Highlight some of the most remarkable trends and attributes to Pakistan's 300%+ YoY funding growth driven by the top 3 industries
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It was a big year for the Pakistani VC ecosystem which introduced many themes and trends detailed in our Pakistan 2022 Venture Investment Report. For one, the ecosystem upheld its 4-year consecutive growth in deal count, reflective of a vigorous entrepreneurial scene with burgeoning interest from investors. The latter also made a mark on the rise of VC funding in 2021, where the number of global and local investors backing Pakistan-based startups almost tripled between 2020 and 2021. Many of these investors, while have backed numerous startups across Emerging Venture Markets, made debut investments or doubled down on their mandates. Success stories of the latter include global investors like Global Founders Capital (Germany), 92 Ventures (USA), and MSA Capital (China); after making 0 investments in 2020, some of them closed up to 11 new deals in Pakistan over 2021.
On one hand, this funding surge could be attributed to the impressive level of intricacy and business acumen founders have been showing across industries, meeting an expedited market adoption of digital solutions. On another, both private and public initiatives have been expanding their efforts to create conducive innovation environments. The government’s 3-year tax exemption along with the rollout of innovation hubs and public funds have been major boosters for the entrepreneurial scene. Pakistan-based founders are also being met with bridge-building opportunities by the likes of Paklaunch, where their premier virtual conference ‘The Next Big Thing’, was attended by the most prominent global investors including Kleiner Perkins, 20VC, Quiet Capital, and Antler.
In light of that, exceptional VC investment has been made in Pakistan over 2021 both in number of deals closed and funding amount. Here are the top 3 industries which drove the 355% funding growth in Pakistan over 2021:
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Highlight: Airlift Technologies
Driven by Airlift’s historic $85M Series B deal, 1 of 5 Series B rounds in Pakistan, and investor interest in hyper-localized digital disruptions, the Transport & Logistics (T&L) sector achieved more than 200% in VC funding growth YoY to rank as the most funded industry in Pakistan over 2021.
This hasn’t been the only remarkable feat for the sector over the past year, where sizable investments backed startups like travel booking platform Bookme.pk, instant courier service Bykea, and supply chain solutions provider BridgeLinx boosted the number of transactions closed. The number of T&L transactions in Pakistan 2021 observed a 400% YoY growth with early signs of emerging T&L stars like TruckSher, which was acquired by UAE-based TruKKer shortly after fundraising, and Pakistan-based Q-commerce pioneer Krave Mart, which raised an unprecedented multi-million Pre-SEED round.
The global movement towards FinTech innovations surely took shape in Pakistan over 2021. Observing more than 300% YoY growth in number of transactions closed, the sector ranked first by number of deals despite being overshadowed by T&L and E-commerce in the amount of VC funding raised throughout the year.
In close proximity, the difference in funding between FinTech and the most-funded sector T&L is slightly north of 30%, which was a result of equally sizable rounds raised by the FinTech sector over 2021. Attracting global investors like Tiger Global, Quona Capital, and Banana Capital along with local giants like i2i Ventures and Fatima Gobi Ventures, Pakistan observed major FinTech Rounds closed in 2021, the highest being a $12M SEED round by instant payment solutions provider TAG. Other major rounds were closed by the likes of digital ledger Creditbook, receivables factoring solutions provider PostEX, and alternative digital banking platform Sada Pay.
Highlight: Bazaar Technologies
E-commerce in Pakistan grew exponentially throughout the past 3 years gaining global and local investor interest. The number of deals closed by E-commerce startups in 2021 grow by almost 10x since 2018, where funding grew from almost reaching $4M in 2018 to a little south of $90M in 2021.
With debut investments from global players like Wavemaker Partners and Kleiner Perkins, the sector was able to rank second both in number of transactions closed and amount of funding. VC focus in Pakistan was congruent to other emerging venture markets, where E-commerce Rounds 2021 were backing B2B solutions, E-commerce propositions with FinTech integrations, and surely early ventures of Q-commerce, where the highest round was closed by B2B E-commerce startup Bazaar Technologies. Of these FinTech startups raising sizable investments in 2021, we highlight top rounds closed by B2B startup Tazah, and FinTech-powered E-commerce propositions like Udhaar App, dastgyr, and Tajir Pakistan.
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