Pakistan’s ecosystem’s defining test

By Kalsoom Lakhani

About this op-ed’s author:

Kalsoom Lakhani is the co-founder & General Partner at i2i Ventures, an early-stage venture capital fund for Pakistan, and the country’s first female-founded VC fund, launched in 2019.

i2i Ventures has invested in TelloTalk, Edkasa, CreditBook, Abhi, Oraan, Tazah, Truck it In, EZBike, Metric, Rider, DealCart, Safepay, Swag Kicks, and more.

The Realistic Optimist is a subscriber-funded publication.

This allows for deep, nuanced and sponsor-free articles.

A rough patch

Pakistan’s startup ecosystem, not unlike other emerging market ecosystems, is traversing a tumultuous period. The end of 2021’s VC funding fury has caused a sobering hangover. Startups whose plan relied on the certitude of future rounds have drowned as the funding wave receded. Global VC winter has deprived Pakistan of what had pushed its startups to record highs in 2021: foreign investors. Many have lost interest in the country as they deal with their own issues. 

In Pakistan’s case, the funding winter is complemented by an internal “polycrisis”, as the country battles hard-headed inflation, persistent political instability, and an uneasy relationship with its national debt. Last year’s calamitous floods added insult to injury.

The accompanying decline in quality of life has led to the devastating draining of Pakistan’s human capital. The number of Pakistanis leaving the country in 2022 tripled compared to 2021. 

Much to the ecosystem’s dismay, prime candidates for emigration are tech workers, whose skills remain in high demand abroad. One can’t blame a person supporting a family for seeking stability and a better salary. For those who stay, tech startup jobs’ allure has significantly decreased compared to the golden 2021 era, when Pakistanis in the diaspora flocked back home to work in Pakistani tech. 

All of these unfortunate circumstances have resulted in one overarching truth: the contraction of Pakistan’s startup scene. There are less VCs, less startups, less rounds, less available talent. 

That adversity can be turned into a positive.