What’s Behind the 70% Fall in Pakistan’s Startup Funding?

Pakistan’s startup funding dropped sharply in 2024. Total investment fell by 70%, going from $75.8 million in 2023 to just $22.5 million, according to Data Darbar. The number of deals also dropped, from 39 to only 15 — a 61% decline.

Fewer startups got funded, but those that did received bigger amounts.

• The average deal size was $3.75 million, up 68%.

• The median deal size rose by 158%, reaching $3.1 million.

This shows that investors are being pickier. They’re supporting fewer companies but putting in more money per deal.

Early-Stage Funding Takes the Lead

In terms of stages, early-stage funding dominated the landscape:

• Pre-Series A rounds made up 48% of disclosed capital.

• Seed-stage funding followed with 38%,

• Series A rounds accounted for just 14%, down from 25% the year before.

• No Series B funding was recorded in 2024.

This signals a growing hesitancy among investors to fund later-stage startups, possibly due to

• Exit uncertainties
• Economic pressures

Gender Disparity Persists

The gender gap in startup funding remains stark:

• Startups founded exclusively by men received 75.6% of the total investment.

• Mixed-gender teams received 24.4%,

• Startups founded solely by women received no funding at all in 2024.

This reflects the ongoing challenges faced by female entrepreneurs in Pakistan’s startup scene.

Debt Financing Offers Some Relief

In response to the equity crunch, startups turned to debt financing, raising $20.5 million across 28 deals. Here’s where the money went:

• Fintech: 46.7%

• E-commerce: 37.8%

• Real Estate: 8.9%

• CleanTech: 6.7%

This shift shows how non-equity capital is helping some sectors stay afloat, particularly those with stronger revenue models.

Mergers & Acquisitions Continue to Decline

The M&A landscape also slowed, with only five deals in 2024, down 44% from the previous year and well below the 17 deals recorded in 2022. Notably, 80% of these were domestic, reversing the earlier trend where cross-border activity dominated.

From 2020 to 2024, Pakistan saw:

• 38 total M&A transactions

  • 25 cross-border

  • 13 domestic

• 14 product-based companies were acquired.

• 18 service-oriented firms,

• 6 companies with mixed models.

Tech Sector Outperforms Broader Economy

Despite the funding slump, Pakistan’s broader tech sector showed resilience:

• The ICT sector grew by 8.5%, far outpacing the overall GDP growth of 1.73%.

• ICT exports jumped 33.7% YoY, hitting $3.6 billion.

  • Computer services made up $3.1 billion (+38.5%)

  • Telecom services added $550 million

  • Information services surged 341.5% to $22.4 million

This suggests that while VCs are cautious, Pakistan’s export-driven tech industry remains on an upward trajectory.

Summary

The data paints a mixed picture: startup funding is in sharp decline, yet tech exports are booming. As investor caution continues into 2025, the ecosystem may shift its focus toward sustainability, profitability, and global markets rather than hyper-growth alone.