Future Fest 2023: ‘Tis the season for a comeback?

‘Tis the season for a comeback?

After a shambolic showing last year and following a brutal year for startups, Future Fest 2023 came back stronger

By Taimoor Hassan

After a debacle last year that annoyed visitors and the startup folks alike, Future Fest largely pulled off this year’s tech meetup smoothly in a bid to restore its reputation, with the presence of Saudi startups being one of the main highlights of the event.

This year’s event was inaugurated at Lahore’s Expo Center on January 6 by President Arif Alvi, who welcomed the participants and highlighted the investment opportunities that the budding local tech industry has to offer.

The event, which ended on January 8, hosted hundreds of speakers which included CEOs, government officials, and visiting delegates. According to the management of the event, they had 250 speakers and 150 international guests from 15 countries at the event.

This conference also hosted a delegation of Saudi startups and venture capitalists, the first of its sort, who met Pakistani startups and key stakeholders to explore investments, partnerships, acquisitions, and talent recruitment.

The conference featured keynote sessions by prominent people such as Ikram Sehgal, the chairman of Pathfinder Group, and Shafiq Akbar, CEO of Imarat Group of Companies and property portal Graana.

The event also hosted master classes, fireside chats, and panel sessions from industry leaders who talked about diverse subjects ranging from web3, scaling tech, worldview, gaming, storytelling, policy and governance.

An embattled moment

Put this year’s event in its context. The last year has been rough for the startup ecosystem. Between May 4 to May 7, the biggest tech stocks lost nearly $1.3 trillion in value in just three days. Apple lost $226 billion, Microsoft $190 billion, Amazon $174 billion, Google’s parent company Alphabet lost $125 billion value and Airbnb saw $24 billion of its value slashed. Trillions of dollars worth of company value was wiped out in a matter of days.

Political and constitutional chaos, double-digit inflation, the rising dollar, reserves reaching record lows and talks about the country defaulting on its debt obligations were the highlights of the year. To top it off, Pakistan’s IT sector, which was widely perceived as an engine that would drive the country’s economic growth, posted sluggish development.

There is a fall in the growth rate of Pakistan’s IT export-based remittances and then the startup sector, which had brought in amounts north of $380 million in 2021, saw this growth slashed in 2022. The year ended with a total of $355 million raised in disclosed funding across 57 deals by Pakistan’s startups in 2022, according to data compiled by VC and insights firm i2i Ventures. The last quarter or Q4 of the previous year recorded the lowest amount of funding during the last four years, raising only $15 million according to i2i. This was 78% down, compared to the same quarter last year. Quarter on quarter growth fell consistently last year.

In Q1 of 2022, startups raised $172 million across 22 deals, which fell to $102 million across 15 deals in the next quarter. In Q3 of 2022, startups raised $65 million across 14 deals with the last quarter of the year only accounting for the remaining $15 million out of the total $355 raised during the entire year. Fintech and ecommerce were the top performing sectors in 2022. Ecommerce startups managed to raise the highest amount of funding, raking in $185 million. Notable raises were by Bazaar which announced a $70 million raise, Dastgyr did $37 million whereas Jugnu announced closing a $22.5 million round. On the fintech side, startups raised $101 million across 15 deals, compared to 13 deals in the ecommerce segment.

The Saudi presence

It was in this context that this year’s Future Fest took place. And despite the nervy times that have arisen for Pakistan’s emerging tech scene, and the shambolic show that was last year’s event, the Future Fest did the only reasonable thing to do in such moments: soldier on. A big boost was received of course by the presence of Saudi startups at the festival that created a degree of excitement that has been short in recent times. The event hosted delegates from Digital Cooperation Organisation (DCO), a Saudi Arabia headquartered multilateral organisation to promote technology exchange between member countries which include Pakistan, Saudi Arabia, Bahrain, Cyprus, Djibouti, Kuwait, Morocco, Nigeria, Oman, Pakistan, Jordan and Rwanda. Then the event had the presence of some of the prominent Saudi startups which displayed their digital offerings at the expo. eCommerce platform Salla was there, edtech startup Classera, which is counted as the top edtech startup in Saudi Arabia and broader MENA region, was in presence, besides Riyadh-based fintech startup Hala also in presence at the event. On the eve of Future Fest 2023, Fahad bin Mansour Al Saud, a member of the Saudi royal family and the co-founder of mobile and web development firm ILSA Interactive, announced in a virtual session the establishment of a dedicated Saudi-Pakistan Tech House to promote greater ease of doing business. The prince, who was expected to be present at the event but could not travel because of concerns around security, further announced new projects for the company creating hundreds of jobs

“Pakistani IT companies sometimes lack the scale to bid for big IT projects,” Being an investor will help form a consortium of IT companies that will collectively make the scale big enough to bid for IT projects that a single company would not be big enough to win”

Mustafa Najoom, co-founder at Gaper

in Pakistan, Saudi Arabia and globally.

ILSA Interactive employs workforce in Saudi Arabia and in Pakistan. On announcing the establishment of the Saudi - Pakistan Tech House, Prince Fahad said that the house will be headquartered in Riyadh, with its first branch in Lahore.

A Saudi startup founder of Pakistani origin explained that the event was of great help to his startup for showcasing the products, robots and drones, to the audience that met him and he was actually able to showcase and gain interest of investors at the event.

“Overall, this portrayed a positive image of the Pakistani startup community in front of Saudis,” he said. Though the downside was that while Saudi startups were in presence, some of the prominent Pakistani startups were not present. “For instance, Daraz was in absence,” he said. “It would have been great if the event could showcase top Pakistani startups as well to the Saudi visitors.”

The second day of conference and expo also witnessed the signing of an MoU under which Tracking.me, a company that sells Saudi made hardware and software, will be acquiring Telematics Private Limited, a local distributor in Pakistan known for selling Saudi made tracing devices.

“The main aim of the fund is to facilitate mergers and acquisitions across the industry which will in turn accelerate growth and increase market visibility for companies involved”

Ahmed Muzammil, co-founder of Gaper.io

Gaper announces a Rs500 million technology fund

One of the highlights of the event was an investment fund launched by a ‘startup’. It’s an unusual move given that the startup itself has not raised any funding for itself yet. Instead, it plans to grow the startup by investing in existing technology services companies, not startups, which are currently facing the brunt of an economic slowdown at home and abroad. The Rs500 million launched by Lahore-based Gaper.io has among its LPs (limited partners) some of Pakistan’s textiles exporters, leather manufacturers and chemical producers, and some of whom are Stanford and Harvard alumni, and have worked at Google. Gaper.io, which is an AI-driven marketplace that connects software engineers and businesses, was founded by Mustafa Najoom and Ahmed Muzammil at the start of the COVID pandemic. The company has since bootstrapped and has not raised external funding of its own. “The main aim of the fund is to facilitate mergers and acquisitions across the industry which will in turn accelerate growth and increase market visibility for companies involved,” Ahmed Muzammil, co-founder of Gaper.io said.

Instead, it will use cash in this fund to invest in technology services companies, and then use its position as an investor in these companies to bid for IT projects, as a consortium, on the Gaper platform. This will not only help the companies invested in but will also promote the Gaper platform, since Gaper acts as a marketplace for businesses to find engineers for IT projects.

“Pakistani IT companies sometimes lack the scale to bid for big IT projects,” Mustafa Najoom, co-founder at Gaper told Profit. “Being an investor will help form a consortium of IT companies that will collectively make the scale big enough to bid for IT projects that a single company would not be big enough to win.”

Mustafa says that the composition of LPs that have decided to invest in this fund reflects the willingness to invest in IT companies that are not considered startups. The investments from this fund will also go into companies that are profitable and have their income in dollars.

“Empowering service companies that are cash flow positive by giving them a clear path to Pakistan Stock Exchange will not only build trust, but also create a much more investment-positive industry,” said Mustafa Najoom.

Gaper plans to launch this fund under a separate company which will be a private equity setup. The company plans to deploy the Rs500 million Gaper Technology Fund I in 12-18 months, and the move on to Gaper Technology Fund II with a target raise of a few billion rupees.

Furthermore, a roundtable on the problems faced by the eCommerce industry was organised by Bilal Mumtaz, Lahore chapter director Pakistan E-commerce Consortium. Various problems were brought into discussion with Lahore Chamber of Commerce and Industry (LCCI) who, while acknowledging these problems, extended support by agreeing to take it up with the government. n