more than 70 percent compared to the large influx of funding in 2021 and 2022.
“Today we launched the Pakistan Startup Fund (PSF), which will invest up to Rs 2 billion annually in Pakistani startups,” Saif wrote on social media platform X, previously Twitter.
“If you are a startup in Pakistan and a foreign VC is evaluating your startup for a $1 million investment, the VC only needs to invest $700,000; the Pakistan Startup Fund will provide you with a $300,000 grant to help close the round.”
Saif assured the startups that the government will not obtain shares or seats on the board of directors in exchange for funding. He said that the Enterprise Support Fund aims to reduce the risks of international investors investing in Pakistani startups. Once the government gives money to startups, “we won’t bother them at all,” he added.
“With PSF, we hope to create value of at least Rs 50 billion annually in Pakistan’s startup ecosystem,” he wrote.
Pakistan’s financial regulators last week expressed optimism about 2024, predicting a more promising year for local startups after the country’s general elections.
They noted that Pakistan’s ongoing economic recovery and the announcement of elections have restored investor confidence, which is expected to boost the startup ecosystem in the country.