The government has launched the Pakistan Startup Fund (PSF), which aims to invest Rs2 billion per year in startups, Caretaker Information Technology Minister Dr Umar Saif said after a dismal year for entrepreneural activities in the country.
According to the minister, the PSF is structured as an equity-free capital that would help close a venture capitalist (VC) round for a startup and help it raise its first external investment.
The development takes place after an unimpressive year for Pakistani startups. In 2023, they raised over $70 million, according to independent monitoring firms, marking a significant decline of over 70 percent compared to the major funding influx in 2021 and 2022.
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“Today we launched the Pakistan Startup Fund (PSF) which will invest up to Rs 2 Billion every year in Pakistani startups,” Saif wrote on social media platform X, formerly Twitter. “If you are a startup in Pakistan and a foreign VC is evaluating your startup for a $1 million investment, the VC only needs to invest $700k — the Pakistan Startup Fund will give you a grant of $300k to help close the round.”
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The minister assured startups that the government would not acquire any shares or a board position in exchange for the funding. He said the PSF is designed to lower the risk for international investors to invest in Pakistani startups. He added that once the government issues the funds to startups, “we won’t hassle you at all.”
“With PSF we hope to create a value of at least Rs 50 Billion per year in the startup ecosystem in Pakistan,” he wrote.
Pakistani funding monitors last week expressed optimism about 2024, expecting a more promising year for local startups after general elections are held in the country.
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They noted that Pakistan’s ongoing economic recovery and the announcement of elections have restored investor confidence, which is expected to boost the country’s startup ecosystem.