In recent years, Airlift has proven to be one of the most resilient and agile startups coming out of emerging markets. The Company was able to navigate the Covid-19 crisis, pivoting into q-commerce and building scale in a new domain. While the global recession and recent downturn in capital markets has affected economic activity across the board, it has had a devastating impact on Airlift and rendered its shut-down inevitable.
On July 12th, Airlift’s operations has shut down permanently. This has been an extremely taxing decision that impacts a large set of stakeholders and an emerging technology ecosystem.
(I) Response Code to the Global Recession:
With the onset of the recession, Airlift was one of the first few companies in emerging markets to restructure business operations – our response code included three adaptations: (i) an immediate reduction in headcount, (ii) shutting down operations across all expansion markets, and (iii) revision in platform configurations to ramp up monetization (i.e. introduction of higher prices and delivery fee).
With the above adaptations, Airlift was able to achieve order-level profitability, maintain reasonable scale, and reduce financial burn by 66%. As of July, 2022, Airlift was about three months away from operating profitability (i.e. positive cash flow from operations), and about 6-9 months from company-level profitability (i.e. Free Cash Flow).
(II) Financing Situation:
With the above developments in May, one of our investors stepped up to lead Airlift’s Series C1 financing. We’ve received tremendous support from the potential lead in opening doors to other investors to put together the round. First Round Capital, Indus Valley Capital, Buckley Ventures, 20VC and other investors agreed to participate in the round with sizable checks.
In early July, Airlift had a clear path forward to close the round – the Company pushed out documents for signatures to all participating investors. Last week, amidst rapidly deteriorating conditions in the global economy, several participants shared uncertainty in wire schedules and their disbursements – this ultimately meant that the Company’s capital requirements would not be met.
Ultimately, the round was unsuccessful. With the above clarity, a complete shut-down was inevitable, Airlift could not risk leaving its employees unpaid or reneging from its commitments. The Board deliberated on this via multiple calls and ultimately decided to not assume the risk of leaving teammates unpaid.
For our management team, and for the broader set of investors, the above became clear only on July 7th – a day before the Eid holiday in Pakistan.
(III) Severance & Liabilities:
As part of our plans, Airlift will ensure that all of its employees are sufficiently protected and catered for – this includes supporting teammates with two (02) months of payroll for July and August, setting up a platform for job placement, and creating support systems for aspiring entrepreneurs from within our team that may be interested in starting new ventures.
For suppliers, vendors and other third-parties, our team will communicate proactively to manage arrears and liabilities as a part of our ongoing shut-down process.
(IV) Implications for the Regional Ecosystem:
As a pioneering technology startup in Pakistan that had established a new precedent, Airlift’s success was viewed as a milestone for a burgeoning technology ecosystem in emerging markets. We believe that the ecosystem will continue to thrive and that some of the most valuable technology companies in emerging markets are still yet to be started.
(V) Reflections Over the Past Few Years:
As we wind down operations and reflect on our work with Airlift, we cannot help but recognize the talent density that Airlift was able to bring together. From structuring the $85m Series B financing and delivering on order-level profitability to launching and scaling operations across international markets – Airlift was able to achieve initial success and has had a lot to celebrate.
In closing, we are grateful to our teammates, investment partners, suppliers, vendors and other partners who have supported us throughout this journey. Our management team will stay on until our shut-down process is complete. While the future is unknown to us, we know that our work in emerging markets has just started.
Due to factors beyond our control, the Airlift journey must come to an end. However, our broader mission of creating positive change in the region will find a new life.
To read our blog on “VAVA Cars has wrapped up their operations in Pakistan,” click here.
