The VC Syndrome in Pakistan
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Riaz Haq not-so-recently wrote a detailed post on the venture capital investment activity, or the lack of it, in Pakistan. The hesitation of VC firms in doling out funds for Pakistani ventures is mainly because of the so-called ‘lacklustre’ activities and security situation in Pakistan. Even the Pakistani entrepreneurs based in Silicon Valley are tarnishing the image of Pakistan.
Speaking in a panel discussion at OPEN Forum 2008 recently organized by the Organization of Pakistani Entrepreneurs in Silicon Valley, Faraz Hoodbhoy, the CTO of PixSense, argued that Pakistani expatriates in Silicon Valley are the harshest critics of Pakistan. They are not immediately likely to ask US VCs to invest in Pakistan.
This reluctant behavior of Pakistani-American entrepreneurs has already cost us a lot. If you have the expertise and the funding, why don’t you make use of the opportunities available in your homeland? The good omen is that some of these people have actually made successful interventions in Pakistan but the majority is still sitting on the fence.
We have a $50 million Competitiveness Support Fund (CSF), set up to fuel the growth of Pakistani startups but the regime change and the security situation has hampered its efforts. The fund is also currently more focused on microfinancing and social uplift projects and not in IT startups.
While the efforts of the Pakistani government and CSF are laudable, the real impetus will come from the successful outcome of VC investments in companies such as PixSense and Naseeb. The other factor that will influence US VCs to do deals in Pakistan is the willingness of Pakistani-American entrepreneurs in the US to set up presence in Pakistan and demonstrate the value of Pakistani talent to the Americans and the rest of the world.
Naseeb is a runaway success, we all know, and PixSense is not doing bad either. VC investment in Naseeb came when Pakistani economy had already started taking a plunge but the investors had a confidence in the company’s standings. The crux of the matter is that if your venture has got ‘that thing’ in it then it will definitely attract investment. Given the current global economic slowdown, lobbying for more VC investments is a really difficult job but not much if we get the support of our well-heeled brethren of the Silicon Valley.
11:15 am
There are other Matching Grant Funds also. Business Support Fund (www.bsf.org.pk) and Agribusiness Support Fund (www.asf.org.pk) come to mind.
ASF provides grants to Service Providers / Consultants for their capacity building as well as product development.
1:56 pm
I dont even think that IT startups on the CSF’s roadmap to begin with – IT isnt really a “sector” by official definitions and I think CSF is focused more on traditional sectors like agriculture, telecom etc.
Now, someone making software for agriculture could probably apply I suppose
2:29 pm
Osama,
ASF is focused on agribusinesses, CSF is more of a policy making / supporting body. They have quite a broad mandate / initiatives including setting up a VC Fund and setting up Incubators.
Anyway, ASF can support IT enterprises, if they ask the right way.
12:46 pm
I believe one needs to clarify that there may be US based companies with PK based back office opertaions that have received US VC funding – I don’t know of any PK companies getting US VC funding yet, because US VC’s do not directly invest here. A VC industry doesn’t really exist in Pakistan either.