KARACHI: Pakistani startups raised a total of $55.4 million across 18 deals in the July-September quarter, down 46.2 percent from the previous quarter, when flows totaled $102.9 million .
Statistics compiled by Data Darbar, a website that tracks investment flows in the country’s tech ecosystem, show that the average ticket size stood at $4.6 million between July and September, up from $4. 9 million dollars from the previous quarter.
“In addition to a global slowdown in startup investments amid uncertain macros and a change in monetary stance, there have also been spillover effects from the closure of a flagship startup (Airlift), as well as allegations of fraud against a fintech (TAG),” said Mutaher Khan, co-founder of Data Darbar. Sunrise in an interview on Saturday.
Pakistan’s startup ecosystem has been in financial crisis. Heavily funded instant delivery service provider Airlift has shut down entirely, while players like Careem, Swvl, Truck It In, VavaCars and others have laid off employees and cut back on services.
“This bad news together with the economic situation in Pakistan has increased our country risk premium. Getting good valuations has become much more challenging lately,” she added.
The year-over-year drop in funding for emerging companies in the last quarter was more pronounced (68.3%). Both the total funding size and the number of transactions in July-September were the lowest since the first quarter of 2022.
The latest three-month period was dominated by the fintech sector, which cumulatively raised $35.85 million across eight deals. The second largest sector was e-commerce, where startups attracted $18.9 million in five deals.
The top five rounds in July-September were conducted by fintech DBank ($17.6 million), fintech OneLoad ($11 million), e-commerce startup PriceOye ($7.9 million), e-commerce startup 24seven.pk ($6 million) and e-commerce startup DealCart ($4.5 million).
Venture capitalist-backed startups are struggling to find new funding for rapid customer acquisition. Venture capitalists are no longer willing to write blank checks to help startups acquire new customers at a high price. Investors are asking entrepreneurs to break even sooner instead of focusing solely on revenue mobilization.
As for the stages, the startups raised $9.8 million in six pre-seed rounds, $28 million in four seed rounds, $6 million in two pre-Series A rounds, and $11 million in a single Series A round. Series A during the last three-month period.
One women-founded company managed to raise $0.5 million, while four women-co-founded business deals raised $20.1 million between July and September.
The total number of investors in the three-month period was 52 compared to 81 in the previous quarter, the data showed.
Khan expects a further slowdown in seed funding as many of the delayed rounds have already been reflected in the latest figures. “While investors continue to have a significant amount of dry powder, many of them are hesitant to deploy any capital and can afford to wait a quarter or two,” he said.
There are also early signs of consolidation. Excluding Cloudways, as many as three M&A deals took place in the last quarter: Bagallery’s Emerce.pk, Venture Dive’s NexDegree and PostEx’s Call Courier. However, neither of these revealed the size of the deal.
“The consolidation trend is likely to continue,” Khan said.
Posted in Alba, October 2, 2022