Is the deepening economic crisis in Pakistan starting to impact its startup ecosystem, which was abuzz with funding till recently? With Pakistan’s most watched out startup — Airlift, announcing closure due to crunch in funding, many fear that there could be more in line as a large number of them have prioritised rapid expansion and funding rather than sustainability.
“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 shutdown inevitable. On July 12, Airlift’s operations will shut down permanently,” the grocery and pharmacy delivery app based startup that drew funding of more than $85 million, said in a statement.
Airlift was being touted to be the first unicorn of the country. A unicorn is a startup with a valuation of $1 billion or more.
According to the Express Tribune, Pakistani startups were sizzling like a hot Karachi afternoon last summer, bringing record breaking funding and creating a positive buzz around the country.
“Fast forward to the summer of 2022 and an icy cold chill is blowing throughout the global startup ecosystem as recession fears loom and the era of easy money and low interest rates come to an end,” the newspaper said.
The brewing economic crisis and rising political uncertainty in Pakistan have also hit the nascent industry.
The South Asian nation has more than 3700 startups. Besides Airlift, Bazar, Bykea, Jugnu are among the prominent startups.
Sudip Kr Goswami. Co-Chairman, Assocham Startup Council told India Narrative that the uncertainty in the global economy has hit the startup eco-system across the world.
“Like the US and China, India has a much wiser and tighter policy and framework for the startup industry. The policy is transparent and based on global standards which makes funding easier,” Goswami said, adding that the framework is regularly altered to suit the changing dynamics.
“Not sure if this is the case in Pakistan,” Goswami said.
He also noted that the global economic uncertainty has had an impact on the Indian startup industry as well.
However, most Indian startups have now switched gears and are focusing on sustaining their operations rather than expansion though 2021 brought cheer to the industry as more than 30 companies in India made it to the prestigious Unicorn list.
Solid and well thought out startup ecosystem is fundamental to any country’s economic growth as they create employment, boost tax revenue while improving quality of life.
Startup Blink, a global research centre tracking startup ecosystem said that as an entrepreneur, location will greatly influence the chances your startup will succeed.
The Express Tribune article also pointed out that there are a few startups and founders who showed the vision to build their businesses more sustainably in anticipation of exactly this kind of macroeconomic earthquake. But the focus needs to be on quality.
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