Pakistan’s Series B gap is one of the most serious structural problems facing the country’s startup scene right now. Founders can get seed money. They can land a pre-Series A round. But once they need the larger capital to truly scale, a wall appears. The data from 2024 and 2025 makes this very clear.
What the 2024 Funding Numbers Really Show
The headline numbers from 2024 were already bad. Total equity funding fell to just $22.5 million, a drop of over 70% from $75.8 million in 2023. But the stage breakdown tells an even sharper story.
Pre-Series A rounds made up 48% of all disclosed capital. Seed-stage funding added another 38%. Series A investments covered the remaining 14%. And Series B? Not a single Series B deal was recorded across the whole of 2024. Zero. That is not a slowdown, it is a complete absence of growth-stage capital.
The total number of deals also fell sharply, from 39 in 2023 down to just 15 in 2024, a 61% decline. Investors did not disappear entirely, but they pulled back hard and focused on very early bets.
Pakistan Series B Gap Explained Simply
Think of startup funding as a ladder. Seed money helps you build and test your idea. Pre-Series A gives you funds to find early customers. Series A lets you build a real team and prove the business model works. Series B is when you use capital to grow fast, enter new markets, and hire at scale.
In Pakistan, almost every rung of that ladder above Series A is missing. The Pakistan Series B gap means founders who do everything right, who survive the early years, prove their model, and grow revenue, still cannot find the capital to take the next step inside Pakistan. They either stall, pivot to debt, or look abroad.
This also connects to a broader failure rate problem. More than 80% of Pakistani startups close within their first three years. Only a tiny fraction ever reach the stage where a Series B would even be relevant. So the pool of Series B-ready companies is small, and the capital available to them is even smaller.
2025 Recovery Was Real but Narrow
The picture improved somewhat in 2025, but not in the way that fixes the structural gap. Equity funding rose to about $36.6 million across 10 disclosed rounds. That is a 63% improvement over 2024, but still far below the 2022 peak of $355 million.
More importantly, the recovery was driven by fewer, larger deals, not by a broad return of Series B-level activity. The average deal size rose meaningfully, but that reflects a small number of bigger early-stage bets, not a wave of growth-stage rounds opening up.
When you include hybrid financing (a mix of equity and debt), total reported funding in 2025 reached about $74.2 million. A large part of that came from deals like Haball’s debt financing from Meezan Bank. That is meaningful capital, but debt and hybrid deals are a different tool than equity Series B rounds. They do not give startups the same firepower to hire aggressively, expand regionally, or capture market share at speed.
For Pakistani IT exports and the broader digital economy (which you can read more about in our coverage of Pakistan’s IT exports nearing $5 billion), the lack of growth-stage capital is a direct ceiling on how far local tech companies can go.
Why Investors Skip Series B in Pakistan
Several reasons explain why Series B rounds rarely happen in Pakistan.
- Small domestic VC pool. The number of local venture capital firms that can write large cheques is very limited. Firms like Zayn VC, Fatima Gobi Ventures, Sarmayacar, i2i Ventures, and Lakson Investments are active, but their fund sizes are modest by global standards.
- No unicorns yet. Despite over 170 VC-backed startups in the country, no Pakistani startup has reached unicorn status or earned more than $100 million in annual revenue. Without clear exits or massive success stories, international growth-stage funds stay cautious.
- Exit routes are thin. Series B investors need to know how they will eventually get their money back. Pakistan’s stock exchange IPO route for startups is still developing, and M&A activity dropped to just five deals in 2024.
- Currency and macro risk. Foreign investors worry about dollar-to-rupee exposure. Startups that earn in rupees but need to repay dollar-denominated investors face a real mismatch.
- R&D investment is very low. Pakistan spends just 0.16% of GDP on research and development, compared to a global average of 2.62%. That makes it harder to build the deep-tech products that usually attract large growth-stage investors.
What Is Being Done to Bridge the Gap
The government has launched some tools to help. The Pakistan Startup Fund (PSF) offers non-dilutive grants of up to $300,000 per VC investment round, which lowers risk for early investors. The National Incubation Center provides seed funding up to PKR 10 million per startup.
The Securities and Exchange Commission of Pakistan (SECP) has also introduced reforms: tax credits for angel investors, a simplified five-year compliance framework for registered startups, and lower thresholds on the Pakistan Stock Exchange’s Growth Enterprise Market board to make IPOs more accessible. The SECP’s regulatory sandbox also allows equity crowdfunding platforms to test under real conditions.
Development finance institutions and bilateral lenders are also showing interest in Pakistan’s ecosystem. Venture debt, while still rare locally, is available to some startups through regional investors, though the currency mismatch remains a challenge for those without foreign-currency revenues.
For 2026, experts expect capital to stay selective and efficiency-focused, with hybrid financing structures becoming more common. The emphasis is shifting toward founders who can show governance, product depth, and a clear path to regional scalability rather than just early traction.
What This Means for Pakistani Founders
If you are a Pakistani founder who has cleared pre-Series A, the honest picture is that the domestic Series B market barely exists right now. Your options are narrow but real:
- Build strong revenue and use debt or hybrid financing to extend your runway without giving up too much equity.
- Target regional expansion early, especially GCC markets, where international investors have more appetite.
- Build relationships with global funds before you need Series B capital, not after.
- Focus on unit economics and profitability metrics that matter to growth-stage investors, not just top-line user numbers.
The Pakistan Series B gap will not close overnight. It needs bigger local funds, cleaner exit routes, and a few big success stories to prove the market to global investors. Until then, founders who understand this reality and plan around it will be better positioned than those who assume the capital will come just because the business is growing.
Frequently Asked Questions
What is the Pakistan Series B gap?
It is the near-total absence of Series B funding rounds in Pakistan’s startup ecosystem. In 2024, not a single Series B deal closed. This means startups that grow past early traction have almost no local source of the large growth-stage capital they need to scale.
Why did Pakistan startup funding fall so sharply in 2024?
Total equity funding dropped over 70% in 2024, from $75.8 million to $22.5 million, and the number of deals fell 61%. Global investor caution, Pakistan’s macroeconomic stress, political uncertainty, and currency risk all played a role. Confidence returned only slowly in 2025.
Did funding improve in 2025 and 2026?
Yes, but selectively. Equity funding rose to about $36.6 million in 2025, and total reported funding including hybrid deals reached $74.2 million. The recovery was driven by a few larger early-stage rounds and a shift to hybrid financing, not by a return of Series B activity. For 2026, experts expect steady but cautious growth.
What can Pakistani startups do if they cannot raise a Series B locally?
Founders are increasingly using debt financing, hybrid deals, and venture debt through regional investors to extend their runway. Some are targeting GCC markets to attract foreign growth-stage capital. Government tools like the Pakistan Startup Fund and SECP reforms are also helping reduce investor risk at earlier stages.
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