People from all over the globe started calling it a Black Swan occurrence shortly after the pandemic broke out, and for good cause. Equities have had a bloodbath around the world. During March, our KSE-100 index lost over 12,000 points in less than three weeks.
All of this explicitly pointed to the inevitable doom for investments, including tech and private markets. Yet what followed was the absolute reverse, and a bit disconcerting to a sane mind, frankly. In addition to a milestone year for initial public offerings (IPOs) since the dot-com bust, venture financing has proceeded unabated internationally. Finally, the local technology market also had its time on the Pakistan Stock Exchange (PSX), although several large rounds took place in the start-up ecosystem.
Start-ups in the nation raked in $66.24 million of funding across 50 deals in 2020, according to a study issued by Data Darbaar, a tech-sector archive. This showed gains in 2019 of 57.34 % and 78.57pc from $42.1m and 28. The values and volumes at $57.7m and 41, and $46.72m and 23, respectively, are provided by other reports from the analytics company Invest2innovate and Medium blog Techshaw.
Startups raised $66.24m of capital in 50 deals in 2020, up 57.3pc from a year ago
Over the year, the overall ticket size slipped a bit from $1.56m in 2019 to $1.32m. But the median will be a safer measure to isolate the influence of extreme values and outsized rounds. In 2020, that was $500,000, more than times as much as $200,000.
Like yesteryear, transport and logistics continued to dominate the fundraising charts at $25.4 million in 2020, with Bykea taking in $13 million in September and $10 million in a July 1 announcement by Airlift. It is important to remember, though, that the rapid transit activities of the latter have been discontinued following the coronavirus outbreak and the organisation has since operated a supermarket service.
The largest drivers by value were e-commerce startups, accounting for 14 transactions and collecting a combined $11.3m. However, much of this money came from the B2B room where a host of emerging markets, such as Retailo’s $2.3m, Tajir’s $1.8m and Bazaar’s $1.3m, appeared and closed notable rounds. In terms of the investment number, Fintech closely followed at $10.8 m with an overwhelming share from Finja who scored $9 m in Series A barely 12 days earlier.
Healthcare was a hot market, too. During the year, it witnessed 10 deals, with $2.6m from Medznmore leading the rankings. However, despite hopes of a substantial improvement due to the behavioural shift triggered by the coronavirus, edtech room remained lacklustre
Stage-wise, with as many as 11 start-ups heading for a pre-Series A this year, a curious trend emerged, indicating increased adoption of transitional rounds and a possible shift towards higher valuations. Cumulatively, they pulled in $8.35 million by amount and value, with most contributions from the e-commerce market.
Nevertheless, even though their share of the total has declined, seed deals were still the most common (19). They accounted for 18 of the 28 rounds in 2019. Despite just three rounds by Airlift, Finja and Tapmad, Series A was the main capital puller. Bykea, meanwhile, was the only start-up to have Series B closed down.
In terms of the number of sales, Karachi managed to lead and raked in $32.4m. With $30.2m from across 21 unique rounds, Lahore came in a near second value-wise, possibly for the first time. Meanwhile, only five federal capital firms reported a combined $3.5 million worth of investments.
Although more offers and money flooded in, in terms of gender equity, there was practically no change. Just three startups were created exclusively by female founders. In these, Aimfit managed to collect $1 million for the highest ticket size. All of this only reaffirms what everyone has suspected for ages: a boys’ club is indeed a tech and VC landscape.
The presence of some major names in the world of investing, particularly Prossus and Golden Gate, was another indication of what seems to be the maturing of the ecosystem. These two had shares in some of the region’s largest startups, such as Swiggy and Ninja Van.
Meanwhile, Fatima Gobi, Lakson and Karavan VC were the most involved financiers, bringing capital into four upstarts each.