‘Pakistan Startup Fund’ formally launched

ISLAMABAD: the interim government has officially introduced the ‘Pakistan Startup Fund’ (PSF), aimed at rejuvenating the dwindling startup investment scenario in the country. The government pledges to invest up to Rs 2 billion annually in the sector under this initiative.

Dr Umar Saif, the caretaker minister of IT & Telecom announced the launch of PSF, asserting that it is tailored to assist startups in securing their initial external investments. He claimed that over $800 million had been invested in Pakistani startups in recent years, with some poised to become unicorns.

Skeptical voices question the feasibility of such a fund, given the country’s struggling startup scene. Dr Saif’s optimism about Pakistan being the “fifth largest country in the country” and every household having a smartphone is met with cynicism, with many expressing doubts about the potential success of these startups.

The establishment of the Pakistan Startup Fund was initially announced by Dr Saif last year in October, with plans to utilise revenue from IGNITE, funded by a portion of the federal government’s telecom receipts. Critics wonder about the sustainability of relying on telecom revenue and its impact on the fund’s long-term viability.

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Dr Saif hopes that this fund will position the government as the “last check of equity-free capital in a venture capital round.” However, concerns linger regarding the practicality of this approach, especially as Pakistan’s startup landscape witnessed a dismal run in 2023. With only $75.6 million attracted, reflecting a staggering 77.2% YoY decrease, experts attribute the decline to broader global economic trends.

Critics question the sustainability and effectiveness of such an approach, expressing doubts about whether this initiative will indeed reverse the downward trajectory observed in the startup funding landscape. The fate of the Pakistan Startup Fund remains uncertain in the eyes of many observers.

The adverse impact of high-interest rates and a cautious global environment on fundraising efforts is a stark reality for startups in Pakistan. Analysts argue that the slump is not unique to the country, as a worldwide surge in interest rates has shifted investor preferences towards less risky options like government bonds and T-Bills.