ISLAMABAD: On January 20 of this year, viewers of Finnish television channel MTV3’s popular show “Good Morning Finland” were witness to something rather unusual: a businessman making the argument that one of the great unreported emerging markets’ business opportunities in the world lay not in India or China, but in Pakistan.
The entrepreneur in question was Wille Eerola, a technology and media consultant who first visited Pakistan eight years ago and for the last several months has been spending one week of every month in Islamabad. Eerola’s argument is simple: Pakistan gets far too much negative attention in the international media which overshadows the tremendous untapped potential in the country, specifically its young entrepreneurs.
“There is huge potential and a growing market that nobody knows of,” said Eerola in an interview with The Express Tribune. “The potential and size of the Pakistani market have generated great interest in me and everyone else who I have been talking to.”
Eerola visits campuses across the northern part of the country, meeting students and talking to them about their business ideas. While he did not explicitly say so, he appears to be in the process of setting up a venture capital fund to incubate, advise and grow small Pakistani businesses and start-ups.
“We are creating a project for new companies to start up from – whether it means providing funding or management expertise, understanding of sales abroad and so on,” he said. “And adjacent to that I am building up a fund by this spring which will then support funding of those new born companies.”
The concept Eerola speaks about is one that some of the largest venture capital funds in the United States have already employed. Some US venture funds provide not just capital, but also office space and consulting on how to grow the business.
The more involved method is seen as a good way to ensure a higher probability of success in their investments. Pakistan’s venture capital market is far too small – with only four registered funds – and none of them currently use this method.
Eerola was unwilling to state explicitly how big the fund would be, or who its primary investors will be, but did say that he considered a $50 million fund sufficient to fund several new start-ups. He did, however, state that he hopes that his fund will be copied by other investors, both international and domestic.
While the Finnish businessman speaks broadly of opportunity in Pakistan, he feels that the country’s focus on innovation and productivity gains should be in two areas that he identifies as Pakistan’s natural competitive advantages: agriculture and textiles. And contrary to a development strategy recommended by many experts, Eerola seems to favour serving Pakistani businesses serving their own domestic markets more than being concerned with exports.
“I would say if you are 180 million people and you have a huge domestic market, then make new products and the market is actually in Pakistan. This is one of the things we really like to see in new companies,” he said.
Pakistan’s gross domestic product – or the total size of the economy – crossed $210 billion in June 2011 and is expected to reach approximately $231 billion this year. The country has a rising middle class which many economists estimate to be at least a quarter of the population. This middle class commands purchasing power similar to their much-feted (and far more numerous) counterparts across the border in India.
Eerola says that he hopes to have several success stories to talk about over the coming months as his fund gets off the ground.
Published in The Express Tribune, February 27th, 2012.