Invest2Innovate's 2023 Report: Pakistan's startup landscape grapples with funding slump

Morning! Just like your toxic ex who pops up when you least expect it, we're making a comeback into your lives. It’s not you, it’s me a random-burst-of-unproductiveness on our part 🙃

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In this week’s edition:

🌊 Sea trouble leading to world trouble

💰 Pak’s first credit guarantee company for SMEs

❓ Why mixing Google with medical queries will no longer be a horror story

📊 End of year Report 2023 (Pak’s startup ecosystem edition)

- The Itla Squad 💼

Business

Global 🌎️

It always got to do with the Red Sea when something goes down..

There's some trouble in the Red Sea, and it might mess with the world economy, says Vincent Clerc, the big boss at Maersk, a massive shipping company.

Why the sea trouble? Recent U.S. and UK airstrikes in Yemen triggered concerns for global trade in the Red Sea. Houthi militants, responding to Israel’s war against Palestine, are attacking ships. Despite a U.S.-led task force, clashes persist, raising worries about trade disruptions.

Big boys’ response: Maersk, like many other shipping companies, is playing it safe as instead of using the Suez Canal, the shortcut between Europe and Asia, they're taking the long route around Africa. This means it could take two to four extra weeks for stuff to get from Europe to Asia.

What it can mean for us:

• The cost of shipping containers has shot up, especially on routes from China to Europe and the U.S. West Coast. This could lead to higher costs for businesses.

• Big players in shipping, responsible for most global trade, are preparing for many months of challenges. Even if the conflict zone becomes safe, it could take a couple of months for shipping to return to normal.

• And to top it off, the World Bank is saying we might be in for the worst economic five years in three decades.

TLDR: Red Sea tensions sparked by U.S. and UK airstrikes in Yemen are impacting global trade, warns Maersk CEO Vincent Clerc. Shipping giants like Maersk are avoiding the Suez Canal, causing delays of two to four weeks. This leads to increased shipping costs, major industry challenges, and the World Bank predicts the worst economic five years in decades.

What else is new in news

✶Governors of New York and California want to stop retail crime i.e. theft from stores. They're making new rules to make the punishment for stealing in shops even tougher. Also, they want to provide more funding to police departments and district attorney's offices.

Local 🇵🇰

Money talks, NLGCL listens

The Ministry of Finance and Karandaaz Pakistan have joined forces to launch Pakistan’s first credit guarantee company for Small and Medium Enterprises (SMEs) – introducing the National Credit Guarantee Company Limited (NCGCL).

• NCGCL is all about supporting SMEs by providing a unique credit guarantee facility. The goal? To create special financial products for over 1.5 million SMEs in Pakistan, with an expected market size of more than Rs. 3.7 trillion.

• Caretaker Federal Minister of Finance, Dr. Shamshad Akhtar, highlighted that only 5.2% of private credit goes to SMEs in Pakistan. The NCGCL aims to change that and pave the way for more investment in small businesses.

• British High Commissioner shared that they've kicked off with a solid investment of Rs. 6 billion through the Financial Inclusion Program.

TLDR: Pakistan launched NCGCL, a credit guarantee company for SMEs, backed by the Ministry of Finance and Karandaaz. NCGCL assures banks, making them more willing to lend to riskier businesses. The goal is to support 1.5 million SMEs with special financial products, with an initial investment of Rs. 6 billion through the Financial Inclusion Program.

News Flash

✶Canadian coffee chain Tim Hortons is expanding in Pakistan, opening new outlets in Islamabad and Rawalpindi. After a successful debut in Lahore in February 2023, which set opening-day sales records, Tim Hortons has since launched stores in Islamabad and Rawalpindi.

Tech

Global 🌎️

Google and medical queries = no longer a horror story

Googling your symptoms can be a rollercoaster of anxiety. But now, with the help of AI, it seems like we won't have to feel like we're knocking on death's door every time we dive into medical questions online.

What’s up: The AI researchers at Google Research and Google DeepMind have developed an AI-based diagnostic dialogue system called Articulate Medical Intelligence Explorer (AMIE) to enhance medical interviews, which essentially means it is a medical chatbot that will serve as a diagnostic tool.

• To train AMIE effectively, the team initially used publicly available data and then they had AMIE play a patient with an illness and a critic, basically giving itself feedback.

• AMIE's main thing is figuring out what's up with you. It uses Google's PaLM and learned from a bunch of real medical talks. It's got two loops in its brain – one for practice chats and another for tweaking things based on feedback.

• In one study, AMIE was at least as effective as human physicians in simulated diagnostic consultations, with higher diagnostic accuracy and quality of advice.

Way forward: Despite promising results, the researchers recognize the need for extensive further research to make AMIE a robust clinical tool.

TLDR: Google's AI researchers developed AMIE, a medical chatbot, for enhanced diagnostic interviews. Trained on public data and self-play simulations, AMIE uses Google's PaLM, excelling in diagnostic accuracy and advice quality in a study. Despite promising results, further research is needed for AMIE to become a robust clinical tool.

What else is new in news

✶The International Monetary Fund said that the increasing use of artificial intelligence might impact around 40% of jobs worldwide. Rich countries are more at risk than poorer ones.

Local 🇵🇰 

The good, the bad, some more bad

January is that time of the year: when you take a pause, look back, and ponder on 'what went down' and 'what didn't.' Invest2Innovate did the same but for Pakistan’s startup ecosystem - in its End of Year Report 2023.

What does it say?

• Pakistani startups struggled, raising only $33.6 million in the first nine months—just 10% of the previous year.

• Despite a slight Q2 improvement with $5.2 million, the overall trend remained downward, hitting a low of $6.8 million in Q3.

• Facing a 79% drop in funding and 34% fewer deals, Dr. Umar Saif initiated the Pakistan Startup Fund (PSF) with PKR 2 billion to spur growth and confidence.

Sector deep dives:

• Digital lending: Companies like AdalFi and EduFi are filling credit gaps using AI and creative lending models. AdalFi, with $7.5 million in seed funding, has a low default rate of 0.1%.

• Merchant digitization: The State Bank of Pakistan's Raast service and startups like Chikoo are focused on creating a complete digital financial system for small businesses, emphasizing QR codes and digital payments.

• Rise of the gaming industry: Raptr Games, associated with IGN.com, makes global gains from gaming platforms. Shake the AI, a game development studio backed by Magnus Ventures, prioritizes AI-integrated games.

TLDR: In 2023, Pakistani startups struggled, raising only $33.6 million, 10% of the previous year. Despite minor Q2 improvement, overall funding dropped significantly. Dr. Umar Saif introduced the Pakistan Startup Fund (PSF) with PKR 2 billion to stimulate growth and confidence. Key sectors include innovative digital lending models, merchant digitization efforts, and global gains in the gaming industry.

Tech tour of news

✶A new fact-checking tool, iVerify, was launched in Islamabad ahead of the February 8 elections to promote unbiased reporting in Pakistan. The tool emphasizes eliminating bias, verifying facts, and manually examining news articles. Journalists can submit stories through iVerify's portal, undergoing a comprehensive evaluation for accuracy in factual representation and context.

More interesting Itla (اطلاع) we consumed:

🏘️ We just found our dream nature-inspired holiday home. It also happens to be Virat Kohli’s home too.