Invest2Innovate recently released their report, COVID and its Impact on Pakistani Startups to understand how the downturn – resulting from the pandemic and the subsequent lockdowns – has impacted the local startup ecosystem.

Invest2Innovate’s research arm, Insights, conducted a survey that gathered data from 101 early-stage companies operating in Pakistan and collated it with secondary sources and anecdotal evidence to create an analysis to see how startups are responding and iterating their businesses during the current situation in Pakistan.

The study revealed that while 49% (out of the 101 startups that participated) have already suspended services, some sectors such as travel/e-tourism, e-commerce, mobility (transportation), and on-demand have been impacted more than others. Of the startups falling under these four sectors, 56% (i.e. 26 startups) reported suspending services.

Due to the countrywide lockdown, prominent startups such as Airlift, Swvl, Bykea, Mauqa Online, and Gharpar had to pause operations. The report further emphasized the gravity of the situation for startups in the absence of any real support from the government.

Moreover, survey data also identified startups in edtech, healthtech, and other essential services that have evidently done relatively well during the pandemic, especially as the lockdown has created opportunities for such companies.

For instance, Telehealth startup SehatKahani has been providing free telemedicine services through e-clinics, their mobile application, and a video call feature. Additionally, out of 51% participating companies that reported not suspending services due to the pandemic, the highest number were from edtech and healthtech.

Companies in essential services have also remained operational during the pandemic, delivering items to customers from medicines to groceries.

The report also offered a commentary on how the pandemic has reshaped the VC landscape. Venture capital in Pakistan according to experts faces a major challenge as a high risk asset class, especially as reports show a decline in VC funding in other parts of Asia. It has been forecasted that VCs will prioritize taking care of their existing portfolio companies than investing in new ones.

Data from the study showed that 49% of the sample is already facing delays in closing ongoing investment deals while 42% of the 101 startups have a cash runway of only 1-3 months.

So it will not be an overstatement to say that if the pandemic lasts for longer than 3 months, these companies will be most severely impacted. In order for companies to survive, then, they will have to be innovative and inventive, and pivot their companies to keep themselves alive past the pandemic.

Invest2Innovate’s report looked at the current situation and how startups have responded to it, but it also looked to the future, to a world post-COVID. While recognizing the general uncertainty and anxiety around the future, the study also highlighted how several players believe that the pandemic might have inadvertently catalyzed a digital transformation wave. Others have said that as people increasingly lose jobs, there might be a larger appetite for applying for more unorthodox jobs offered by startups.

In light of the current circumstances in Pakistan, though,  the study predicts that a lot of small companies will perish, especially if they don’t adapt and if they are not provided with the much-needed support to stay afloat.

This report – and other similar data-driven briefs released by other stakeholders in the ecosystem – signify a serious need for systematic support from the government and other key stakeholders to help startups survive the impact of the pandemic and to keep contributing to the economic growth of the country in the post-COVID world.

You can download the complete report here.