Pakistan's start-ups attract 63% more funding in first half, Magnitt says

Pakistan's start-ups sealed an increasing number of deals and attracted more funding in the first half of 2020, driven by investments in e-commerce and healthcare sectors during the Covid-19 pandemic. Start-ups in the South Asian country secured $18 million (Dh66.1m) in funding in the first six months of the year, up 63 per cent on the same period a year ago, according to data platform Magnitt's H1 2020 Pakistan Venture Investment Snapshot . The number of deals rose 13 per cent to 17 transactions between January to June, led by a $7.8m in funding in dental tech start-up Overjet. The average ticket size of disclosed deals was $1.1m, up 51 per cent compared to the first half of 2019. Dubai-based Magnitt released the report to mark its expansion into Pakistan, its first foray beyond the Mena region. "Pakistan is a key and growing market," Philip Bahoshy, Magnitt's chief executive and founder, said. "Through increased transparency, this report looks to promote Pakistan’s entrepreneurship landscape to a wider audience, while also encouraging Pakistani start-ups to explore investment opportunities beyond their borders." A young population, a growing middle class and an increasing 3G/4G connectivity have created a conducive environment for start-ups in the South Asian country, according to a report by consultancy McKinsey & Company. Pakistan is also among the youngest countries in the world, with a median age of 23 and more than two-thirds of the population aged below 30, the report added. If Pakistan were ranked among Mena countries in terms of the number of funding deals for start-ups in the first half of 2020, it would be fifth - behind Egypt, the UAE, Saudi Arabia and Oman. "As the Pakistani ecosystem continues to evolve, we expect that the number of deals will grow significantly to reflect its market size," Magnitt said, noting that Pakistan is most comparable to Egypt in terms of population size. Pakistan would rank fourth in terms of the amount of funding raised by start-ups in the Mena region, following the UAE, Egypt and Saudi Arabia. Early-stage Pakistani start-ups attracted 88 per cent of the total funding in the country during the first half. Among the sectors most popular with investors in the country, e-commerce ranked first in terms of number of deals. Healthcare, advertising and marketing, technology and data analytics rounded out the top five. "Covid-19 accelerated the adoption of digital technologies across Pakistan, evidenced in increased investment in both e-commerce and healthcare," Magnitt said. The healthcare sector accounted for 47 per cent of the total funding into Pakistani investments in the first half of 2020. Overjet’s $7.8m fundraising largely contributed to this. The top five funded start-ups accounted for 68 per cent of total funding in Pakistan during the first six months of the year. Other notable fund-raising rounds include $1.8m to Tajer in seed funding, $1.3m to Bazar, $700,000 to Mandiexpress and another $700,000 to healthwire.pk. Some 29 institutions invested in Pakistan-based start-ups in 2020, with Sarmayacar being the most active investor by number of deals. International investors accounted for 76 per cent of investment activity during the period, compared to only 30 per cent of international investors across Mena. Overall, venture capital investments into Pakistani start-ups are expected to continue growing, with the $22m funding round for Airlift that began last month a sign that momentum is continuing into the second half of the year, Magnitt said. Through its expansion into Pakistan, Magnitt aims to break the "psychological barriers" to entering new markets by sharing know-how and data, its chief executive said. "There is no better time for founders to explore and develop an understanding of new markets to identify opportunities beyond ‘usual-suspect’ regional clusters," Mr Bahoshy said. "Pakistan, with its strong ties to the region, existing history of technology and talent synergies, and expanding digital economy is an exciting and natural next step for us." With increasing internet penetration and developing local tech clusters, Pakistan looks promising as a launchpad for technologies that solve problems such as infrastructure and logistics, he added. "Pakistan is an exciting space, with key signals that its tech start-up space is about to get much more exciting," Mr Bahoshy said.

Pakistan's start-ups attract 63% more funding in first half, Magnitt says

Data platform Magnitt plans to expand into the South Asian country in its first foray beyond Mena