Turn away from sugar and textile, focus on technology

Published: December 25, 2014
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Supercell earns Rs46 billion
in profits before tax, which
is higher than that of any top
five banks or insurance companies
in Pakistan. DESIGN: CREATIVE COMMON

Supercell earns Rs46 billion in profits before tax, which is higher than that of any top five banks or insurance companies in Pakistan. DESIGN: CREATIVE COMMON

KARACHI: If Pakistan can produce a single global technology company like Google or Facebook, it will result in a huge economic turnaround.

Settling the entire balance of payment will then be an understatement, according to Lahore University of Management Sciences (Lums) Center for Entrepreneurship Executive Director Khurram Zafar.

However, lack of capital is the biggest hurdle facing Pakistani start-ups, some of which have the potential to become global players, Zafar told The Express Tribune.

An angel investor himself, Zafar co-founded two software product start-ups in the Silicon Valley and advised several venture capital firms in the US. He has now taken another challenge — he is trying to convince local investors, inclined towards conventional businesses, that pouring money into the country’s technology companies is a smart bet.

“How long will investors keep pumping money in sugar and textile mills?” said Zafar in a blog post. “Let me share something that might shed light on the opportunity that I am ranting about.”

Zafar, who also served as one of the founding board members of Plan9 – a technology incubator of the Punjab Information Technology Board – believes that the technology entrepreneurship ecosystem in Pakistan is at a tipping point. “There are a number of factors at play that make Pakistan ripe for both local and international investors looking to invest in the tech space.”

Rollout of mobile broadband technology, increase in the number of internet users, development of technology incubators, steady investments flowing into start-ups at the early stage are gradually building investor confidence, he added.

However, such indicators are not enough to change an established mindset of individuals more interested in achieving monetary targets, exactly what Zafar is trying to showcase.

In his infographic, the techie compares the gross profits of Supercell – a Finnish mobile gaming company – to that of top businesses in industries that are dearest to investors on the Karachi Stock Exchange.

Supercell earns Rs46 billion in profits before tax, which is higher than that of any top five banks or insurance companies in Pakistan. In fact, the figure is higher than the combined gross profits of the top 10 cement manufactures; top five automobile companies and sugar mills; top nine textile firms; six oil marketing companies and two oil refineries in the country.

Clash of Clans – a free mobile game with in-app purchases – is the only product that demonstrates the company’s overall potential. With a number of downloads ranging between 100-500 million, the game earns Supercell between around $3 million a day. “This company is in a country [Finland] that has half the population of Lahore,” said Zafar.

Giving another example, the expert said Skype – the world’s leading telecommunication app for video chat and voice calls – was developed in Estonia, a country of only 1.3 million people. The company was acquired by Microsoft for a whopping $8.5 billion in 2011.

Responding to a question about local start-ups’ acquisition, Zafar said the Karachi-based Mixit, which deals in financial services softwares, got acquired recently, providing exit to their investors and founders through global acquisitions. Gameview Studios, GenITeam and Tapinator are other start-ups that provided exit to investors, he said.

Zafar believes that there are a bunch of Pakistani companies that have the potential to become global players. “Mindstorm Studios in Lahore can be the next Supercell if it attracts investment.”

Arguably the best gaming app developer in the country, Mindstorm developed the official game for the 2011 Cricket World Cup. The app was previously made by leading game developers Electronic Arts United States’ and Codemasters of the UK.

Zafar further added that Mindstorm recently launched a game, War Inc: Nations Fury, which is similar to Clash of Clans – the game already has installs ranging between 500,000 to 1 million.

“All the traction metrics of Mindstrom are way above industry average,” said Zafar. “One of its players spends up to $5,000 a month on War Inc, indicating the potential this company has.”

Published in The Express Tribune, December 25th,  2014.

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Reader Comments (1)

  • Dec 25, 2014 - 11:23AM

    Wah! Wah Farooq Baloch Sahib! This is the best advice you have given to the entrepreneurs in Pakistan. Kudos for writing this article because textiles is a sunset export industry and should be focused on the internal market, including sugar. Salams

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