Pakistan plans $25-50mn fund to back startup ecosystem

Shaza Fatima Khawaja, Federal Minister for IT and Telecommunication, told an audience in Karachi on Saturday that Pakistan is working to have a fund worth $25 million to $50 million available for its startup sector, as reported by Business Recorder. Funds from the first stage of the Pakistan Startup Fund are already being put to use, and the second stage, Pakistan Startup Fund 2.0, starts with a $10 million base grant. The minister tied these steps to a broader push to strengthen the digital economy.

Talks are under way with the World Bank, while the International Finance Corporation and the Asian Development Bank are also involved. The aim is to build a considerably bigger fund, structured as a first-loss guarantee for overseas investors, and run by an international fund manager picked via a request-for-proposals process. According to the minister, the first-loss mechanism is designed to spread investment risk and build trust among foreign backers.

She said the startup sector has struggled to raise money since a global drop in funding, and described access to capital as having completely dried up. The government also wants better financing for SMEs and new products for freelancers, whose exports have passed $1 billion.