Pakistan’s startup scene experienced a funding drought in the first quarter of 2024, raising no capital compared to $75 million in 2023 and $315 million in 2022. Experts attributed this dry spell to investor caution preceding the February general elections.

“2023 was a tough year for Pakistani startups,” said Mutaher Khan, co-founder of Data Darbar. A sluggish economy and high-interest rates dampened investor enthusiasm, he explained. While there was one undisclosed investment in Q1, it wasn’t enough to offset the overall decline.

The looming elections were the primary culprit for investor hesitancy. Many chose to wait for a clearer political picture before committing significant funds.

Interestingly, 2023 saw a record high of $10.5 million invested in female-founded startups.

However, there are signs of a potential rebound. Since the new government took office, foreign investment in the capital markets has shown encouraging growth, with $38 million flowing in since February 8th. Additionally, foreign investors injected $82 million into local T-Bills through Special Convertible Rupee Accounts (SCRA) in March.

This turnaround in investor sentiment, coupled with the new government’s focus on economic reforms, suggests brighter days ahead for Pakistan’s startup ecosystem.