Pakistan ushers in a new era of start-ups
With the two e-commerce companies recently obtaining large amounts of financing, Pakistan's start-ups have raised more than $300 million this year, higher than the sum of the past six years.
It is reported that Bookme, Pakistan's leading online ticket booking platform, and Bagallery, a Karachi-based beauty and fashion e-commerce start-up, recently announced the collection of $7.5 million and $4.5 million respectively in Series A funding round. The financing of both companies was jointly led by Zayn Capital, Lakson Venture Capital and Hayaat Global.
Due to security concerns, insufficient infrastructure and lack of withdrawal mechanism, Pakistan was not favored by domestic and foreign investors in the past. However, the bold economic reforms of the Imran Khan administration, the continuous improvement of the business environment and the socio-economic benefits arising from the construction of CPEC have made the international business community increasingly aware of Pakistan's huge development potential.
With the high cost of start-ups in neighboring countries such as India, many international venture capital institutions believe that investment in Pakistan has the best prospects in South Asia. Therefore, they have increased their investment in Pakistan this year. For example, Tajir, a Lahore based B2B e-commerce platform, collected $17 million in financing led by China's supply and demand e-commerce platform "Business Opportunity 77", Defy Partners of Silicon Valley and Wavemaker Partners of Singapore jointly led the investment in the B2B e-commerce platform with $30 million in August this year.
In addition to international investment institutions, Pakistan has also gradually developed its own start-up ecosystem, and local investors include Lakson Venture Capital and the National Incubation Center. In order to stimulate investors' enthusiasm, the Pakistani government has set up a special department, plans to build more Special Technology Zones (STZs) and provide various concessions to help the development of the IT industry. Pakistan's Ministry of Information Technology and Telecommunications (MoITT) has also established Pakistan's first national investment platform "PakImpactInvest" this year.
Pakistan's e-commerce industry is still in its infancy, but it is growing rapidly. In the first quarter of 2021, Pakistan's e-commerce market reached $540 million, with a year-on-year increase of 35%. Daraz, the largest e-commerce retail platform in Pakistan, expects that its total retail sales will double every year in the next five years, and there will be 300,000 small and medium-sized enterprises on its platform within two years.
Daraz, which cooperates with Alibaba, currently operates in Pakistan, Bangladesh, Sri Lanka, India and Nepal. In October this year, about 70 million users visited the Daraz website, half of them from Pakistan. Daraz expects that by 2030, its platform will have 100 million active users and it will participate in Alibaba's goal of serving 2 billion global consumers in 2036.
In view of the above, I believe that now it is a good time for relevant Chinese enterprises, especially e-commerce platforms, to increase their investment in Pakistan. China and Pakistan can carry out close cooperation and jointly expand the markets in South Asia, the Middle East, Central Asia and even Europe and the United States.
Editor's note: Cheng Xizhong, Visiting Professor at Southwest University of Political Science and Law，Special Commentator of China Economic Net, former Defense Attache in South Asian countries. The article reflects the author's opinions and not necessarily the views of China Economic Net.