New FDI magnet

Published: November 8, 2019

The advent of advanced communication technology and the ability for it to help solve critical issues has been attracting capital the world over. Over the past weekend, at perhaps one of the largest tech conferences of the country, it emerged that Pakistani companies raised the most money, particularly from foreign investors.

The most money was raised by local smart bus transportation firm Airlift which raised $12 million from foreign and local investment partners. This is touted as the highest-ever investment raised at the early ‘Series A’ level for a Pakistani startup. Elsewhere, a host of other startups also announced that they have secured funding from foreign and local investors.

The startup culture has been slowly but steadily been growing in the country. It has seen a number of techenabled companies come up to fill critical gaps such as mobility and connecting businesses to customers in online market places. A large and increasingly-connected population means that many investors salivate at backing startups in the country. We have companies which have become absolute giants in the field, providing employment to thousands of people. Many local investors have realised that this is a good way to spend their money, backing a promising horse.

As a result, a number of venture capital firms have been set up over the past decade which are investing in startups. Of course, not all startups promise a high return on investment or even if promising, fail to fully catch on and hence there is huge risk involved. Unfortunately, there is little insurance against this risk. This could perhaps be one reason why we have not seen more foreign investors back local companies.

The image of a country ravaged by terrorism and one whose technological credentials are not quite proven, have kept investors away. Perhaps the country can look into making investments into startups easier by tapping into the large pool of Pakistanis living abroad. Maybe someone can make an app for that.

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