Pakistan’s hybrid funding model combined equity and debt to help startups raise $74.2 million in 2025, nearly double the $33.5 million raised in 2024. According to Invest2Innovate’s Ecosystem Signals 2026 report, hybrid deals made up $66 million of that total, signalling a major structural shift for Pakistani founders seeking capital.
Pakistan Hybrid Funding Model Drives Historic Rebound
For years, Pakistani startups had one real option for raising money: give away a slice of the company in exchange for cash. That is called equity financing. But 2025 changed the game. Pakistan’s hybrid funding model, which mixes equity with debt, became the dominant way startups raised capital last year, and the numbers show it worked.
Invest2Innovate (i2i), the Karachi-based ecosystem builder and research firm, published its findings at the closing ceremony of a two-year project supported by Visa Foundation, titled ‘Ecosystem Signals 2026’. The data it released is the clearest picture yet of how Pakistan’s startup funding landscape shifted in 2025.
Pakistani startups closed 16 deals in total during 2025. Of the 11 disclosed deals, total reported funding reached approximately $74.23 million. That figure includes $8.18 million in pure equity deals and $66.04 million in hybrid finance, which blends equity and debt in a single transaction.
From $1M to $66M: How Fast Hybrid Finance Grew
The scale of the shift is hard to miss. i2i’s Deputy Director Aleena Khan noted that hybrid financing rose from just $1 million in 2024 to $66 million in 2025, accounting for 89 percent of all funds raised that year. In 2024, the picture was very different: startups raised around $33.5 million, almost entirely through pure equity deals.
The single biggest driver was Haball, a fintech startup focused on Islamic B2B payments. It closed a $52 million round made up of $5 million in equity and $47 million in strategic debt from Meezan Bank. That one deal alone reshaped the annual totals. Other notable raises included MedIQ’s $6 million healthtech round, and seed-stage investments in BusCaro, Qist Bazaar, ScholarBee, Shadiyana, and myco.io.
The Pakistan hybrid funding model was not just a fintech story either. Deals spread across logistics, healthtech, mobility, edtech, wedding tech, sports tech, entertainment, and SaaS/cloud computing, showing that the new funding structure is sector-agnostic.
What Is Hybrid Financing and Why Do Startups Use It?
If you are new to these terms, here is a quick breakdown.
- Equity financing means you sell a percentage of your company to an investor. You get cash, but you give up ownership and sometimes some control. You do not have to repay the money directly.
- Debt financing means you borrow money and pay it back over time with interest. You keep full ownership, but you must make repayments even when times are hard.
- Hybrid financing mixes both. A startup might take a smaller equity stake from an investor alongside a structured loan. This lets founders keep more of their company while still accessing meaningful capital.
For investors, the debt portion gives them downside protection, because debt is repaid before equity holders get anything in a wind-down. For founders, less equity dilution means they keep more control of their business long term. That balance made the Pakistan hybrid funding model attractive to both sides of the table in 2025.
Women Founders Were Central to 2025 Deal Flow
One finding from the i2i report that deserves attention: female-founded and co-founded startups, including Shadiyana, BusCaro, Metric, MedIQ, and Lean Outset, accounted for eight of the 11 disclosed deals in 2025. These spanned pre-seed, seed, and Series A rounds across fintech, mobility, healthtech, and wedding tech. This is a strong signal that gender diversity is becoming a real part of Pakistan’s funding story, not just a talking point.
What Founders Should Expect in 2026
i2i CEO Sarah Munir said the firm expects funding in 2026 to remain selective and efficiency-driven, with greater emphasis on hybrid financing structures, revenue-backed growth models, and capital-efficient startups. In plain terms: investors will write bigger cheques, but only for startups that can show real revenue and clear money management.
This matches data on deal sizes. The average deal size rose 68 percent to $3.75 million in 2025, even as the overall deal count stayed modest. Investors are being more careful, but they are willing to deploy more when they find the right company.
i2i Ventures co-founder Misbah Naqvi added that bilateral and multilateral creditors, as well as development finance institutions (DFIs), are actively looking to support Pakistan’s startup ecosystem. She said these institutions could help structure deals where a third party absorbs the first layer of risk, making it easier for banks and investors to say yes.
Banks are also slowly opening up. Some are now willing to lend to startups and SMEs if proper guarantees or collateral are in place. That is still cautious behaviour, but it is a shift from the outright refusals that many founders faced in 2022 and 2023.
If you want to understand how the government’s own capital is flowing into this space, the Pakistan Startup Fund’s Rs1 billion allocation in the FY2026-27 budget is an important parallel development for founders looking for non-dilutive grant support.
A Maturing Ecosystem, Not a Boom
It is worth keeping perspective. Pakistan’s $74.2 million in 2025 is still well below the $350 million-plus peaks seen in 2021 and 2022. The country’s cumulative startup funding since 2015 remains under $1 billion, which is a fraction of what peers like India have attracted in the same period.
But the structure of 2025’s funding is arguably more healthy than those boom years. Capital is going to fewer, more carefully vetted companies. Hybrid structures discipline both founders and investors. And the Securities and Exchange Commission of Pakistan (SECP) has approved digital capital-raising platforms under a regulatory sandbox, which could open equity crowdfunding to broader audiences in coming years.
The Pakistan hybrid funding model is not a temporary workaround. It is a sign that the ecosystem is learning to work with the tools available locally, from Islamic finance structures to bank-linked debt, rather than waiting for the global VC boom to return.
Frequently Asked Questions
What is Pakistan’s hybrid funding model for startups?
It is a way of raising capital that combines equity (selling a share of the company) with debt (a structured loan that gets repaid). Startups get larger amounts of funding while giving away less ownership, and investors get better risk protection. This model became the main funding method for Pakistani startups in 2025.
How much did Pakistan startups raise in 2025?
Pakistani startups raised approximately $74.2 million across 16 deals (11 disclosed) in 2025. This is nearly double the $33.5 million raised in 2024. Of the total, $66 million came from hybrid equity-debt deals and $8.18 million from pure equity rounds.
Which sectors benefited most from hybrid funding in 2025?
Fintech was the biggest beneficiary, led by Haball’s $52 million hybrid round. Other sectors that saw deals include healthtech (MedIQ), mobility (BusCaro, Trukkr), logistics, edtech (ScholarBee), wedding tech (Shadiyana), and SaaS/cloud computing.
What does this mean for Pakistani founders seeking funding in 2026?
Founders should expect a selective market where investors prefer capital-efficient startups with real revenue. Hybrid structures, Shariah-compliant financing, and DFI-backed instruments are likely to remain the dominant funding routes. Preparing clear financial projections and demonstrating strong unit economics will matter more than ever.
