Pakistan’s startup ecosystem is expected to maintain momentum in 2026 after young businesses changed their approach for fundraising towards the hybrid financing models.
Startups raised approximately $74.2 million in reported funding in 2025, almost double the funds mobilised in 2024. The increase came in line with fundraising through hybrid financing models (combination of equity and debt), replacing the previous equity-only funding approach, according to invest2innovate (i2i), the firm that works to help build up the startup ecosystem in Pakistan.
The change in fundraising approach helped a number of startups belonging to different sectors of the economy to receive much-needed financing last year, emerging on the business horizon in the country including logistics, healthtech, transportation, entertainment, and wedding tech with additional undisclosed deals in sports tech and software as a service (SaaS)/cloud computing.
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Speaking to media on the sidelines of the closing ceremony of a 2-year i2i ecosystem project supported by Visa Foundation titled ‘Ecosystem Signals 2026’, i2i CEO Sarah Munir said, “For 2026 and onwards, as macroeconomic conditions improve and investor confidence slowly returns, we expect funding to remain selective and efficiency-driven, with greater emphasis on hybrid financing structures, revenue-backed growth models, and capital-efficient startups. The ecosystem is entering a phase where more disciplined capital deployment and diversified funding pathways could create a healthier, more sustainable investment environment”.
Speaking at a panel discussion on ‘Where Capital Goes Next in 2026’, at the ceremony; i2i Ventures co-founder Misbah Naqvi said bilateral/multilateral creditors and development finance institutions (DFIs) were interested in supporting the development of ecosystem for startups in Pakistan.
These institutions could play a key role in making the finances available to startups, work on guarantees and “come to a structure where the first risk is mitigated by a third party, and not by inherently the actual business model”, according to Naqvi.
She said even banks were opening up their balance-sheet to startups and SMEs (small and medium-sized enterprises) with the condition of submission of collateral (guarantees) by startups, as they continued to operate with a traditional mindset that is their right.
Moreover, venture debt – another type of capital – is also an opportunity for startups to access, according to Naqvi.
“We do not have venture debt as such in Pakistan. There are some regional players that have invested in Pakistani startups…they [startups in Pakistan] have access to venture debt through them [investors] which is dollar dominated debt.”
However, in that case, most of local startups might face the question of repaying the debt, as “they do not have earnings in foreign currencies like in the US dollar”, she added.
Hybrid financing replaces equity-only funding model
The CEO Munir further said Pakistani startups raised approximately $74.2 million in reported funding in 2025, almost double the funds raised in 2024.
“This is a notable shift from the previous year not just in size but in structure. The majority of this capital came through hybrid equity–debt deals, which accounted for roughly $66 million across 16 transactions, while pure equity funding totaled about $8.2 million.
“Notable raises included Haball’s $52 million hybrid round, along with funding secured by MedIQ, Qist Bazaar, and BusCaro,“ she said.
Pakistan startups raised around $33.5 million in 2024, largely driven by equity-only financing.
“While current funding levels remain well below the $350+ million peaks of 2021–2022, the 2025 figures signal a meaningful recovery and a growing shift toward more diversified financing structures in Pakistan’s startup ecosystem,” CEO Munir said.
Meanwhile, i2i Growth & Strategy Deputy Director Aleena Khan said hybrid financing (equity + debt) had risen from merely $1 million in 2024 to $66 million in 2025, accounting for 89% of total funds raised at $74.2 million in 2025.
She further said e-commerce funding had collapsed, falling from the largest funded sector in 2024 at 55.2% of capital to a negligible share in 2025.
Khan informed that female founded startups secured 31% of deals in 2025, up from 13% in 2024, signaling improved access, “though their share of capital slipped to 14% from 16%, underscoring a persistent scale gap”.
“Funding to female-founded or cofounded startups nearly doubled, increasing from $5.5 million in 2024 to $10.1 million in 2025…Higher deal participation did not translate into proportional capital, indicating smaller average deal sizes for female-founded startups,” she said.
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