Pakistani startups raise only around $1 million in 2024’s first half: report

Pakistani startups have continued to suffer from the effects of a tough economic environment, managing to raise only around $1 million in the first half of 2024.

According to a quarterly report from Invest2Innovate, which supports startup communities in growth markets, Pakistani startups could not raise any funding in the first quarter (January to March).

However, in the second quarter, KalPay — a fintech solution provider based in Lahore — reached a deal and raised over $1 million in debt and equity.

This is a stark decline from the same quarter last year when Pakistani startups raised $6 million through eight deals.

Pakistani startups have received funding of over $1 billion via 354 deals since 2015, according to the report. Of this amount, $74 million was raised last year.

The report attributed this year’s decline to the “tricky economic environment” globally as well as Pakistan’s high interest rate, which was lowered from a record 22% to 20.5% in June. It has since been reduced again to 19.5%.

However, the interest rate was still too high to encourage any significant domestic capital flow towards riskier early-stage ventures, it added.

Invest2Innovate expects a slight increase in funding in the second half of the year.

Meanwhile, global venture funding in 2024’s second quarter stood at $94 billion compared to $85 billion during the same period last year.

Of this, the MENA region raised $336.4 million through 59 deals in April and May. Saudi Arabia raised $60.8 million via 13 deals, UAE $221 million via 29 deals, and Egypt $33.2 million via nine deals.

The MENA region’s uptick in investment activity came as new venture funds launched and set up bases, according to the report.

Despite the increase, global funding remains subdued as central banks are cautious about cutting interest rates, which makes investing in assets more attractive than startups.

The central banks’ caution was likely to keep venture funding growth in future as well, the report stated.