Good things come to those who wait, and in 2021 it appeared like the wait for Pakistan’s tech ecosystem was finally ended.
Finance increased more than five times to $366 million, while IT tech exports exceeded $2 billion. Market activity was booming, big-shot investors entered, and confidence was pervasive.
However, that hackneyed adage makes no mention of good things lasting, which is exactly what occurred in 2022.
Despite a strong beginning in which approximately $173 million was raised in Q1, tech investment activity fell and hit a 10-quarter low.
Although the annual total was still above a robust $351 million, the decrease was painfully apparent.
Foreign investors’ newly discovered passion for Pakistani companies was short-lived because of the shift in global macroeconomics and the ensuing devastation in venture capital, as the risk premium of the nation exceeded the attainable return potential.
It may be the end of a rather brief tech era, according to the doomsday preachers and default mongers.
We might not reach the levels of 2021–2022, but we would still be much over our 2020 total of about $65 million.
The transaction flow, by Pakistani norms, relatively later-stage businesses seeking Series A or higher funding, will remain weak for the foreseeable future.
There are at least 14 companies that may need to fund follow-on rounds shortly based on these criteria (ignoring all those who had seed deals in 2021).
Deals for the remaining companies might still go on, albeit at significantly reduced prices at a slower rate.
One reason to think the deal count dropped to eight even though investment value declined by a staggering 79 percent year over year in Q4-2022.
The reason for this is also because a lot of investment rounds were not disclosed, and the limited base makes the fall in percentage terms more pronounced.
Early-stage funding may skew toward accelerators, whose checks ranging from $100,000 to $250,000 may have looked like small change to some companies during the good times.
To read our blog on “Saudi Arabia is planning a $37.8 billion investment in the gaming sector,” click here.
