Pakistan’s top performing startup, Airlift, announced on Tuesday that it had permanently shut operations in the country after day-to-day running finances dried up and an attempt to raise fresh funds failed last week.
“While the global recession and recent downturn in capital markets has affected economic activity across the board, it has had a devastating impact on Airlift and rendered its shutdown inevitable. On July 12, Airlift’s operations will shut down permanently,” Airlift said in a statement.
The grocery delivery startup had raised the largest financing of $85 million in the country’s history in the Series B funding round in August 2021.
It stopped the operations while at a distance of three months before reporting an operating profit (positive cash flow from operations) and six to nine months before posting a net profit (free cash flow), the company said.
Earlier, the startup pulled out of a couple of expansion markets, cut jobs and increased delivery charges under a business restructuring strategy, but failed to survive in the end.
My heart goes out to everyone working hard in the Pakistani tech ecosystem— Ankur Nagpal 🔥🔥 (@ankurnagpal) July 12, 2022
Airlift raised a monster Series B ($85M) & was the poster child for the burgeoning Pak startup scene
I ~really~ hope their failure is taken in context & not as a reflection on the entire ecosystem https://t.co/DbaoLu4ksz
Read more: Airlift secures $85m in series B financing
In May, one of the investors stepped up to lead Airlift’s Series C1 financing.
“We’ve received tremendous support from the potential lead in opening doors to other investors to put together the round. First Round Capital, Indus Valley Capital, Buckley Ventures, 20VC and other investors agreed to participate in the round with sizeable cheques.”
In early July, Airlift had a clear path forward to close the funding round as the company pushed documents for signatures to all participating investors.
“Last week, amidst rapidly deteriorating conditions in the global economy, several participants shared uncertainty in wire schedules and their disbursements – this ultimately meant that the company’s capital requirements would not be met. Ultimately, the round was unsuccessful,” Airlift said. “With the clarity, a complete shutdown was inevitable.”
Airlift's letter confirming the shutdown and detailing the events of past few months: pic.twitter.com/cvmfM7xRMS— Manish Singh (@refsrc) July 12, 2022
The company announced that it would pay two-month salary to its teammates covering July and August.
“For suppliers, vendors and other third parties, our team will communicate proactively to manage arrears and liabilities as part of our ongoing shutdown process.”
Earlier, with the onset of recession, Airlift was one of the first few companies in the emerging markets to restructure business operations – its response code included three adaptations including an immediate reduction in headcount, shutting down operations across all expansion markets, and revision in platform configurations to ramp up monetisation (ie introduction of higher prices and delivery fee).
With this, Airlift was able to achieve order-level profitability, maintain reasonable scale, and reduce financial burn by 66%. “As of July 2022, Airlift was about three months away from operating profitability and about six to nine months away from company-level profitability,” it said.
“As we wind down operations and reflect on our work with Airlift, we cannot help but recognise the talent density that Airlift was able to bring together. From structuring the $85 million Series B financing and delivering on order-level profitability to launching and scaling operations across international markets, Airlift was able to achieve initial success and has had a lot to celebrate.”
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