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Launching unicorns

THERE is a trend emerging across major cities in Pakistan, where a tech event brings together various analysts, entrepreneurs, investors, and commentators who gush about the opportunity in Pakistan’s ‘booming tech industry’. This, they say, will undoubtedly become ‘the Next Silicon Valley of Asia’, with an abundance of home-grown technology ‘unicorns’ — those elusive companies that have achieved the coveted billion-dollar valuation.

Some would argue that Pakistan has already built unicorns in the form of Mudassir Sheikha’s Careem and Zia Chishti’s Afiniti. Both Sheikha and Chishti were raised in Pakistan and their companies have significant operations in the country. But while we claim these success stories and laud the efforts of the entrepreneurs, it is worth noting that they were both educated and trained in the United States and their companies were registered outside of Pakistan. We can claim them all we want, but we haven’t created an ecosystem where an entrepreneur born, raised, and educated in Pakistan will register his or her company locally and achieve a valuation of a billion US dollars.

This raises the question, if we have the raw talent, why don’t we have any local unicorns?

When will Pakistan get its billion-dollar tech company?

The answer is simple: we haven’t developed the necessary ecosystem for groundbreaking technology and entrepreneurs to thrive. This includes educational institutions that inculcate an innovative growth mindset; government rules and regulations that are transparent and not burdensome; and an abundance of genuine investors with deep pockets and helpful advice.

Let’s look at education. It is not a coincidence that the technology centres of the world cluster around world-class technology research institutes, such as Stanford and MIT. It is no wonder that a country, where the former chief minister of Balochistan famously said “a degree is a degree regardless of whether it is authentic or not” and where faculty and professors are rewarded based on the number of articles published, often plagiarised, without any regard for their quality, is ranked 109 out of 126 countries in the 2018 Global Innovation Index.

It is also equally true that, despite our best efforts, we are unlikely to create an institute that can compete directly with Stanford overnight. At best, we can look to create innovation clusters in areas where industries and universities can come together to form specialised research hubs. However, this will still require us to identify these areas, overhaul our higher education and research institutions, and make investments in research and education that won’t yield returns for at least a generation. It requires us to reform and invest in general education so that we develop lifelong learners who continuously learn and adapt with the changes in the fourth industrial revolution.

Another inconvenient truth, which government officials and local tech enthusiasts are unwilling to admit, is that the local rules, regulations, and infrastructure present a serious challenge for entrepreneurs. They are opaque, change often, and make even simple tasks, such as getting an electricity connection, overly cumbersome and time-consuming. In Pakistan, it takes businesses over 160 days to obtain an electricity connection, which is well above the regional average of 98 days and it even costs 50 per cent more. In 2018, under the PML-N, Pakistan jumped 11 spots to 136 on the World Bank’s Ease of Doing Business Index but, seen in the context of the last decade, Pakistan has slipped over 50 spots since 2009.

Finally, despite the recent investments by Chinese companies, a proliferation of incubators, accele­rators, start-up competitions, and conferences over the past decade, along with the entry of a few notable VC firms, the capital raised by Pakistan is dwarfed by the other players in the region and the exits remain insignificant; Pakistan’s tech startups raised under $30 million in 2018 compared to countries such as Indonesia (where even if we don’t count unicorns) which raised over $274m in 2018. Despite all these challenges, the Senate has been told that the IT budget will be cut by 53pc, which is a blow to an already uncompetitive industry. The fundamental flaws in our ecosystem mean that the likelihood of Pakistan becoming the next Silicon Valley of Asia is as probable as seeing an actual unicorn gallop down Karachi’s thoroughfares.

From Azerbaijan to Zambia, almost every country, no matter how nascent the industry, believes they will build their region’s next Silicon Valley. This sense of national exceptionalism is not unique to us. But, if we are to build tech ecosystems that can rival global competitors, it is essential that we recognise our own shortcomings, and create laws, processes, systems and a culture that propel the Pakistani tech start-up ecosystem forward, and lead to the emergence of Pakistan’s unicorns.

Written by: Osman Haneef

You can find him here:

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