Pakistan's Real Startup Opportunity: Build Locally, Sell Globally

The conversation around Pakistan’s startup ecosystem often blurs two distinct investment theses: building for the local market and building for international customers. As a result, there’s been confusion around what constitutes a sound investment strategy. To be clear, these are entirely separate approaches, with different risk profiles, challenges, and rewards.

The Risks of Building for the Domestic Market

The Pakistani economy continues to grapple with significant challenges—while the government announced on October 1 that the YoY inflation rate is down to 6.9%, many investors may question the reliability of these figures. Political instability remains a constant threat, and the security situation is getting worse in large parts of the country. These pressures together with ever-shifting regulations and the difficulty of repatriating profits make it extremely difficult for international investors to invest with any degree of confidence.

Airlift Technologies , once heralded as Pakistan’s answer to logistics and e-commerce, collapsed amid a perfect storm of capital shortages, operational inefficiencies, and a turbulent economic environment. And while Bykea , a local ridesharing startup, has managed to hang on, they have an unclear path to ROI for international investors in an inflationary, cash-strapped market.

But the example that best exemplifies my thesis is Ddbank - despite raising a record $17.6 Million seed round from Silicon Valley VCs including Kleiner Perkins and Sequoia Capital to revolutionize digital banking in Pakistan, they failed to secure a license from the government, which prioritized entrenched industrialist-backed and state-backed institutions instead. The Dbank team was forced to pivot as DGlobal / DCore - still building in Pakistan, and perhaps still hoping to receive a banking license, but no longer relying on that as their only proposition and instead building for the wider international emerging markets opportunity.

Another significant challenge for startups focused on the domestic Pakistani market is the devaluation of the Pakistani Rupee against the US Dollar. Over the past two years, the PKR has depreciated by more than 40% against the USD, severely impacting the ability of international investors to realize dollar-denominated returns. This devaluation, coupled with Pakistan’s foreign exchange reserve crisis, makes it increasingly difficult for investors to repatriate profits in USD, further diminishing the attractiveness of local market-focused ventures.

The recurring theme: domestic-focused startups face enormous challenges that go beyond typical startup risks. Investors need to be clear-eyed about the structural issues that are likely to persist in Pakistan for the foreseeable future. The failure to account for these risks will lead to more disappointment, particularly for investors from the diaspora drawn in by patriotic sentiment rather than data-driven analysis.

Building in Pakistan for Global Markets

There is a growing cohort of startups that are thriving by building in Pakistan for international markets. These startups tap into Pakistan’s relatively low-cost yet skilled workforce while targeting customers in stable, lucrative markets such as the US, Europe, and the Middle East. This approach leverages the advantages of labor arbitrage while avoiding the pitfalls of the local economy.

Shoaib Makani's Motive (formerly KeepTruckin) is a prime example of a unicorn that serves the North American market via a Pakistan-based workforce. The company has built a leading fleet management and logistics platform, with a significant portion of its engineering and sales teams based in Pakistan, while its core customer base is in the US. Motive’s ability to leverage Pakistan’s workforce to deliver high-quality solutions at scale has helped it scale to >$250 million in revenue. New customer acquisition and account relationships are powered by hundreds of employees "dialing for dollars" from Motive's offices in Pakistan.

For an early-stage player, take Metric, which has built a financial intelligence platform aimed at businesses outside Pakistan. With development based in Pakistan and a market focus on MENA, Metric exemplifies the kind of startup that leverages Pakistan’s strengths while sidestepping its weaknesses. Roll is building the future of video production with a Pakistani-origin Silicon Valley based Co-Founder and an engineering team in Pakistan. This strategy leverages local connections and knowledge and significantly extends the runway that is available to startups.

While IT services firms like 10Pearls and BPO players such as TRG - The Resource Group have already made a name for themselves by providing B2B solutions abroad, it’s the emerging SaaS players like Roll, Metric and others that demonstrate how the future of Pakistan’s startup ecosystem could align with global business needs. They prove that Pakistan’s real startup opportunity at this moment in time lies not in serving its own market but in becoming a hub for tech products and services designed for international clients.

Separating the Investment Theses

What’s critical here is that investors—particularly those from the diaspora and Silicon Valley—don’t conflate the two investment opportunities. Building for the domestic market comes with serious risks that are compounded by economic and political factors largely out of a startup’s control.

In contrast, building for global markets allows Pakistani startups to mitigate much of this risk by focusing on markets with stronger demand, reliable payment channels, USD denominated payments collected safely outside Pakistan, and scalable business opportunities.

These two strategies require fundamentally different approaches, and they shouldn’t be treated as if they are part of the same ecosystem. We should be cautious not to let a desire to help the Pakistani startup ecosystem and entrepreneurs cloud our judgment. We should instead provide a clear-eyed assessment of where the opportunity actually lies. Many of us in the diaspora chose to leave and continue to remain overseas because we recognize the macro dysfunction —dysfunction that continues to undermine business prospects. When investing, let's rely on sound strategy.

What are your thoughts? What other startups are leveraging Pakistan’s cost advantages to succeed globally? Let’s discuss.