Pakistan to produce a unicorn by 2025: Endeavor Managing Partner Allen Taylor – Business & Finance

Pakistan, the world’s fifth most populous country, is struggling to revive its International Monetary Fund (IMF) program to unlock a $1.1 billion tranche to address its short-term economic woes.

With the rupee depreciating to historic lows and inflation hitting a new peak, there is little expectation that this suffering will ease anytime soon. These problems have brought the country’s economy to a near standstill.

If polls of several thousand respondents are to be believed, most Pakistanis see a bleak future.

A state-of-the-art facility for technology startups has been launched

In such circumstances, there are more than a dozen foreigners, including three from America, who have arrived in Pakistan to attend the official launch of the Endeavor Catalyst subsidiary on Friday. Specifically, four businessmen from Turkey and two each from Saudi Arabia, Egypt and the United Arab Emirates participated in the launch.

Noting the major challenges facing Pakistan and talking about whether the country is an investment avenue, Endeavor Catalyst Managing Partner Allen Kinsey Taylor answered with a confident “absolute yes.”

“That’s why we’re here. I visited Pakistan in November 2018 and 4.5 years later, in March 2023, I have the exact same belief that I had then. In the next 10, 15 or 20 years, there will be amazing things built here in the technology sector. There are incredible entrepreneurs out there,” Taylor said while speaking exclusively with Business Registrar.

2023: Year of Challenges, Opportunities for Pakistan’s Startup Ecosystem

Endeavor identifies and works with high-growth entrepreneurs, helping them through the process by providing mentorship and guidance while supporting their fundraising process and/or investing (up to $2 million).

Taylor said that Pakistan has its ups and downs but the era it is going in, the top and the bottom is tilted upwards.

“Over the next ten years, we really believe in the potential of entrepreneurs,” he said.

Why investment in startups has decreased compared to 2021

According to statistics compiled by Data Darbar, a website that tracks investment flows in the country’s tech ecosystem, startups in Pakistan raised $366 million in 2021.

The year 2022 started well with investments in the first quarter amounting to $172 million, however, the numbers fell to $15 million in the last quarter. Cumulatively, the number reached $347 million, which was 5% less than the previous year.

Memo to connect startups, tech communities in Germany and Pakistan

The decline in investment may have little to do with the problems facing Pakistan.

Taylor said venture capitalists were more interested in Pakistan in 2021 compared to 2023 because of the global environment.

He said interest rates have risen globally.

“There were more VCs investing in markets like Pakistan, Egypt and Nigeria as they looked for yield in the global economy as interest rates were zero in 2021.

“In the current environment, the risk-free rate is 5-6%. Now we have fewer people looking to invest in emerging or frontier markets,” he said.

“So the only people who will invest here in the short term are what I would call true believers. Funds like us believe in the long-term potential of emerging markets.”

He added that his firm will also motivate other funds to enter Pakistan. He said Business Registrar that it has helped such funds move into markets such as Latin America and Southeast Asia.

Why doesn’t Pakistan have a unicorn yet?

A unicorn is a billion dollar high growth company. Despite being the fifth most populous country, Pakistan does not yet have a unicorn. It may be the only country in the top ten most populous nations without a unicorn.

“Pakistan’s ecosystem is not bad,” Taylor said, “it’s just young.”

Taylor said that in 2018, when he arrived in Pakistan, things were just starting to evolve in the technology space. “It takes years to build a billion dollar company.”

He said that in 2013 there were only 39 businesses that fit into the unicorn category. There are currently over 1,000 companies, 51% of which are in the US.

“Pakistan will have a unicorn and it will have more than one,” projected Taylor. “But it’s going to happen when the company is 5, 6 or 7 years old, not when it’s brand new.”

Taylor claimed that Endeavor’s launch in Pakistan was a hallmark for its startup ecosystem.

“We think this is the start of something big.”

“I will make a prediction that by 2025, Pakistan will have one unicorn and by 2030, we may have dozens or twenty of them. It’s what we think is possible.”

Should foreigners trust Pakistan and invest here?

Having worked in more than 40 different countries, Taylor said global investors need to recognize and invest in human talent in Pakistan.

“I think the long-term thinking of foreign venture capital should recognize the potential that is here in Pakistan, the size of the market, but also the potential of the human talent, the entrepreneurial talent. The caliber of entrepreneurs here is world class,” Taylor said.

Taylor said he wants global investors, foreign investors and venture capitalists to spend time in Pakistan with the founders and see their talent.

“They will see what I see. Human potential here, market potential here. To some extent, what we’re missing here is the smart connected capital that could help break through.

“Pakistan is one of the last markets where the potential has yet to be realized.”

For people who have invested in countries like China, India, Brazil and Indonesia, Pakistan is one of the markets where the potential is yet to be tapped, says Taylor.

“The type of investments that venture capital makes are long term and high risk and high reward,” he said.

“We’re not trying to invest today and get out in six months or a year. We invest in young companies that will help them grow and scale 5, 7 or 10 years from now. We think there is an opportunity to make a very good investment.”

“The fundamental belief is that the reward is so great that it’s worth the risk,” he said.

Taylor cited a pleasant experience of investing in Brazil and Turkey, where the depreciation was up to 60%.

“The companies we invest in have grown by up to 3000%. So if we can do something like that, then these challenges are nothing,” he said.

How does Endeavor see Pakistan?

Endeavor shortlisted Abhi, Sadapay and Bazaar. Endeavor Pakistan managing director Ali Samir Oosman said there are five more in the process and nearly 100 more pending.

Although Pakistan was recently added to Endeavour’s list of markets, Allen Taylor says the country may enter the top 5 markets for it in the next five years.

“In the next five years, it will be Brazil, Indonesia, UAE and Egypt, and maybe Pakistan in the top 5 markets for Endeavor in the next five years.”

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