Technology

The changing times for technology

The changing times for technology

The best things happen to those who are patient and for Pakistan’s tech-based ecosystem it appeared to end in 2021. The amount of funding jumped 5 times to $366 million, and tech exports surpassed $2 billion. The big-shot investors made their debut, the market was booming and optimism was everywhere.

The long-term benefit of good things, which exactly what occurred in 2022, is not truly addressed by that proverb though. Although the year started off with a positive start and resulted in nearly $173 million being raised in the first quarter of 2018 Investment activity plummeted and sank to an all-time low of 10 quarters.

The total for the year was more than 351 million, but the drop in investment activity was obvious. Venture financing has been restrained, as has the global macro change and its ensuing damage.  The new enthusiasm for Pakistani startups by foreign investors.

Since the risk-adjusted cost of Pakistani startups was too high to justify the potential return. The doomsday-oriented peddlers and default mongers will tell you that this could be the end of an extremely temporary era. Perhaps we won’t get back to the levels of 2021-2022 however, we’ll be well above our 2020 average of $65 million.

 

Deal flow is probably going to stay low over the next few years, especially for late-stage businesses. Pakistani standards state that anyone wanting to raise Series A capital or more Based on this the list includes at least 14 startups that could require follow-on funding within the next few months (ignoring all companies that have the seed round prior to 2021).

In the case of the rest, the deals may continue to be raised but at less value and at a lower speed. Accelerators, which to founders originally seemed like peanuts, may be the source of funding for early-stage businesses.

One reason to believe even though investment values fell by a staggering 79 % year-on-year during Q4-2022 but the number of deals dropped by a mere eight.

This is because a large number of investment rounds went unreported, and the small base accentuates the percentage reduction. The origin of capital for early-stage companies may be a tad more favorable to accelerators, whose $100,000-$250,000 checks might seem like peanuts to some founders during good times.

However, the cycles change regardless of the fact that the grim outlook isn’t like it, like optimism the previous year. Markets can be sluggish and can be influenced by sentiments that improve at some point or another.

It’s at least when macroeconomics of the world are concerned, and not just the situation in Pakistan. Beyond the environment of venture capital — which, in truth, occupies a large share in discussions about technology. There’s one missing topic that will be discussed in 2022. A little worrying.

In the quarter that ended in Q1-2021, Pakistan’s electronically paid e-commerce transactions decreased to 9.1m from 136 million in the previous period.

While the number increased to more than 10.1m during the 2nd quarter of 2018, it is a problem, particularly when you consider the way our macroeconomic condition deteriorated in July and into the following months.

Inflation, for instance, reached its peak in August, and the last few months have been marked with chaos for those who is trying to run an enterprise. This isn’t just about the numbers. Market discussions paint a dark picture as major online retailers see a drop in orders.

In the past, it was very different early everyone was struggling to meet the increased demand and the squeezed supply. Today, players are said to be having excess capacity, which comes with its own costs, and are trying to negotiate the terms with their partners.

Based on Hammad Khan, the co-founder of AlphaVenture the digital firm behind the cost comparison site Pakistanistores.com sales have decreased. By about 10 to 15 percent this year, as compared to 2021 even with increased traffic to the website.

“Even though our website traffic went up 5pc year-on-year in November 2022, it hasn’t necessarily translated into more orders for stores as major players in the industry are having a relatively slower period.”

“But more than supply is supply, which is the problem in all industries. Regardless of whether they are online or traditional channels struggle to procure goods. If companies aren’t able to source items from the beginning then how are they going to fulfill orders?”

The problems are now looming for international e-commerce merchants. Because banks need to settle these transactions by first buying dollars on the market. This means that payments to companies such as hosting service providers software, hosting providers, etc. — essential in any tech-driven enterprise — are even more costly.

On the exports of technology side, the situation is a little hazier. It’s not the part that shows how profits have been slowing down and that’s evident enough, but the reasons behind it. In the end, up to the mid-2022 period, telecom group exports were rising each month at a rate of around 20 percent annually, but they then fell to only single figures. At times, it wasn’t even this.

 

This trend will likely continue into the near future, as we aren’t moving towards stability anytime very soon. In reality, the frenziedness and panic of policymakers could create more scars and cause lasting harm.

 

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