The startup ecosystem is growing day by day and it is a known fact that during the journey of a startup questions regarding investment do arise; especially, when founders have to decide whether they want to scale their businesses with or without an investment.
Giving their point of view on the budding entrepreneurship in the country are some of the main investors.
Rabeel Warraich, CEO Sarmayacar speaking to the local blog said, “While we’re still in the early stages of the ecosystem, we see that the building blocks are very much there. I haven’t come across a single ecosystem that is perfect before different stakeholders get involved. So, we can’t expect the ecosystem to be perfect and that’s an opportunity because there are a lot of things to be fixed as well. The most important building block is inculcating the mindset in the youth that entrepreneurship is a viable career choice.”
According to her, the ecosystem has grown tremendously throughout the last 3-5 years with the support of the government, donor agencies, universities and other stakeholders. She added, “The second big component is the uptake of 3G and 4G and an increasing digital penetration. The final piece is that some of the underlying businesses, as a result of increasing Internet penetration, are seeing increased traction. VCs and capital coming into this asset class is increasing – this will enable startups to grow exponentially. We’re yet to see a flurry of companies emerging, there are some that have already reached that level. One such example is of Zameen, which now has a very decent valuation.”
Howevever, Nadeem Hussain Founder Planet N talks about the good and bad about the startup ecosystem. He said, “The good news is that when you compare it with the condition that was there 5 years ago, there are at least 25 accelerators and incubators in existence in Pakistan. The locations where people can go and learn about being entrepreneurs didn’t exist previously in Pakistan – that’s the good news. The not-so-good news is that we have limited seed capital available. There are hardly any VCs or angel investors available – local or international.”
According to him the lack of capital is causing a high degree of failure of startups. “Unfortunately, our local family offices – individuals of high net worth are not investing in startups at all. Lack of capital, at the moment, is a real showstopper for Pakistan’s ecosystem. The second thing is that the ecosystem does not support startups in the sense that getting a simple bank account is a challenge for startups. There are no significant tax benefits for people who are investing and those people who are receiving the investment.” He added.
Kulsoom Lakhani, CEO Invest2Innovate reflected back on her experience and said, “I remember when we started i2i, there was maybe an event happening a month around the country, seven years later and there are multiple events happening every weekend that activity is something to be proud of.”
However, even as the govrnement continues with the National Incubation Centres that signal an investment by the public sector in the startup landscape, the business-enabling environment is still very poor, and very debilitating to entrepreneurs and investors alike according to Lakhani.
Furthermore, she adds that the taxation policies still need to be improved significantly, along with the issue of payments and how money flows in and out of the country are all massive problems.