Disruption takes years. It takes persistence, resilience and undeterred belief in the larger vision of the start-up. It requires bravery. After laying the foundation during the past decade, Pakistan’s start-up ecosystem is taking its first steps in that direction. And at a fast pace. Year 2021 has indeed been momentous for the local entrepreneurial landscape. In the first nine months alone, $305 million worth of investments were raised – higher than the cumulative amount of the past six years. Pakistan now ranks fifth across Emerging Venture Markets (MENA, Turkey and Pakistan) by both funding and deal count; it was the only country in the MENAPT region to see deal count increase between 2021-Q2 and Q3. From an investor perspective, the number of active investors in Pakistani start-ups in Q3 YTD 2021 was double of that in FY 2020. More VC transactions were registered in Pakistan in Q3 2021 than in any quarter before. Let’s take a deeper, micro view to see how it happened.

Airlift

Airlift has raised financing worth $110 million to date, making it one of the most well-funded start-ups in the region. In Series B, it raised $85 million, a deal that made headlines in the local news. The round values the company stand at around $275 million. It is the journey that matters and must be learnt from. Established in 2019, Airlift began as a mass transit start-up, offering air conditioned buses services on predefined routes and offering the convenience of advanced prepaid booking. The start-up gained early traction, generating over 35,000 rides a day. However, after Covid-19 and lockdowns hit, Airlift halted operations. The company presents a good case study of a pivot done at the right time, by launching a 30-minute grocery delivery platform. In addition to groceries, multiple categories were added and delivered from its network of multiple fulfilment centres across every city it operates in. With three headquarters across Pakistan, 30 dark stores and operations eight cities, the platform has grown on average by 30% to 50% month-over-month. In the past year, the cost of blended customer acquisition reduced to five dollars, at a unit cost of $2.5. Airlift is also building a farmer-to-consumer distribution channel for fresh produce.

Bazaar

Launched a little over a year ago, Bazaar reflects what it means to understand customer needs. A B2B e-commerce start-up, it offers solutions for traditional retail in Pakistan. Its mobile-only e-commerce marketplace enables retailers in Karachi and Lahore to procure inventory for their stores. In addition, suppliers have a direct-to-retail channel through Bazaar, and are provided with actionable insights on purchase patterns and trends. The start-up’s initial target was to serve 800 retailers in Karachi by the end of 2020. They beat that 10 times and crossed the target with over 10,000 retailers on-boarded. In terms of investment, Bazaar raised a $6.5 million seed round, followed by Pakistan’s largest Seed A round, amounting $30 million. Understanding its customer needs, Bazaar has launched Easy Khata, a digital ledger app to help retailers a manage their bookkeeping. With a 90% retention rate, they are serving 750,000 plus merchants, on boarded 200 plus brands and scaled to 400 plus towns. It is important to note that Bazaar was launched less than two years ago.

BridgeLinx

BridgeLinx is a digital freight marketplace that raised Pakistan’s largest seed funding round of $10 million in September 2021. Based in Lahore and launched a year ago, BridgeLinx connects shippers (manufacturing companies, cement factories, textile companies) with truckers and private fleets. It provides tech solutions to ensure document validation at both ends, timely pickup, port operations and cargo safety. Like AirLift and Bazaar, BridgeLinx is scaling up. It has successfully on boarded 25% of Pakistan’s top exporters, has 150 plus active shippers, moves an average of over 4000 tons a day and services 100 plus lanes.

QisstPay

QisstPay stands out for introducing the Buy Now Pay Later (BNPL) model in Pakistan. Simply put, it is an instalment payment service for emerging markets at zero interest. With a mix of equity and debt, QisstPay has raised $15 million across its seed and pre-seed rounds. Growing rapidly at a 92% week on week growth, it currently serves over 500 retailers in Pakistan. It plans to expand services to Sri Lanka and Bangladesh. 

Tazah

A B2B fresh produce marketplace, Tazah uses a managed marketplace model whereby it guarantees the quality of the produce by screening it. Based in Lahore, it has raised two million dollars in a pre-seed round. It is already serving approximately 300 businesses and individual sellers of different sizes in Lahore. Tazah may still be in the initial stages of operations but its potential to scale is large. In terms of the market it is targeting, the agriculture and food supply chain in Pakistan represents a $60 billion opportunity‌. At a macro level,‌ inefficiencies result in significant food wastage and food price inflation‌, which are reasons why consumers spend almost 33% of their income on food. It is precisely this challenge that Tazah is slowly overcoming.

There are a few common factors in the start-ups mentioned above – VC investment being just one.

1 They converted the economic challenge the pandemic posed into an opportunity – not only for themselves but for their customers and users.

2 All five point towards an age old start-up rule: solve a real user-centred problem.

3 They operate in markets with huge under-tapped potential.

4 It was the efforts made by their founders to understand the market to the core.

5 The interest and risk-taking approach of investors including Aatif Awan of Indus Valley Capital, Ali Mukhtar of Fatima Gobi Ventures, Faisal Aftab of Zayn Capital, and Kalsoom Lakhani and Mishbah Naqvi of i2i Ventures is significant - it was the engagement of local investors that has given confidence to foreign VCs and has opened doors for the ecosystem. Industry dynamics in most markets, including ours, still operate on old school and conventional methods. True, disruption takes years but Pakistan is taking the first step in this direction... Disruption calls for scale and in Pakistan, start-ups are scaling and scaling fast. The next phase will now depend on one aspect: scaling horizontally and vertically to make Pakistan one of the strongest economies in the region.

Nabeel Qadeer (PMP, SCPC) is Executive Director, Infinite Scaleup and CEO, DirAction. nabeel.akmal@gmail.com