Venture firms optimistic as Pakistan’s digital economy develops

Islamabad:As Pakistan’s digital economy steadily gains traction, the South Asian country is attracting increasing interest from regional venture capital firms seeking untapped growth opportunities beyond traditional investment hubs.

With a population of over 240 million—one of the largest in the world—Pakistan presents a sizable consumer base and a young, tech-savvy demographic. Nearly two-thirds of the population is under the age of 30, a statistic often cited by investors as a key indicator of digital potential. “Pakistan is one of the most promising but underappreciated digital markets in Asia,” said Thomas G. Tsao, Co-Founder and Chairperson of Gobi Partners, during an exclusive interview with China Economic Net.

Tsao noted that Pakistan reminded him of China back in 2002, where a vast population and a surge in internet users laid the groundwork for rapid digital scaling. “When we first entered Pakistan in 2018, the ecosystem was at a very early stage. But what we saw was a country full of energy, talent, and ambition,” he highlighted the country’s young talent and growing connectivity as core reasons for Gobi’s early move into the market.

Since then, Gobi has become one of several regional players participating in Pakistan’s evolving startup ecosystem, launching landmark projects like the USD 30 million Techxila Fund I and Techxila Fund II ($50 million), investing in several Pakistani startups across sectors such as logistics, e-commerce, travel tech and fintech including Sastaticket.pk, DealCart, PriceOye, Abhi and so on. The fund’s performance has been in the top quartile for its vintage.

In recent years, Pakistan’s startup ecosystem has experienced significant drop in venture capital funding. After reaching a peak of $365.8 million in 2021 and $332.4 million in 2022, investments declined sharply to around $75.6 million in 2023—a 77.2% year-over-year drop attributed to global economic headwinds and local macroeconomic challenges. The downward trend continued into 2024, with total startup funding falling to $42.5 million, marking a 42.5% decrease from the previous year.