2022 — a dismal year for Pakistani startups

By every measure, 2022 has been a pretty tumultuous year for Pakistan. On the political front, it saw the first vote of no confidence being passed in parliament, removing former prime minister Imran Khan’s government. The massive protests that followed seem to have put an irreparable dent in the establishment’s role and status. However, all those developments pale in comparison to the economic crisis the country has been reeling through over the last year. Peak inflation in almost two generations and the sharp monetary contraction managed to put a major dent in customers’ and businesses’ pockets. All of this was only made worse by the dilly-dallying resumption of the International Monetary Fund (IMF) programme and the constant talk of default. For tech startups though, it was the changing global macros more than anything that spoiled the party. After a solid 2021 on the back of a capital frenzy that swept away markets the world over, and record investment of $366 million in Pakistan, there was naturally a lot of optimism for the ecosystem in 2022. And it started on a high note too: local startups raised over $174m in the first quarter. But the US Federal Reserve’s contractionary policy amid high inflation soon caught up and slowed down the venture capital activity. The cracks first began to appear in the second quarter of 2022, when startups started scaling back their operations and laying off people. That included Airlift, which pulled out of all cities other than Karachi, Lahore and Islamabad and let go of 31 per cent of the workforce. Soon after, Swvl, Retailo and Truck It In followed suit. However, the fundraising held up to $104m, still higher compared to the same period last year.