Techpreneurs in the United States often sing the praises of Pakistan – the country has relatively low start-up costs, a rich talent pool and an emerging technology community backed by private companies, universities and the government.
Mention the fact that the country is the world’s sixth most populated nation and it leaves many entrepreneurs seeing dollar signs, eager to jump in. Just like investing in any foreign country, though, there are certain things that U.S. entrepreneurs should consider BEFORE they make an investment in Pakistan.
As with any investment, you need to do your homework first and do your due diligence to make sure it’s the right opportunity for you. Go into a foreign country with your eyes wide open, on the lookout for a business environment that will fit your needs and new international opportunities.
Here are five things U.S. companies need to consider:
- Be realistic. Though rich with talent, the tech community in Pakistan is no Silicon Valley – not yet. The area is emerging, yes. But don’t be surprised when you find out that the money and even government and private infrastructure support that you’d expect in rich tech centers like in California just don’t exist in Pakistan yet. Though growing with the help of nearly 30 tech incubators and accelerators, the level of tech investment there is only a fraction of Silicon Valley’s. The bright side: There’s still lots of room and opportunities to grow, though it make take years before there is a groundswell of opportunities as Pakistan builds its tech community infrastructure from the ground up. It’s also important to note that Pakistan’s overall economy is still relatively poor – more than half of the population lives on less than $2 a day – but investment dollars there could be stretched much further.
- Demand for technology. Pakistan is a hotbed of technology. Information communication technology is one of the fastest-growing industries. An estimated 10 percent of the population is online, according to the World Bank, ranking just below India’s 13 percent. Pakistan has more than 30 million Internet users, with half of them on mobile phones, according to a survey by Ansr.io. The country is estimated to be the fifth-largest mobile phone market in Asia.
- U.S. and international companies are making investments. U.S. companies such as Google are reaching out to help Pakistani companies like Eyedeus Labs make it happen – the company was chosen to participate in Google’s summer immersion program for startups in Silicon Valley for its app, Groopic (Twitter Link). In February, Intel said it will support investment in Pakistan soon, but only after the country sets goals such as more investments in education.
- Political upheaval is largely a thing of the past. For years, many U.S. companies shied away from Pakistan, for fear of political unrest. Those worries have largely dissipated in recent years, as the country’s political stability has increased.
- Lack of a solid tech infrastructure. Though the country has a number of high profile success stories, Pakistan still lacks a cohesive financial tech ecosystem that provides substantial financial support and the mentorship required to build a strong base of support. That’s a problem, as many local startup companies have little to no way of funding their operations or of receiving the mentorship and relationships they need to grow.
That doesn’t mean that local incubators and accelerator programs aren’t trying. Moftak Solutions LLC has said they plan to organize 1,500 start ups in Pakistan over the next five years under an aggressive campaign to raise investment money for local firms.
Incubators like Plan9 (Twitter Link) are trying, but they still have a long way to go, especially when it comes to funding. Many tech companies start in Pakistan but some eventually go to the U.S. and other countries to seek IPOs and raise necessary capital needed to fund their businesses.
Still, investments are coming. In February 2014, China announced it would invest $20 billion in the country’s energy infrastructure – among the nation’s largest investments to-date. This investment is important because it will undoubtedly help spur the need for more tech companies that will support the energy industry for years to come.