The awful lack of capital has become one of the mightiest obstacles for Pakistani entrepreneurs to bring out fresh and unique products. The foreign startups namely Uber, Careem and Rocket Internet have already taken over most of the businesses-transportation, e-commerce and food delivery.
With 1 million broadband connections every month, these entrepreneurs already know about the country’s constantly growing consumer market.
Crowding-out effect will surely take its place if this growth continues. As more and more foreign start-ups are taking over in Pakistan, the local companies would be left very far behind with dumps. There is a lot of potential in Pakistan. Uber says that out of all the countries they work in, Pakistan has one of the best markets. Rocket Internet has also build a head office in Karachi to centralize its operation there.
Sarmayacar & Its Investments
Recently, a group of investors and huge corporations have started a steadfast tech fund to gather investment. Although it is an interesting idea but that hardly got any huge and favorable investment for the investors.
A new seed fund association, Sarmayacar is hoping to bring forward these issues. It includes a total of 14 people, mainly expatriate Pakistanis that belong to financial sector working in Singapore, London and New York.
Vice president at private equity firm GIC Investment Management, Rabeel Warraich is the mastermind behind this scheme. To help boost the operation, Rabeel and his 13 other partners have put in their own personal investment in it. Rabeel says that Sarmayacar has estimated capital of up to US $3 to $4 million.
Last month, Sarmayacar made its first ever investment for Pakistan. It invested US $200,000 in a music streaming app Patari, an alternate app for Spotify made by Pakistanis. Sarmayacar is looking forward to make six to ten investments in this year as the team is actively searching for more Pakistani startups.
Hoping for other interested investors to join the cause, Rabeel claims that amount of investment is likely to grow. Nonetheless, the scheme will be closed by the end of 2017 and topped with around 25 to 30 investors.
More Investors to Work With the Association
To help in strategy, networking and opening doors, Pakistan based investors have already started working with Sarmayacar. Rabeel himself visits Pakistan every now and then, hoping to meet new entrepreneurs and accelerating startups.
When asked about Sarmayacar’s investment strategy, Rabeel stated:
“We try not to be overly fixated on specific verticals as most verticals offer opportunities in Pakistan. We try to focus more on what problem is being addressed, what the fundamentals of the target market are and whether the business model of the startup will enable effective monetization of the opportunity”
He further added:
“We are open to considering anywhere between US$50,000 and US$300,000 per investment, but our sweet spot is around US$200,000”
The main focus of the company is to help out those startups that require funding in all the sectors. At this time, interesting opportunities are on the top list, but the company will also take part in series A round as it grows.
Rabeel is confident about attracting large corporations and investment companies due to the status of its founders. If that happens, it will change the structure of the company and would limit the number of partners in it. Rabeel said:
“We are in this for the long run. Typical of investments of this nature, we expect at least a five-to-seven-year hold period for each investment”
The expert investor admits that the severe lack of capital but rushing to add more has raised a lot of questions by foreign VCs. It is important to keep the deals going so that it lures them even more and that’s what Sarmayacar aims to support.
Source: Tech in Asia