Salman Sufi, the head of the Strategic Reforms Unit under the Pakistani Prime Minister, has made suggestions that the government may be considering controlling the startup sector.
Sufi stated in a tweet that businesses that primarily rely on acquiring capital and ultimately collapse owing to a weak corporate structure must be avoided.
The PM’s aide further added, “We can’t allow few to sour the market for the entire industry.”
Many users immediately pointed out the reasons why controlling startup funding would be difficult. The co-founder of TazahTechnologies, Abrar Ul Haq, wrote:
In today’s episode of the government venturing into something they have no clue about which will most likely make things worse https://t.co/htVzoXfcFV
— Abrar Ul Haq (@ABinthemix) September 19, 2022
Sufi’s theory was contested by renowned macroeconomist Ammar Khan as well:
This is such a bad take. One important thing that the government can do to strengthen the startup ecosystem is to stay away from it as much as possible.
This is how a ecosystem develops. Maybe the gov can inculcate ‘robust corporate mechanism’ in SOEs first… https://t.co/jbWINII8Vv
— Ammar Khan (@rogueonomist) September 19, 2022
Investment banker Fahd Sheikh expressed his disapproval of the notion of government involvement in the startup ecosystem and the following:
@SalmanSufi7, this is an area which you don’t have much expertise in.
Therefore, best to stay away from commenting on it, as it gives a bad impression of @pmln_org & political parties in general. #GOP & bureaucracy bankrupted #PIA. Must not be allowed to disrupt startup funding. https://t.co/V6btngveO9
— Fahd Sheikh (@FahdSheikh3) September 19, 2022
Sufi’s concept received little attention, and many other users questioned him for putting out something that would potentially harm Pakistan’s startup sector.
It is important to note that Pakistani companies have attracted significant investment in recent years.
The amount invested in local companies in 2018 was less than $10 million, but in 2019 it increased to almost $50 million.
A further rise occurred in 2020 when startups attracted financing totaling more than $65 million.
The sector, however, really took off in 2021 when Pakistani startups raised $350 million through 81 agreements.
Local entrepreneurs have continued the trend this year, raising $322 million through September.
The exponential growth in investments suggests that investors have more and more faith in Pakistan’s startup environment.
To read our blog on “Blockchain startups are advised by investment bank Moelis & Co,” click here.