Islamabad, Dec 12: The fourth edition of Invest2Innovate’s (i2i) main project, the Pakistan Startup Ecosystem Report 2024 (PSER 2024), has been formally issued. Prominent figures from Pakistan’s entrepreneurial ecosystem, investors, legislators, and other important players were present at the report’s launch event, which took place at a nearby hotel.
The ecosystem has undergone a major reset following the investment boom of 2021–2022, therefore the report comes at a critical moment. The ecosystem’s focus has switched from quick growth to creating lucrative, sustainable firms based on good unit economics, as investments have fallen from $355 million in 2022 to barely $37 million in 2024 (till November).
Kalsoom Lakhani, the creator of i2i, stated, “i2i has been benchmarking the Pakistan startup ecosystem since 2014, tracking historic highs and more challenging periods.” In addition to examining the numbers, this year’s report explores the causes of a difficult period and the ways in which founders are adjusting and managing. 2024 is more evidence that Pakistani founders are among the most resilient in the world.
The research was written by i2i Head of Insights Amna Masood and her team under the direction of i2i CEO Sarah O. Munir. Interviews with more than 60 industry participants and three focused surveys for investors, representatives of business support groups (such incubators and accelerators), and company founders served as its foundation.
Extensive secondary research further supports the conclusions. According to Sarah O. Munir, CEO of i2i, “the lack of reliable, data-driven research has been a persistent challenge for stakeholders in Pakistan’s entrepreneurial ecosystem.” In order to assist Pakistan reach its full potential on the path to innovation, this research attempts to close that gap by providing practical insights.
With 241.5 million people, 65% of whom are under 30, Pakistan has enormous potential, according to the report. Increased IT exports, which hit $3.2 billion in FY24, and growing digital use highlight the potential for growth and innovation.
E-commerce, cleantech, and fintech are among the industries that continue to garner interest; in 2024, fintech will account for USD 30.5 million of all startup funding. The report also highlights significant accomplishments, such as COLABS raising $2 million to expand into MENA, PostEx’s $7.3 million pre-Series A fundraising, and SadaPay’s acquisition by Turkey’s Papara (worth around $2 billion).
But PSER 2024 also highlights enduring issues that impede ecosystem development. Brain drain and infrastructure deficits exacerbate issues like gender inequity, where women make up only 39% of the workforce and have received only 18.75% of all startup investment since 2015.
With 47% of the population without internet connection and frequent outages costing an estimated $238 million in damages in 2023, connectivity is still a major obstacle. The ecosystem’s potential is further strained by complicated regulations, poor R&D investment (0.16% of GDP compared to the global average of 2.62%), and restricted access to financing.
The paper highlights new prospects in spite of these obstacles, including the digital economy’s ability to produce Rs. 9.7 trillion in value by 2030. It highlights the necessity of all parties taking coordinated action, which includes coordinating legal frameworks, enhancing infrastructure, and offering focused assistance to female entrepreneurs.
In order to fill talent gaps, the report also urges strengthening ties between academia and business and encouraging domestic investment to combat the dwindling availability of foreign funding.
