The rise of Pakistan’s startup ecosystem: Shifting traditions and inward inspiration

Kalsoom Lakhani is the Founder/CEO of Invest2Innovate, or i2i, which supports startups in new and untapped markets. 

Any ‘boom’ you hear in relation to a country like Pakistan is more likely literal than figurative. The country is likely to be the butt of a snarky Bill Maher joke than depicted in a positive light.

Most news about Pakistan is negative – detailing bombings, targeted killings and political instability. While this is sadly very much part of the narrative, it is not the whole truth.

The Pakistan you read about in the news omits the vast amounts of people, organizations and companies striving to make it better. In the last year alone, Pakistani women have won a Nobel Peace Prize, scaled the world’s highest mountains, won an Emmy and brought home the gold medal in cricket.

Just two months ago, e-commerce company Markhor, which works with local artisans to produce high-quality men’s leather shoes, became Pakistan’s most successful Kickstarter campaign, raising seven times more than its intended goal, catching the attention of Seth Godin and GOOD Magazine.

There is no greater evidence of this positive change than in Pakistan’s burgeoning technology ecosystem. In a new report released by my company, Invest2Innovate – which was commissioned by the World Bank’s Consultative Group to Assist the Poor (CGAP) – we mapped the number of startup competitions, incubators, university programs, coworking spaces and forums, and analyzed the gaps and challenges entrepreneurs continue to face in the country.

Three years ago, the ecosystem was relatively nascent, with just a handful of organizations. Today, the space is unrecognizable and brimming with constant energy and activity.

A closer look at Pakistan’s tech scene

Plan9, the country’s largest technology incubator launched by the Punjab Information Technology Board, recently announced PlanX, its new startup acceleration program. The Lahore University of Management Sciences (LUMS), one of Pakistan’s top universities, recently graduated the first class of incubatees from its Foundation program.

The IT trade association, Pakistan Software Houses Association for IT & ITES will soon launch Nest i/o, a Karachi-based technology incubator seeded by Google, Samsung and the US Department of State. Coworking spaces like Basecamp in Peshawar, DotZero and HQ in Karachi and TechHub in Lahore are sprouting all over the country – providing space to fledgling and growing companies.

Hackathons and Startup Weekends are producing startups like Savaree (a ride-sharing application similar to Lyft) and Groopic (a photo editing application), and online publications like TechJuice and PakWired also provide constant coverage of rising companies, events and other startup-related news.

While this phenomenon is not unique to Pakistan – we are watching startup communities sprout and thrive all over the world – there are several factors that make us hopeful about the growing ecosystem.

First, Pakistani entrepreneurs have largely led the growth of Pakistan’s ecosystem. In his book, Startup Communities, author and cofounder of TechStars Brad Feld noted that leaders of a growing startup community must be entrepreneurs who have a long-term commitment to growing the ecosystem and “must be inclusive of anyone who wants to engage with the community.”

A number of Pakistan-based technology entrepreneurs – many of whom have had some exposure to well-developed ecosystems like Silicon Valley, New York or London – have been and remain deeply committed to growing this space, often participating as judges, mentors, advisors and investors to competitions, incubators/accelerators and startups.

For example, DotZero, one of Pakistan’s first major coworking spaces, was cofounded by four successful technology entrepreneurs based in Karachi. The Karachi Institute of Technology & Entrepreneurship (KITE), established in by a Pakistani entrepreneur, is providing an alternative and innovative learning environment to students wishing to enter the technology sphere.

Second, though security issues, corruption, and political instability have increased the perceived risk for foreign investors, it has also in turn caused Pakistanis to look inward, build indigenous networks, and replicate models that have worked in other countries for the local market.

As a result, we’ve seen an ecosystem that is being built by Pakistanis for Pakistan. Moreover, given that 2/3 of Pakistan’s 180 million people are under 30 years old, we have a young population who are hungry and determined to change the environment around them. Young Pakistanis are launching local chapters of global brands like TEDx, Startup Weekend and Startup Grind, further fostering idea generation and the dialogue around innovation.

Forward and upward

This is not to say that challenges do not remain. In the report we released this year, Pakistan Entrepreneurship Ecosystem Report, we noted that while this micro-level activity is indeed encouraging, macro-level policy and infrastructure challenges continue to plague entrepreneurs and investors alike.

In the World Bank Group’s Doing Business report, Pakistan continues to drop down the list, ranking 128 out of 189 countries in the new 2015 list (versus 127 in 2014 and 106 in 2013). The current policies – from taxes to business registration to investor protection – promote an environment that is more opaque than transparent, ultimately discouraging investment and impeding growing companies.

The good news is that these policies are neither difficult nor expensive to change – they just require the political will to do so. In fact, Pakistan’s government can and must play a stronger role in this burgeoning ecosystem to further enable entrepreneurship in the country and encourage investment.

Startup communities are indeed cropping up all over the world. This is an exciting sea change. But, particularly in the case of Pakistan, if we want to see this burgeoning micro-level activity turn into actual growth and results, an ecosystem approach is necessary.

It is important to design and build solutions that promote trust and foster transparency. Policy reform is vital. Collaboration among all stakeholders is key. Only then can real and systemic change happen.

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