Pakistani startups are sizzling like a hot summer afternoon in Karachi, raising a quarter of a billion dollars already this year. This is more money than they have raised in the last five years combined. We’ll get to what’s driving this global gold rush into Pakistani startups in a hot second but first let’s paint a picture for how booming startups could transform not just the sectors they’re seeking to disrupt individually but also our collective culture, economy and politics.
Traditionally, Pakistanis like to invest in physical assets like real estate. On the other hand, startups are an investment in human beings (founders) with an idea and a big dream. Growing investment in startups will result in the birth of a niche meritocracy in the country, which will challenge our social norms where the smartest labour and capital is incentivised to become rent seeking rather than productivity or innovation seeking. When this meritocracy grows and matures, they will seek political representation and challenge the rent seeking nature of the country’s political economy.
Startups have been innovation and economic growth engines for developed countries like the US (think Silicon Valley and the hundreds of thousands of high paying jobs it has created). Now imagine what startups can do for a developing country like Pakistan, where markets are inefficient and disruptors can create new opportunities that can’t even be imagined today. If this is hard to imagine, think about the bad old days when you applied to receive a landline from PTCL and it took months (even years!) to get a service installed. Then came mobile phones and sims where you could receive a line within minutes. Now imagine everything you’ve been able to do because of your phone. That’s how disruption in a market segment works. It shatters assumptions of what’s possible and not possible.
Imagine the opportunities a meritocracy creates for women and other marginalised groups in our country. Previously, big business, largely run by men, served the needs of other men. Now, startups can offer niche services for consumer groups that are underserved. There are startups that are now giving unsecured loans to the underprivileged while our traditional banks can barely find anyone other than the government to give loans to. What does the future of our financial sector look like when FinTech startups begin eating our traditional banks for breakfast? I guess smaller bonuses for bankers and more access to capital/better customer service for the rest of us.
Back when Asad Umar was Finance Minister, I asked him how he intended to transform Pakistan’s economy beyond the immediate fixes it needed. Asad argued that his biggest priority was to fight elite capture within the economy and he called out startups as a key focus area. I didn’t understand the connection between the two at the time but I do today. When a political government fights elite capture, the rest of the elite fights back. Elite capture can’t just be fought top-down (because policy implementation itself is often captured), it also needs to be fought bottom-up by nurturing a constituency within society, which is organised and actively seeks to disrupt the very inefficient oligopolies which give elite the economic capital to capture policymaking.
In our signature style, Pakistan hasn’t arrived but burst onto the scene. Pakistani Start Ups: The Next Big Thing — a conference hosted by Pak Launch recently — made it clear that we find ourselves at the heart of a perfect storm. Pakistan has a large, young, digitally connected population that loves to consume. Add to that a hot mix of global capital, the Careem Mafia and Wapistanis returning from Silicon Valley. This house is ready to be set on fire.
Am I being too bullish on the power of startups to transform Pakistan’s economy, society and politics? Or am I less bullish than the investors betting on Pakistan? Over the coming weeks, I’ll continue my reporting by speaking with key players locally and globally to understand how much change will actually happen. Meanwhile, Pakistani startups have earned their irrepressible moment in the sun and we should toast their dramatic potential for transforming our society. If it can be imagined, it can be done. Carpe diem!
Published in The Express Tribune, September 19th, 2021.
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