Airlift: a pragmatic analysis of Pakistan's most funded startup's failure
Dubbed by some commentators as a "complete disaster", Airlift's sudden and spectacular failure actually makes the entire ecosystem better.
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In 2019, former Mastercard and Doordash executive Usman Gul launched Airlift alongside his two co-founders Ahmed Ayub and Meher Farrukh. The initial idea was to improve traffic in the Pakistani city of Lahore, by offering residents air-conditioned mini-bus rides, that could be ordered through an app. Much like SWVL in Egypt, Airlift started as an alternative to both deficient public transport and onerous individual ride-hailing. The company gained traction rapidly, becoming a symbol of Pakistan's novice but exciting startup ecosystem.
“Gul and his small team started operations with a pilot project in Lahore using $50k of internal capital. Within three months, the company was operating in two Pakistani cities, Karachi and Lahore. Within six months (August 2019), the company raised $2.2 million in seed funding. Through their seed funding, Airlift had acquired 50,000 riders in Lahore and scaled to over 10k daily rides. On the back of this success, they raised $12m in a Series A funding round in November 2019. The most notable investor was US VC, First Round Capital.” - Sturgeon Capital
Although gaining traction, Airlift was suffering from the infamous ride-hailing business model, which was even more fragile and expensive in their case due to the large capital expenditures related to maintaining the buses. SWVL, an Egyptian competitor, entered the Pakistani market in summer 2019 right after its $42M round, putting an additional strain on Airlift’s already fragile finances. SWVL’s recent stock price woes and the Egyptian company’s inability to garner investor trust is another case in point of the shaky foundations on which these types of businesses are built.
The pandemic put a definite end to Airlift’s ride-hailing ambitions. The company quickly pivoted out of the sector, with the founder explaining that he and the management team quite literally did not believe in the model anymore. In a matter of weeks, Airlift completed its transformation to an even more cash-dependent vertical: quick commerce.