Pakistan Startup Fund Encourages Investment with 30% Co-Investment Offer for VCs and Angels

In a bid to foster the growth of the startup landscape in Pakistan, the government has introduced the Pakistan Startup Fund (PSF), providing an enticing opportunity for venture capitalists (VCs) and angel investors. Under this initiative, the PSF commits to co-investing up to 30% of the capital secured by startups from these investors.

Allocating Rs2 billion annually, the government aims to fuel increased investments within the startup ecosystem. The unique structure of the fund offers equity-free capital, specifically designed to facilitate the closure of Venture Capitalist rounds for startups.

The PSF plays a pivotal role in supporting startups in securing their initial external investment. For instance, if a startup in Pakistan is being considered for a $1 million investment by a foreign VC, the VC's actual investment required would be $0.7 million, with the PSF contributing a grant of $0.3 million to finalize the funding round.

Notably, the government does not seek any equity or shares in the startups benefiting from the PSF, further enhancing the appeal for both local and international investors.

The program strategically aims to mitigate risks for global investors, thereby elevating the allure of investing in Pakistani startups. Caretaker Federal Minister for IT & Telecom, Dr. Umar Saif, highlighted during the launch event that the PSF is anticipated to facilitate approximately Rs10 billion in annual investments within the startup ecosystem. This projection is based on an average commitment of 20% from the government towards funding.

Considering an estimated average dilution of 20% at the startup's initiation, the program is poised to generate an impressive Rs50 billion in annual value creation within the Pakistani startup ecosystem. This groundbreaking initiative is expected to usher in a new era of growth and innovation in the country's startup landscape.