Pakistan plans $25-50mn fund to support startup ecosystem

Pakistan plans to make a fund of between $25 million and $50 million available to support its startup ecosystem, Federal Minister for IT & Telecommunication Shaza Fatima Khawaja said on Saturday. “We are also in advanced stages to make sure that at least a $25 million to $50 million fund is available for Pakistan’s startup ecosystem over the next few years, ” she said in an address in Karachi. The government has already begun deploying the first phase of the Pakistan Startup Fund, while its second phase, Pakistan Startup Fund 2. 0, has a base grant of $10 million, the minister said. “We are in discussions with the World Bank. The IFC [International Finance Corporation] is pitching as well, and we are also talking to the Asian Development Bank (ADB). “The idea is to anchor a much larger fund and make it a first-loss guarantee for international investors, ” said Shaza, adding that the fund will be managed by an international fund manager selected through a request-for-proposals process. The first-loss mechanism is intended to help diversify and mitigate investment risks and build confidence among international investors, she said. Pakistan’s startup ecosystem has undergone significant changes, experiencing periods of tremendous growth followed by notable slowdowns and adaptations. The sector has faced growing difficulty in accessing capital in recent years following a global decline in funding, the minister said, adding that access to capital had “completely dried out”. The government is also seeking to strengthen the broader digital economy, with the minister saying digital connectivity, digital transformation and the digital ecosystem need to move forward together. “The SBP is also doing a wonderful job. It has introduced sandboxing and issued licences to five digital banks. “Sandboxing is really helping drive further innovation across the ecosystem, ” she said. The minister said that the government also wants to improve access to capital for small and medium-sized enterprises (SMEs) and develop financial products for freelancers, whose exports have crossed $1 billion, the official said. “Developing financial products for our freelancers is something we are looking towards — how we can genuinely facilitate and incentivise them to bring their earnings back into the country, ” she said. According to experts, Pakistan’s startup ecosystem is anticipated to maintain momentum, with a continued focus on hybrid financing, revenue-backed growth models, and capital efficiency. The combined enterprise value of Pakistani startups is projected to exceed $4 billion, reflecting significant expansion since 2020.

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