Happy 2023!! Our Insights team Invest2Innovate (i2i) have produced a beautifully succinct 2022 EOY roundup (think our startup ecosystem report but much, much more bite-sized) on the Pakistan startup landscape. (You can access it here yourself here, though I’ve shared the slides below: https://lnkd.in/etknzA8c) Here are my broad takeaways: 1/ Pakistani startups in 2022 raised $355M, barely surpassing our 2021 number ($354M), but the PACE of funding towards the latter half of the year is what is imp: in Q4 we raised $15M, 78% down from what we did in Q4 ’21 & much less than what we did in Q1 ’22, proof of the funding “slowdown” (the word of 2022!) that very much impacted our market & was not helped by Pakistan’s macro realities. 2/ In terms of sectors, similar to 2021, e-commerce & fintech remain the top 2 most funded sectors in Pakistan, though for both b2b approaches remained the most popular (for fintech, it first appears it’s b2c, but if u combine b2b, b2b/b2c & b2b2c it amounts to more), which makes sense given the macro realities & shrinking consumer spending. b2b fintech globally was also more well funded than b2c, so Pakistan’s #s track well (and I think will continue to be the case in 2023). 3/ While this year felt very doom & gloom, there were some new entrants that are a highlight — players like Sequoia Capital & Speedinvest made their first investments in Pakistan (in Dbank & Abhi respectively), which is a strong signal. 500 Global announced their entry into Pakistan via partnership with JS Bank, and the IFC – International Finance Corporation announced a lot of funding, partially earmarked for startups in Pakistan. All good signs! 4/ M&A activity was another trend we found really significant — aside from the incredible Cloudways acquisition by Digital Ocean ($350M), other local/regional consolidation will continue in 2023 given the macro environment, but is also a good & important signal given the question marks we often get re: exits in Pakistan. 5/ Looking forward, we believe the funding slowdown will continue into this year, and the biggest gaps will be felt at the growth stage (Series A & beyond). Good companies w/ good economics should still be able to raise, but valuations will need to come down to match the macro realities (which is not a bad thing, considering how inflated they were in 2021), and it may take longer to close a round, so founders, please keep this in mind. The EOY roundup includes quotes by Faisal Aftab from Zayn Capital, Robin Butler CFA from Sturgeon Capital, case studies on Abhi (YC S21) & BusCaro (thx to Omair Ansari & Maha Shahzad), & much more. Huge kudos to our Insights team for this fantastic work — Duaa Amina Noor, Ibrahim Iftikhar & Shifra Khan. Sana Khalid Misbah Naqvi i2i Ventures Ailia Naeem Ahmed Usman
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