What's in and out: Predictions for Pakistan's startup landscape for 2024

Morning! We don’t give news the basic way so why do basic on Eid?

With the scary year of 2023 for startups in Pakistan and uncertainty for the year 2024, we wanted to dive deeper into some topics/questions we have covered for the past year like is 2024 going to be just as tough as 2023 for startups in Pakistan, or maybe even worse? Or could things get better? Should Pakistan also get excited about AI like the rest of the tech world or is it too early? When organizations/venture capitalists select companies to coach or fund, what qualities do they look for in a founder?

When you read as much news as us, these are the questions you are curious about. Lucky for us, we had Samia to answer our burning questions… and lucky for you, we are sharing them here. Samia Aslam - currently the Chief of Staff of Endeavor Pakistan - has experience working in Unilever, Careem and Daraz. Endeavor is a global organization spanning 40+ countries and supports more than 2,500 entrepreneurs, whose companies generate combined revenues of over $28 billion US. In Pakistan, the organization has 5 companies on board: Bazaar, Laam, Sadapay, Abhi, and PostEx.

In today’s edition, we will be covering “What Pakistan’s startup scene is going to look like for the year of 2024?”

We hope it’s as fun reading for you as it was for us to talk to Samia.

In today’s special edition:

🔮 Predictions 2024: What Pakistan’s startup scene is going to look like for this year?

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Founded in 1997, Endeavor is a global organization with a mission to unlock the transformational power of entrepreneurship by selecting, supporting, and investing in the world’s top founders. Today, Endeavor’s network spans 40+ countries and supports more than 2,500 entrepreneurs, whose companies generate combined revenues of over $28 billion US, have created more than 3.9 million jobs, and, in 2020, raised over $4 billion US in capital. Endeavor’s unique entrepreneur-first model and network of trust provide a platform for founders to dream big, scale up, and pay it forward to the next generation of entrepreneurs.

How would you describe your job at Endeavor to someone who doesn't work in the startup space?

I look after operations, finance & HR for Endeavor Pakistan. I manage a small team comprising seven individuals. Our organization, established in March 2023, is still in its early stages, requiring significant local institutionalization. As a result, much of our focus is currently directed towards setting up the necessary local infrastructure.

In your opinion, what’s going to be in and out of the startup space in Pakistan for the year 2024?

This question seems to be on everyone's mind lately. At the beginning of the year, there were discussions in the market about the potential for the US Federal Reserve to reduce interest rates, which could spur economic recovery. However, it's still early in the year, making it challenging to predict outcomes definitively. In Pakistan, there remain opportunities for founders to secure investment, especially considering the investment surge witnessed between 2020 and 2022. However, the abnormal increase in valuations during that period has subsided, returning startup evaluations to a more typical market state. Nonetheless, investors are still seeking promising founders building successful ventures. Typically, investors signal market trends in the founder and investor landscape. During economic downturns, Software as a Service (SaaS) products tend to attract investment due to their lower customer acquisition and scaling costs compared to traditional brick-and-mortar businesses. Currently, industries such as logistics and supply chain startups, focusing on process optimization, are gaining traction.

Additionally, healthcare remains a thriving sector post-COVID-19, with increased attention on health-related innovations. Some people might not agree with me on this but I believe that by the end of 2024, recovery will become inevitable. This is due to growing fatigue among people, compounded by ongoing global events like conflicts in Ukraine and Gaza. Despite macroeconomic challenges in Pakistan, a natural correction appears unavoidable. I foresee the end of 2024 as the starting point for recovery, with 2025 being a particularly favorable year for startups and founders.

Is it too early for Pakistani startups to be excited about AI?

There are two perspectives to consider. Firstly, AI aims to enhance efficiency in various domains. When utilizing AI tools, one immediately notices the potential to address tasks that previously required human assistance in the workplace. For instance, in content marketing, AI is leveraged for image generation, while social media marketing extensively uses AI techniques. Pakistan has a pool of talented individuals in the tech industry, making it a great time for AI adoption. The faster and more effectively we train our workforce in AI, the greater the benefits. Rather than starting from scratch, we should strive to attain the level of AI development already achieved globally. The foundational sectors of health and education hold significant potential for AI integration. However, adoption in Pakistan tends to be sluggish due to reluctance to embrace new technologies or change.

Given the economic landscape, what trends do you anticipate in startup funding and investment for Pakistan in 2024?

Based on discussions with investors, I believe that SaaS holds the highest priority for all investors, primarily due to its low customer acquisition costs. Beyond SaaS, there exists considerable potential in industries such as textiles and construction. Given the substantial opportunities in healthcare and education, I anticipate the emergence of more startups in these sectors.

In the context of Pakistan's entrepreneurial landscape, what long-term impact does Endeavor hope to achieve?

Endeavor's main goal is to produce at least one unicorn in each market it enters within the next 3-5 years. Additionally, we aim to scout and support high-impact entrepreneurs in every market we enter as an organization.

Endeavor works with people who are part of the traditional sectors as well because there is a misconception that people feel that the startup has been associated with tech because it was a terminology that was coined in Silicon Valley. But our initiative is inclusive, welcoming founders from diverse backgrounds. For example, in our pipeline, we have founders primarily from the food and beverage industry. These entrepreneurs are restaurant owners, currently expanding their businesses into food chains across Pakistan. We aim to support and collaborate with such founders to contribute to their growth and success. At the same time, we want to bring in the founders who are building SaaS products for retailers. Regardless of the industries, our objective is to engage with these entrepreneurs to unlock potential for scaling up in Pakistan and beyond.

Another crucial aspect is to identify and activate multiplier effects. By multiplier effect, I mean what Careem did, where the whole 'Careem-mafia' got activated. After people left Careem, they started their startups and became ambassadors of the ecosystem. Although Careem is UAE-based, we aim to find the 'Mudassir Sheikha' [Careem’s CEO] for Pakistan. Currently, we have five companies: Bazaar, Laam, Sadapay, Abhi, and recently added PostEx and we are working towards achieving our vision of creating a Unicorn.

What are the top three qualities in a founder that you look for?

One critical aspect for a founder is their business acumen. Secondly, their level of ambition is crucial; sometimes founders are satisfied with the current scale of the business, and investors often seek more growth. The third point is the founder's character regarding coachability and maturity. At Endeavor, our core premise is based on the fact that we want founders who acknowledge the need for support. We often encounter entrepreneurs with different profiles who may struggle with ego issues and reluctance to accept when they are wrong. As founders often present themselves as strong, it can be challenging to work with such individuals.

What's your favorite tech/business stuff to read/watch/listen to?

I find Muzamil’s ‘Thought Behind Things’ podcast intriguing because he covers various aspects with his guests. Abroad, I admire Ashneer Grover from India. India’s startup content is well-developed, considering the long history of startups and the presence of unicorns. I also enjoy random browsing on YouTube, particularly shorts and reels. For technical knowledge, I often visit the Y-Combinator YouTube channel and website.

More interesting Itla (اطلاع) we consumed:

🤷‍♀️ That it is possible to send your newsletter on Chand Raat and still expect your readers to open up their emails and read it…