The last one year has seen an exponential rise in Pakistani start-up companies, as more and more tech-savvy entrepreneurs attempt to solve longstanding business issues with the help of technology. Backed by investment, pitches are finally moving from mere buzzwords to reality. Eos profiles some of the most prominent of these new companies and the people behind them…

On a Wednesday night, thousands show up to attend an online event titled ‘Pakistani Start-ups: The Next Big Thing’. Before the conference begins, the timer ticks on screen and dramatic music plays in the background. The comments section is already brimming with excitement.

“Hello from Rawalpindi,” one comment reads. “Hello from Los Angeles,” says another. And in a sea of hellos from Pakistan and around the world, one jokester says, hello from Wakanda — referring to a fictional country that is very technologically advanced, from Marvel comics and films.

The event has been organised by Paklaunch, a community aiming to connect start-ups with mentors, advisers and investors. Clearly, many in the virtual audience are looking for connections and mentorship. The comments section continues to populate with young individuals, working in tech, introducing themselves.

Pakistani start-ups have thus far secured at least 240 million dollars in investment in 2021 alone.

The countdown ends and makes way for a promotional video that declares that, in Pakistan, you’ll find the “drive, grit and ambition characteristic of the early days in Silicon Valley.” “The venture-backed start-up transformation that happened in the US, China, India and Indonesia is now taking off in Pakistan,” the voice-over continues, over imagery of tech being used across the country.

Soon, President Dr Arif Alvi is on the screen. “Pakistan is catapulting itself in the new digital era,” he says. After welcoming the participants and investors from around the world, he opens the conference by saying, “Pakistan Zindabad!”

The Pakistani tech industry and start-ups have been a frequent talking point over the past year. “Pakistan has huge potential and we are open for business,” tweeted Prime Minister Imran Khan last month when Airlift — a Lahore-based tech start-up — secured 85 million dollars in ‘Series B’ financing. Less than a week later, it was announced that Bazaar — a Karachi-based tech start-up — had secured 30 million dollars in ‘Series A’ funding. This prompted federal minister Asad Umar to tweet, “Time for the Pakistani tech sector has arrived.”

Indeed, the Pakistani tech sector seems to have arrived in a big way. Good news about this boom has continued to mount over the past year. Pakistani start-ups have thus far secured at least 240 million dollars in investment in 2021 alone. For comparison, 66 million dollars were raised in all of last year.

News reports of these triumphs are often published with images of young men and women, usually dressed in business-casual attire or even t-shirts and jeans, smilingly looking into the camera. Surely, they have something to smile about. They see and are a part of a future not everyone can envision just yet.

While the technologically challenged and those without much business savvy may not understand what Series A and Series B funding are, or what terms such as ‘FinTech’ mean, it is clear for all to see that the young minds behind tech start-ups understand international and local funds, and the needs of Pakistan.

(Cheat sheet: Pre-seed-funding is the earliest stage of funding, while seed-funding is the first official funding stage, according to Investopedia, a publication that aims to simplify complex financial information. Series A, B and C the next are funding rounds. Series B financing is the second round of funding for a company that has met certain milestones. Another Investopedia article says that the term ‘FinTech’ refers to the integration of technology into offerings by financial services companies, in order to improve their use and delivery to consumers).

Here we look at some of the success stories that are part of this tech start-up boom and what it all means for Pakistan.

THE ARRIVAL OF DUKAANTECH

On June 1, 2020, a largely unknown start-up — even to those religiously following the local ecosystem — announced raising an investment of 1.3 million dollars. It was then Pakistan’s largest pre-seed round (meaning pre-product) and laid the seeds of what was soon going to be a frenzy of capital and new players in the space.

The start-up in question was Bazaar, a B2B (business-to-business) marketplace founded in Karachi barely two months earlier to help make the lives of kiryana (grocery) store owners simpler. Think Daraz, or any e-commerce app for that matter, but for the dukaanwala (shop owner) in your neighbourhood. An online platform through which they can source inventory, add the stuff to their carts and get it delivered within 24 hours.

The start-up was launched by two childhood friends, Hamza Jawaid and Saad Jangda. The founding team checked off what seems to be the magic formula for successful start-ups in the country: an education in leading British and American universities, followed by professional stints at big name companies. During their college days, Jawaid and Jangda even set up a non-profit organisation by the name of Counselling Pakistan, which helped students aspiring to attend foreign universities with advice and mentorship.

Of late, B2B marketplaces or the broader ‘dukaantech’ has become an exciting space, with lots of emerging players trying to streamline the processes

“Hamza and I grew up together, we used to carpool and attended the same college,” Jangda tells Eos. Later Jangda and Jawaid went their separate ways. Jangda went to the University of Michigan, while Jawaid went to the London School of Economics. Jangda then joined Snapchat, before moving to Careem in Dubai and living with Jawaid, who was working there at McKinsey.

This was a time when the start-up ecosystem was taking off in the region and Jangda and Jawaid were seeing lots of young aspiring entrepreneurs moving back to their countries. The two were inspired to build a “truly home-grown success story,” Jangda tells Eos. They saw that lots of tech companies were actually not local but run from the region, and wanted to change that.

After some research and thinking, they decided that digitising the kiryana store would be an “exciting challenge.” Soon after, the two co-founders were in Pakistan and found themselves talking to kiryana store owners and understanding their problems better. Then the Covid-19 pandemic struck, shutting down the entire country. Jawaid and Jangda knew it was time to step in.

Of late, B2B marketplaces or the broader ‘dukaantech’ has become an exciting space, with lots of emerging players trying to streamline the processes. In 2021 alone, 67 million dollars have been raised by Pakistani start-ups in this vertical (a business segment focusing on a particular niche), with Bazaar leading through first with its 6.5 million dollars seed round in January and then 30 million dollars Series A in August.

This follows similar trends observed in the wider region, including in neighbouring India, which boasts the single-most valuable venture capital-backed company in this sector, Udaan, followed by Egypt’s Capiter, which bagged 33 million dollars in funding on September 14.

And that is just the marketplace vertical, focusing on B2B e-commerce (or buying and selling between retailers or businesses). Within the broader dukaantech space, other product offerings are also emerging, such as ledger apps, focusing on bookkeeping, and online store builders.

“This is a 170-billion-dollar market in Pakistan alone, with lots of inefficiencies, so different players are trying to address it in all sorts of styles,” says Jangda. “Our idea at Bazaar is to create an operating system for the kiryana store, where all [the shopkeepers’] needs can be met, from stocking up inventory to maintaining records,” he adds.

Keeping this in view, in February 2021, they launched Easy Khata, a standalone ledger app through which retailers can record transactions, among other things. By August, the application had already been installed by a million users.

With fresh funds in the kitty, Bazaar is now also looking to aggressively expand beyond Karachi, which has been their hub for the initial part, and Lahore, where they launched a couple of months ago. The co-founders plan to enter other cities, on top of working on other products that can help simplify the life of dukaanwalas.

DIGITAL KHAATAS

Bazaar’s ‘Easy Khata’ app is only one of the ledger apps trying to digitise khaatas in Pakistan. CreditBook is another Pakistani FinTech start-up building the tools for the digitisation and financial inclusion of micro, small and medium-sized business enterprises (MSMEs).

“As the first step of this mission, we launched an app, which helps merchants digitise their bookkeeping and provides them with a secure and convenient alternative to offline physical khaatas or registers,” says the CreditBook team, in an email interview, responded to jointly by the company’s co-founders Iman Jamall, Hasib Malik and Hisham Adamjee.

The start-up, which was founded in June 2020, secured 1.5 million dollars in seed-funding within less than a year of its launch. It has been backed by seven investors, including Pakistan’s i2i Ventures, UAE-based VentureSouq and US-based Better Tomorrow Ventures. During this time, two of the company’s founders, Jamall and Malik, were also named in the Forbes Asia ‘30 under 30’ list in the ‘Social Impact’ category.

“The husband-and-wife duo founded CreditBook in June to empower micro, small and mid-sized businesses across Pakistan. Their app helps small business owners manage their finances by tracking cash received and payments pending, with automated payment reminders sent out to customers,” says the profile of the co-founders on forbes.com.

“If things continue with this momentum, the time is not far when start-ups from Pakistan will be quoted as a shining example of grit, success and sustainable growth worldwide,” they say.

The digital ledger is the first step in helping MSMEs with software, says the team. Over the course of the year, they plan to introduce and test more features and products complementary to the bookkeeping app.

The team behind CreditBook recognises that MSMEs in Pakistan present a huge opportunity as a “driver of economic growth.” They share that the sector currently employs over 80 percent of the non-agricultural labour force and contributes to over 30 percent of the gross domestic product.

“Despite the glaring opportunity, the attention paid to organising, innovating and regulating these businesses has remained negligible,” says the team. “This has given rise to a variety of problems, especially when it comes to accessing financial services. The lack of an institutional framework and access to financial services severely stunts the potential of these businesses to grow and glow.”

The MSME service sector is a major growth area in emerging markets, with ground realities similar to Pakistan’s. The CreditBook team believes it can learn key lessons from the successes, challenges and opportunities that have presented themselves in countries such as India, Indonesia and Vietnam.

“Having multiple players is also beneficial in institutionalising the needs of the sector, building awareness and educating the users,” the CreditBook team says.

They believe that the Pakistani start-up ecosystem is witnessing a pivotal moment. “We have stellar new talent trying to solve key problems in various sectors, and the world is taking notice of everything Pakistan has to offer,” says the team, adding that this is also a critical time to “continue the grind” and not lose sight of the bigger picture.

The minds behind CreditBook are also optimistic about the future. “If things continue with this momentum, the time is not far when start-ups from Pakistan will be quoted as a shining example of grit, success and sustainable growth worldwide,” they say.

FINANCIAL INCLUSION

One of the problems many tech start-ups in Pakistan are looking to tackle is financial insecurity. Abhi, another Karachi-based FinTech start-up, has set its eyes on an important mission — helping millions of people across Pakistan improve their financial well-being and living healthier and happier financial lives.

Abhi aims to create a Shariah-compliant online platform that allows employees to access their earned wages before the payroll date. The amount is then automatically deducted from the next payroll.

“This is a very convenient and time-efficient solution, which allows individuals to gain access to financing that they otherwise would not have been able to receive,” says Omair Ansari, one of the founders of Abhi.

This service was envisioned to address the problems associated with conventional financing, Ali Ladhubhai, the co-founder, points out. The team behind the service observed that many in Pakistan live pay-cheque to pay-cheque and do not have savings available for emergencies or to pay bills in time to avoid the late fees.

Ladhubhai and Ansari believe that the evident future of the world is the digitalisation of all financial services.

Ladhubhai says that we have a very prevalent culture of applying for loans, requesting advances from employers or simply borrowing from friends or family. “The first two processes are rather tedious, because they may involve long processing days, pose the risk of rejection and employees cannot determine the amount of credit available to them,” Ansari says. “Furthermore, people may also feel embarrassment at repeatedly asking for money or justifying their need for it,” he adds.

The Abhi application seeks to provide them an instantaneous service that enables private transactions within “a matter of seconds.”

Before launching, Abhi signed memorandums of understanding (MOUs) with 20 companies and started a pilot programme. The start-up launched with a bang, raising two million dollars in their seed round.

According to a press release put out when the start-up secured the funding, the funding round — led by VEF, the emerging market FinTech investor, and Sarmayacar, the local lead — also included a number of international and local investors, including Village Global, i2i Ventures, and Zayn Capital. This was Village Global’s first FinTech investment in Pakistan, the press release had added.

Ladhubhai and Ansari believe that the evident future of the world is the digitalisation of all financial services. The former is an ex-banker and co-founder of karlocompare.com.pk, a financial services aggregator, while the latter has spent many years as an investment banker abroad, with a particular focus on both public and private emerging/ frontier equity market space. Hence, they both know a thing or two about financing trends and where they are headed.

“With more start-ups emerging by the day and the FinTech ecosystem growing, eventually the conventional ways in which we conduct transactions will change,” Ansari tells Eos. “As more people come on board, innovation and efficiency will increase.”

Ultimately, Abhi aims to help relieve people of their financial stresses. But to do that, they need to get to people’s employers first. Ladhubhai shares that the companies they have on board did have some hesitations initially. But, he maintains, they are now quite excited with the ease and convenience their product offers.

THE ART OF THE PIVOT

Problem-solving is a big part of the pitch of most tech start-ups, but when Airlift first arrived on the scene, it got instant attention for its ambitious goal of addressing one of the biggest issues facing Pakistan — the lack of safe and reliable public transport.

The idea came to Airlift’s co-founder Usman Gul when he was visiting Lahore from San Francisco — where he lived at the time and worked at DoorDash, an online food ordering and delivery platform — and was bothered by the traffic congestion caused by the inefficiency of public transportation.

“A fundamental shift is required across Pakistan’s transportation practices. Specifically in Lahore, 43 percent of smog is caused by the transportation sector,” a statement on one of the company’s websites still reads.

The company had big aspirations. It was developing a decentralised app-based transport network that would be ‘reliable, safe and affordable.’ But as Covid-19 spread across Pakistan, disrupting life as we once knew it, Airlift Technologies had to temporarily suspend its transportation service.

As lockdowns became the norm and Covid-19 continued to spread, the team behind Airlift decided it was time to pivot. They soon launched Airlift Express — a 30-minute online delivery service.

A year later, the start-up managed to secure 85 million dollars in Series B financing.

“This [idea] came about during the start of the Covid-19 lockdowns in Pakistan in March 2020, when there were long queues of people, potentially exposing themselves to the coronavirus, at supermarkets, rushing to get groceries during lockdowns,” says Syed Mehr Haider, the executive director of Airlift Technologies.

“With everyone wanting to stay safe at home, we saw this as a huge customer pain point, which we set out to resolve,” he adds.

A year later, the start-up managed to secure 85 million dollars in Series B financing. When announcing the funding, Gul had said, “If this is the journey of a thousand miles, we have taken only the first step.”

The journey ahead will surely throw up its own challenges. One is the crowded marketplace, with users having multiple options for grocery delivery. As the Covid-19 spread continued, more and more services started offering easy home delivery of groceries. Now anyone wanting to buy groceries from the comfort and safety of their home has multiple options at their fingertips.

But Haider is confident they have an edge over the competition. “There are several companies now in e-commerce grocery delivery, but most of them are not able to deliver as rapidly as us,” he says. “We have strong, mutually beneficial partnerships with hundreds of suppliers across the country, ranging from multinational consumer goods companies to local small and medium businesses, providing our suppliers a seamless distribution channel to be instantly available to their customers.”

The investment recently secured by Airlift is a motivation for the team to keep going. “This round is a huge vote of confidence from top tier global investors in our venture, it’s fuel to further our impact all over Pakistan and beyond — empowering the lives of millions more,” says Haider.

“Now it’s an even greater responsibility for us to continue investing in our technology and operations to more effectively build the rails of commerce.”

Haider recognises that, as more and more players enter the market, innovation will be the name of the game.

“The future is looking very optimistic for Pakistan’s tech industry,” he says. “All the upcoming local companies create a very competitive environment, in which all companies have to innovate in order to thrive. This means continuously improving and [providing] cheaper options for consumers, a strong innovation ecosystem and rapidly improving talent-base armed with cutting edge skills,” he adds.

ON THE OTHER SIDE OF THE SCREEN

While tech start-ups come up with more solutions to address problems faced by dukaanwalas, women, the elderly and those living without savings, the people on the other side of the screen will also adapt and learn to benefit and ask for more from these services. As multiple options become available in this highly competitive space, people will get to pick and choose what works for them. With the money coming in, that next phase is just getting started.

The services mentioned above are only a few players in this exciting space. It also must be mentioned that some of the biggest players are still international services. But the Pakistani start-up scene is growing exponentially.

For some time now, techies in Pakistan have had a bad reputation for being individuals who throw around buzzwords such as innovate, incubate and disrupt. But with pitches now turning into realities, it seems we have entered an exciting new chapter for tech in Pakistan. Hopefully, this is just the beginning.

Mutaher Khan is a technology and business journalist. He used to write ‘Tech Talk’, a Dawn column covering start-ups. He tweets @mutaherkhan

Khurram Zia Khan is interested in Pakistan’s economy and trade. His writing has appeared in various Pakistani dailies and publications. He tweets @KhurramZiaKhan

Published in Dawn, EOS, September 19th, 2021