gccstartup.news Exclusive: Pakistan’s Start up scene

Faraz Khan, chief executive officer of Seed Ventures


Pakistan’s economy witnessed a growth of 5.3 percent during the fiscal year 2016-17, the highest recorded in a decade. Resultantly the country has now joined the list of economies worth more than $300 billion. On the one hand where there is exemplary economic growth, on the other according to economists, it is still insufficient to match the job needs of a growing youth population. Today, as population grows by 1.95 percent and the economy by 4.24 percent, one million jobs need to be created annually to fill the gap. Statistics reveal that as of 2016, youth unemployment in the country was at 10.76 percent, and this number may soar in the coming years unless jobs are created in the market.

More than 50 percent of Pakistan’s population constitutes of young people under the age of 25. Owing to a high fertility rate, the country will experience a substantial increase in working age population beyond 2050. These statistics portend that as of now Pakistan has and will have at its disposal a significant number of young people who can work, pay taxes, save and invest – in essence they can add further impetus to economic growth. The question is if job creation is a challenge that we face as a nation, how do we intend to resolve this issue, and in what possible way will we create one million jobs?

Entrepreneurship is the vehicle which will allow these young people to create jobs for themselves, and in turn create jobs for other people. Findings of the Global University Entrepreneurial Spirit Students Survey – GUESSS 2016 show that there is a higher inclination in university graduates to start ventures of their own. According to UNDP, 23 percent of the existing youth population want to start their own business. Now, if we consider the statistics that on average two million graduates enter the market, and only a quarter of them get absorbed in the job market, we can safely conclude that this shift in choice of career opens up new avenues for employment generation for the surplus youth.

A favourable business environment has led to this increased interest and positive sentiment towards entrepreneurship. Private consumption expenditure accounts for 80.1 percent of the GDP showing that people have a high propensity to consume and spend. Coupled with this, betterment of security conditions; the rise of the middle class, significant increase in internet penetration, smartphone adoption rates, fast uptake of 3G/4G technology, growth of ecommerce, and the slow but visible development of resources like incubators, accelerators, co-working spaces, research funds, and investor groups in major cities across the country creates a very forthcoming environment for start-ups in Pakistan.

This sector has also piqued the interest of the foreign investors. So far major start-up funding in one year from different foreign investors has been close to $50 Million. Zameen.com takes the lead after having received an investment of $20 Million. Sabzi.pk secured $7.5 Million in investment, Rozee.pk was able to find investment worth $6.5 Million, and there are many others in the list.

These numbers speak volumes of the trust the local and international investor fraternity has in the potential of Pakistan’s start-ups and growth trends in our economy. It is not just the private sector that is showing interest in this segment; the development sector is also providing material and financial resources to start-ups. Although both public and private sectors are stepping up to improve

Although this increase in the number of start-ups is an omen of prosperity, it is not so much about the quantity of start-ups that are created; rather how many are able to sustain their operations beyond three to five years. Sadly, I have witnessed several young enterprises give up a large share of their business to an investor who had the money but not the same focus and vision as the owners of the start-up. Because these young enterprises believe investment to be the Holy Grail, they end up sharing more than half of their business with an investor who brings no strategic value to the start-up. In my opinion if one decides to bring in investment, it is very important to find out where the money is coming from and what aspirations and vision the investor has. It is also not just about finding the funding or the investor; a matter of greater importance is finding the right investor.

As an angel investor I meet a number of budding and existing entrepreneurs frequently; bright young people with brilliant ideas and lots of energy, one would think that this is just the right kind of skill set required to fuel the growth of a start-up, however I beg to differ. I noticed that a number of them lack an appetite for failure and the patience required to face the perils of the entrepreneurial journey. They also seem to think that becoming an entrepreneur is the quickest route to making your first million, and it is the ‘cool’ thing to do. Since they expect instant gratification, they tend to get discouraged easily and quit because goals aren’t being met as fast as they planned. Successful entrepreneurs are not overnight success stories, but the result of several days and nights invested in the making of their enterprise.

Then most of them commit the cardinal sin of creating ‘more of the same’ offering. Not too long ago, there was a sudden influx of upscale ‘chai’ dhabbas in the market, primarily in Karachi. They all had more or less the same offerings, and even their business modus operandi was the same. As expected, most of them shut down even before they could complete one year of business. There is really nothing wrong in doing the same thing, however, if no point of differentiation is created or there is a lack of value addition – early death of start-up is imminent.

Although Pakistan’s start-up scenario is still in its infancy, a plethora of opportunity awaits aspiring entrepreneurs in the wake of CPEC. I am certain that we will see a much larger number of young ventures in the coming years, however, it is my hope that these start-ups start up with passion and the right reasons. Incubation, mentoring, and even investment is meant to give flight to a business idea – scaling and growing a business will and forever remain the entrepreneur’s job.
(The opinions expressed in this article are the author’s own and do not reflect the view of the gccstartup.news or TMA Worldwide)

About the Author:

Faraz Khan, chief executive officer of Seed Ventures

Faraz Khan is a UK-based Pakistani social entrepreneur, investor, published author and public speaker. He is regarded as a leading authority on social entrepreneurship and believes in bringing a positive change in the society with forward-thinking business models that allow him to fulfil a personal commitment to improve the lives of people in the UK, Pakistan and beyond. He is the author of ‘Pukh Theory’, Pakistan’s first business parable.

Faraz has been appointed as a member of Catalyst UKTI, and sits on the Advisory Board of All Party Parliamentary Group for Entrepreneurship (APPGE) and is member of Atlantic Council US, advising governments on bringing entrepreneurs together. He has also been nominated by the Asia Society to represent Pakistan in Young Leaders Conference in Delhi and Future Leader of the Year by Power 100, a selection that signifies and collates the 100 most promising personalities who will shape the future of Pakistan. He is also been appointed judge at the Sirius Programme, a global Graduate Entrepreneur Programme by UKTI, and is a Board Member at SEALA (South East Asia Leadership Academy), a sister concern of SIBF (Society of international business Fellows), a US based think tank. Gizelle Communication, a SEED company, was nominated an Arabia500 finalist and was also declared the top 100 fastest growing company in Pakistan twice by AllWorld Network. Faraz is regularly invited as a speaker at universities, professional organisations and worldwide marketing forums, and is a member of Euclid, ACVEO, Institute of Directors (IOD), Cambridge International Arts, and an Executive Council Member of British Alumni Association.

An MBA Marketing graduate from the University of Lincoln.

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