The suspension of operations at Airlift is a noteworthy development. It is a symptom of a more significant issue.
The announcement that the e-commerce rapid delivery firm Airlift, which was similar amy ecommerce , would be closing down last week sent shockwaves across Pakistan’s once-thriving startup industry. It highlighted the “devastating effect” of the global economic crisis and market slump on the startup’s capacity to satisfy its financial needs, despite the fact that efforts at restructuring had been made.
What was once a promising sector that expanded because to the Covid epidemic and government reforms is now in danger of going up in flames. Prospective entrepreneurs used the indoor downtime caused by the pandemic to explore the internet domain. This market boomed.
The termination of Airlift’s operations is a noteworthy event, despite the fact that high-profile deaths and the toppling of dominoes as a result of Pakistan’s prolonged economic crisis may be seen as inevitable. This is because of its stature in the eyes of the Pakistani media as well as the global startup arena; it was the “poster child” of the nation. In August of the previous year, the rapid last-mile delivery firm had secured $85 million dollars in its Series B fundraising round. The startup had attracted the financial backing of venture investors from the United Kingdom and the United States, namely Harry Stebbings and Josh Buckley.
According to a report that was published by Deal Street Asia at the time, “The funding round is the largest ever round for a Pakistani startup.” This amount is equivalent to the total amount raised by local startups up to this point in the year, and it is the highest amount raised in the MENA (Middle East and North Africa) region.
In the third quarter of 2021, financing for Airlift was one of 82 other firms that publicly reported receiving money at various levels, ranging from seed funding to Series B funding. The documentation work that was carried out by the local consulting business Invest2Innovate was mentioned by Al Jazeera as stating that these firms together raised a “record-breaking” 350 million dollars in total over the previous year.
In comparison, there have only been 37 businesses that have broken investment records so far in 2018. Of those 37, 21 occurred during the first quarter of the year, and only two of them were at the Series B stage: the merchant platform Bazaar and the multifunctional e-commerce app Bykea.
And that’s not the end of it. Other well-known start-ups, such as the Egyptian bus sharing service Swvl and the Turkish second-hand automobile marketplace VavaCars, made announcements in June that they would be withdrawing from the Pakistani market temporarily or permanently, respectively, before Airlift’s departure. Airlift has been operating in Pakistan for three years.
However, industry insiders like as Ali Meruani, the co-founder of Golootlo, claim that this is a normal and expected component of a dangerous market in which 90 percent of participants do not succeed in the long term.
If we want to push the limits of what’s possible, we have to accept that there’s a chance we’ll fail sometimes. We need to celebrate both their successes and their setbacks. Meruani told Dawn that the shock over Airlift’s failure has more to do with the’small’ size of Pakistan’s start-up ecosystem. He said that running a start-up requires you to be resilient, therefore this is simply another bump on the road.
Meruani’s assessment of the magnitude of the sector is shared by Kalsoom Lakhani, the founder of the venture capital company i2i ventures located in Pakistan. “The problem with Pakistan is that our ecosystem is not ‘too big to fail,'” as the saying goes. At this moment, we simply cannot afford for anybody to fail since doing so would negatively impact how people see our environment. Lakhani told the web journal Rest of World, which covers technology news in non-Western countries, that “since we’re such a young economy, every single firm becomes an ambassador.” This is particularly true for Airlift.
However, cautious optimism has been voiced by venture capitalists and creators of start-up companies. This must be taken into consideration, since there are structural problems hurting Pakistan’s start-up environment, as explained by Al Jazeera.
In addition to a “drastic” gender inequality, other impediments that appear to have a more direct impact on start-ups in the country include a lack of diversity among local angel investors, unclear taxation laws for foreign investors, and a workforce that is not yet trained for senior positions in this new wave of digital firms, according to the report from Al Jazeera.
“It is imperative that the government and all other key stakeholders understand that we are at a crossroads where addressing the needs of these start-ups and their aliates and creating a favourable environment for them will determine the course of the entire digital economy over the years to come,” I
