Startup funding in Pakistan continues to have a bad run, with investments falling to $6.8 million during July-September 2023, according to data released by Data Darbar.
This reflects an 87.7 percent year-on-year (YoY) decline from $55 million reported in the same period last year. Cumulatively, this has reduced the 9MCY23 figure to just $35.1 million, down by nearly 90 percent.
On a quarter-on-quarter (QoQ) basis, funding increased by 30.8 percent compared to $5.2 million in Q2. Meanwhile, the deal count was five, down 50 percent YoY and 37.5 percent QoQ.
Total deals for 9MCY23 were just 21, essentially the same as recorded in Q1-2022 alone. The average ticket size fell 70.5 percent year on year to $1.36 million in Q3-2023, from $4.26 million. Compared to $742,900 in the previous quarter, this reflects a small increase.
Round-wise, five startups raised seed funding during the quarter. In 9MCY23, seed funding is the most dominating stage, accounting for 15 of the 21 transactions.
During Q3, each of the five seed rounds was in a different industry. Edtech, courtesy of Taleemabad, accounted for the lion’s share of $2.6 million.
Overall during 9MCY23, fintech dominated in terms of both dollar amount ($14 million) and number of transactions (7). Transportation and logistics came in second with $11.1 million and four transactions.
Indus Valley Capital was the sole investor to complete two deals in the quarter, while Sarmayacar completed one. Zayn VC, i2i Ventures, and Fatima Gobi did not declare any investments in Q3-2023, and each revealed only one in 9M2023. This could also suggest that local VCs are not making many announcements but are nevertheless deploying funds.
According to CB Insights, global venture capital was $60.5 billion in Q2-2023, the lowest level since the first quarter of 2018 (pre-COVID).
Overall, the quarter saw the closure of Medznmore, one of the highest-funded startups. Jugnu then halted its basic business shortly after. According to the Carta database, this year has seen a record number of startup closures.
The few sectors that have done well recently are those that rely on Pakistan’s structural imbalances, such as banking or the energy industry.