Karachi
Let’s Start Up!
Thanks to Pakistan’s rapidly flourishing start-up business culture, the country is undergoing a generational shift regarding its investor axis.
The culture of start-ups in Pakistan has taken flight in recent years. Most importantly, this urgency stems from a desire for work autonomy and a drive to challenge traditional ideas and practices. Particularly in Pakistan, a country where recession and political instability seem to be at an all-time high, the culture of ‘start-ups’ has persisted. Although this could point to a desire to control one’s livelihood in an economy where a specific minority primarily usurps the navigation and ownership of institutions, many other factors contribute to its tenacity.
The shift from industrialization to digitization driven by AI and robotics has cemented data as the new currency. Tajir, GrocerApp, Dawai, Finja, Daraz.pk, TAG, SadaPay, Zameen.com, and numerous others are a testament to this generation’s shift towards AI. They highlight the transition from agrarian to technocratic societies, focusing on the growth of digital empires. Although most industries have digitized their entire journey, from production to distribution processes, many facets of the economy remain as untapped as potential in Pakistan, such as textiles, financing, and education. Still, the country is undergoing a generational shift regarding its investor axis, and we are witnessing a real-time shift.
Faisal Aftab, the founder and general partner of a leading Venture Capital Fund, Zayn Capital, and a judge at Shark Tank Pakistan, is a renowned authority on early-stage tech ventures and reflected on this ‘tech boom’ urgency in the region. Aftab’s insight directed the impact of digitization and data connectivity on society, particularly in the context of Pakistan, to the launch of 3G/4G licenses in 2014 that enabled widespread data connectivity in a country that had been too late to the ‘tech party.’ Technological advancements like AI, robotics, and digitalization gradually began disrupting various industries, and inevitably, the economy began to reshape its movement. Day-to-day necessities like taxis, food, and house-help became independent of effort and are now a tap away. These needs are now fulfilled through apps like Bykea, FoodPanda, and GharPar.
When asked about the current economic fiasco that Pakistan is undergoing, Aftab seemed hopeful and encouraging. Regarding the investor atmosphere, he observed that Pakistan’s start-up ecosystem’s most significant challenges and opportunities did not necessarily include what others would claim as political instability or corruption but rather the need for quality founders with strong execution abilities. The day-to-day political activity that might disrupt an owner’s physical presence at a factory or office is not a thought that a tech company worries about since their work requires only connectivity that already exists in abundance. While he noted that there seems to be a lag effect in capital investment due to the impact of geopolitical factors, Aftab stressed the importance of understanding business cycles and managing growth and financing needs accordingly, as all thriving economies today are facing tumultuous political times. While sharing his perspective on investing in start-ups, he emphasized the importance of evaluating factors like market opportunity, founder capabilities, competition, and timing that affect a business model. His advice for the new-age start-up generation looking to peek into a seasoned investor’s mind commanded a singular combination: integrity and consistency.
Shifting the conversation to FinTech start-ups, Aftab discussed the slow building of trust in the Pakistani mindset regarding banking and financial services. Although people use EasyPaisa and banking apps, the average Pakistani is quite particular about ‘Sood’ (Interest), which is forbidden in Islam (the practicing religion of approximately 97% of the population). One of the recent start-ups Aftab has invested in is called “Edu-Fi.” It is an educational fin-tech start-up where students can “Study Now, Pay Later.” This Sharia-law-abiding loan program secures loans for higher education for students who may not be able to pay for higher education immediately upon acceptance. For one, it rids Pakistani students of the new-age slavery concealed behind the ‘Financial Aid’ assistance package in the US college application system that thrives on the repayment of loans with an increasing interest rate and a binding timeline. Aftab claimed that solutions like this tend to fill the gap in the market that is filled with investors who seek innovators.
Tajir, GrocerApp, Dawai, Finja, Daraz.pk, TAG, SadaPay, Zameen.com, and numerous others are a testament to this generation’s shift towards AI.
Contemplating Aftab’s intuition in Pakistan, it seems the critical challenge during these times is managing growth, financing needs, and business cycles. Primarily, we need to develop an understanding of market opportunities and the ability of founders to execute. As everyone begins hopping on this bandwagon, there are limitations to copying successful models. The importance of conviction and innovation in start-ups is as crucial as the idea. Not only is it essential to scale companies to achieve escape velocity, but it is also necessary to emphasize the role of middle management in building successful start-ups that cooperate and compete in this fast-paced ecosystem.
Still, two factors seem to be the most crucial in understanding the way forward through this culture of start-ups: primarily, its impact on the future state of affairs regarding feudal landholdings that is quite vast and apparent, and secondly, the average Pakistani’s fear of the risks involved in trusting the ever-digitizing world and relying on intangible assets for generational livelihood. Like the Industrial Revolution, where the fast hands of time slowly shifted power from the aristocrats to the bourgeoisie, an entire digitized immersion is inevitable. Pakistani families with vast landholdings will have to leverage technology for survival and cave into the mechanization of their tangible wealth that may no longer yield capital in the future. Gradually, we will also witness the productivity gains from automation and the shift from labour-intensive to technician-intensive workforces with warehouses of various industries replacing labour with mass mechanization; an example is Huawei’s robotic factory in China which illustrates the future of automated production. Hence, the wheel that the youth has begun to spin will catch speed in time. It seems the culture of start-ups is still relatively encouraging, even if the ones worth investing in are few and far between.
The writer holds an undergraduate degree in Literary Studies from Eugene Lang College of Liberal Arts at The New School and an MPhil in South Asian Studies from the University of Cambridge. She can be reached at fathimahsheikh@gmail.com
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