Pakistan’s Startup Revival: How Hybrid Financing Drove a $74 Million Surge in 2025

After years of contraction, a strategic pivot to debt-equity blends signals maturation—not just survival—in one of South Asia’s most resilient tech ecosystems

In early April 2025, Omer bin Ahsan faced a familiar dilemma. The founder of Haball, a Karachi-based fintech enabling shariah-compliant supply chain financing, had spent months courting investors for a pre-Series A round. Traditional venture capital appetite remained tepid—Pakistan startup funding 2025 had opened with a dismal $196,000 across three disclosed deals in Q1, marking the ecosystem’s lowest quarterly performance in years. Yet Ahsan’s company had processed over $3 billion in payments since inception, serving nearly 8,000 small and medium enterprises across sectors from retail to aerospace. The fundamentals were solid. What Pakistan lacked wasn’t viable startups—it was capital willing to deploy at scale.

By late April, Haball announced a $52 million raise, comprising $5 million in equity from Zayn VC and a strategic $47 million financing component from Meezan Bank, Pakistan’s largest Islamic financial institution. The structure was a watershed: not pure venture equity, but a hybrid blend of ownership and debt, calibrated to minimize dilution while leveraging established banking infrastructure. It was also emblematic of a broader shift reshaping Pakistan’s startup landscape—one driven less by Silicon Valley playbooks and more by local pragmatism forged through years of macroeconomic turbulence.

When the year closed, Invest2Innovate’s full-year report revealed that Pakistani startups raised over $74 million across 16 deals in 2025, a 121% increase from $33.5 million in 2024. The headline figure, however, concealed the more profound transformation: $66.04 million came through hybrid financing models blending debt, quasi-equity, and structured instruments, while just $8.18 million represented pure equity. It was the clearest signal yet that Pakistan’s startup ecosystem, battered by three years of funding drought and global venture capital winter, had evolved a distinctly localized survival—and growth—mechanism.

The Numbers in Context: Recovery, Not Rebound

To understand Pakistan startup funding 2025, one must first grasp where the ecosystem stood. Between 2021 and 2023, Pakistani startups rode a wave of global liquidity, raising $347 million and $331 million in 2021 and 2022 respectively, according to Data Darbar, a Karachi-based research firm tracking venture activity since 2015. Then came the correction. Funding collapsed 77% to $75.6 million in 2023 amid Federal Reserve rate hikes and a global venture pullback, then tumbled further to $42.5 million in 2024—a nadir unseen since the ecosystem’s nascent years.

The 2025 recovery to $74 million, while encouraging, remained well below pre-2023 peaks. Yet the composition mattered more than the quantum. Data Darbar, in a parallel year-end analysis, reported that pure equity funding reached $36.6 million across 10 disclosed rounds—a 63% increase from 2024’s $22.5 million. The discrepancy between Invest2Innovate’s $74 million total and Data Darbar’s $36.6 million equity-only figure reflects differing methodologies: Invest2Innovate counts all capital deployed, including debt-like instruments, whereas Data Darbar isolates traditional venture equity.

Both narratives are true. Pakistani startups raised more total capital in 2025, but the structure of that capital had fundamentally changed. Consider the quarterly trajectory:

• Q1 2025: $196,000 disclosed (3 deals). A paralytic start as investors awaited IMF program clarity.
• Q2 2025: $58 million, dominated by Haball’s $52 million hybrid round.
• Q3 2025: $15.2 million across six deals, featuring BusCaro’s $2 million hybrid deal and Trukkr’s $10 million mixed equity-debt raise.
• Q4 2025: Modest, sub-$1 million disclosed volumes, but critical for structural shifts—KalPay secured shariah-compliant structured debt from Accelerate Prosperity, while agritech Agrilift and creator economy platform Echooo AI both raised debt financing.

The average disclosed equity deal size climbed to approximately $3.7 million, up from previous years, signaling that investors—when they did commit—deployed more concentrated capital into fewer, higher-conviction bets. This is the hallmark of market maturation: selectivity over spray-and-pray.

Key Deals and Winners: The 2025 Titans

Haball: The Hybrid Pioneer

Haball’s $52 million raise was the defining transaction of 2025. The fintech, founded in 2017, provides digital invoicing, payment collection, tax compliance, and working capital to SMEs—functions critical in a market where less than 5% of small businesses access traditional bank financing. By structuring its round as $5 million in equity plus $47 million in strategic financing from Meezan Bank, Haball achieved two objectives: securing growth capital without excessive dilution, and validating hybrid models as viable for scaling B2B fintechs in emerging markets.

The company plans to enter Saudi Arabia’s $9 billion supply chain finance market in 2025, with further Gulf Cooperation Council (GCC) expansion eyed for 2026. As CEO Omer bin Ahsan noted, “We’re responding to clear market demand for shariah-compliant SME-focused digital financial services”—a thesis resonating not just in Pakistan but across MENA’s Islamic finance corridors.

MedIQ: Female-Founded, GCC-Bound

In April, Dr. Saira Siddique’s MedIQ raised $6 million in a Series A led by Qatar’s Rasmal Ventures and Saudi Arabia’s Joa Capital. The healthtech, born from Siddique’s personal experience navigating Pakistan’s fragmented healthcare system while recovering from paralysis, offers a digitally integrated hybrid ecosystem—telehealth, e-pharmacy, AI-powered facility digitization, and insurance backend automation.

MedIQ’s trajectory underscores a critical trend: Pakistani startups pivoting to GCC markets not as Plan B, but as core strategy. With over 10 million customers served in Pakistan and EBITDA-positive operations, MedIQ exemplifies the product-market fit achievable when founders solve genuine, large-scale inefficiencies. The raise also marked a milestone for gender diversity—female-led startups captured $8.8 million (24%) of 2025’s total equity funding, per Data Darbar, a notable improvement in a historically male-dominated ecosystem.

Mobility, Fintech, and the Long Tail

Beyond mega-rounds, 2025 saw seed-stage activity across diverse verticals:

• BusCaro (mobility): $2 million hybrid deal, female-founded, addressing intercity transport inefficiencies.
• Metric (fintech): $1.3 million seed for infrastructure finance enablement.
• ScholarBee (edtech): $350,000 convertible note, targeting affordable learning platforms.
• Qist Bazaar (fintech BNPL): Rs55 million (~$196,000) disclosed portion of a larger Series A from Bank Alfalah.
• Shadiyana (wedding-tech): $800,000 pre-seed, tapping Pakistan’s multi-billion-dollar wedding industry.
• Myco.io (Web3): $1.5 million, reflecting nascent but persistent interest in decentralized tech.

These transactions, while modest individually, signaled ecosystem resilience. Founders were fundraising—just under radically different assumptions than 2021’s exuberance.

The Hybrid Financing Revolution: Necessity Becomes Strategy

Why did Pakistan startup funding 2025 pivot so decisively to hybrid models? The answer lies in supply-demand asymmetries and risk-adjusted returns.

On the supply side, traditional venture capital remained scarce. Global VC funding reached $512.6 billion in 2025, up 30.8% year-over-year, but concentration was extreme: AI captured 46.4% of Q3 2025 global VC, with mega-rounds ($500M+) to Anthropic, xAI, and others dominating deployment. Emerging markets outside India and select MENA hubs saw limited allocations. Pakistan, with its history of political volatility and currency risk, struggled to compete for the shrinking pool of “generalist” VC dollars.

On the demand side, Pakistani startups needed capital, but on terms preserving founder control. After witnessing down rounds and fire-sale exits across the region during 2022-2024’s contraction, founders sought structures minimizing dilution. Debt or quasi-debt instruments—repayable at fixed schedules with or without convertible features—offered that optionality.

Enter hybrid financing: structures blending equity stakes with revenue-based financing, shariah-compliant murabaha (cost-plus) arrangements, supply chain receivables financing, or convertible notes with conservative caps. Haball’s model epitomizes this: Zayn VC took equity exposure, betting on upside, while Meezan Bank deployed a $47 million financing facility tied to Haball’s transaction volumes—essentially supply chain capital leveraging Haball’s platform as intermediary.

For investors like Meezan Bank, the appeal is clear: lower risk than pure equity, secured by tangible cash flows, and aligned with Islamic banking mandates prohibiting interest (riba) yet permitting profit-sharing and asset-backed financing. For startups, it’s growth capital without governance concessions. For the ecosystem, it’s a localization of financing norms—adapting global venture structures to Pakistan’s financial and regulatory realities.

Sector Spotlight: Where the Money Flowed

Fintech: Still the Heavyweight

Fintech dominated Pakistani startups funding 2025, accounting for the largest share of both disclosed equity and hybrid capital. Beyond Haball and Metric, the sector includes Qist Bazaar (BNPL), KalPay (shariah-compliant payments), and established players like Bazaar Technologies, which acquired rival Keenu in late 2025, signaling consolidation.

Pakistan’s fintech appeal is structural: Islamic banking assets reached Rs9,689 billion ($34.54 billion) by mid-2024, representing 18.8% of banking sector assets, with the State Bank targeting 30% by 2028. Digital payments via Raast, Pakistan’s instant payment system, surged, and SME financing gaps remained vast. Fintechs offering compliance-friendly, digitally native solutions tapped into multi-billion-dollar addressable markets.

Healthtech: The Female Founder Vanguard

Healthtech emerged as the second most-funded sector, led by MedIQ’s $6 million and complemented by seed rounds for diagnostics and preventive health startups. Pakistan’s healthcare system—fragmented, cash-based, and inaccessible to rural populations—presents massive digitization opportunities. Telemedicine uptake accelerated post-pandemic, and corporate health insurance mandates are slowly expanding coverage.

Notably, female founders have disproportionately shaped healthtech: MedIQ (Dr. Saira Siddique), Sehat Kahani (Drs. Sara Saeed Khurram and Iffat Zafar Aga, which raised $2.7 million in 2023), and emerging players like Ailaaj and Marham. Women comprise 74% of MedIQ’s user base, per Arab News interviews—a demographic underserved by traditional clinic models requiring male accompaniment or lengthy travel in conservative regions.

Edtech, Mobility, and Climate: Early-Stage Activity

Edtech startups like ScholarBee secured convertible notes, targeting affordable skill development for Pakistan’s youth bulge (over 60% of the population under 30). Mobility players like BusCaro and Trukkr raised hybrid rounds to address intercity transport and logistics inefficiencies. Climate-linked ventures—Agrilift (agritech) and energy platforms—attracted debt financing from impact-focused vehicles like Accelerate Prosperity, reflecting growing alignment between climate resilience mandates (Pakistan is among the world’s most climate-vulnerable nations) and venture deployment.

Web3 and IoT saw niche activity (Myco.io, undisclosed IoT deals), indicating experimentation persists despite limited exits and regulatory ambiguity.

Global and Macroeconomic Backdrop: Pakistan’s Stabilization Gambit

Pakistan startup funding 2025 unfolded against a volatile but ultimately stabilizing macroeconomic canvas. The country entered 2025 under its 25th IMF program since 1950—a 37-month Extended Fund Facility (EFF) approved in August 2024, coupled with a 28-month Resilience and Sustainability Facility (RSF) targeting climate vulnerabilities.

By year-end, the IMF’s second EFF review in December 2025 confirmed progress: Pakistan achieved a primary fiscal surplus of 1.3% of GDP in FY25, inflation fell from 26% in 2024 to 4.7% over the year’s first ten months, and gross foreign reserves climbed from $9.4 billion (August 2024) to $14.5 billion by year-end—projected to reach $21 billion in 2026. The State Bank of Pakistan cut policy rates by 1,100 basis points since June 2025, easing borrowing costs.

These improvements mattered. Investor confidence, globally, correlates with macroeconomic stability and reserve adequacy. Pakistan’s first current account surplus in 14 years, achieved in FY25, signaled reduced external vulnerabilities. Yet GDP growth remained tepid—2.7% in FY25, projected 3.2% for FY26—barely outpacing population growth. For startups, the message was mixed: stability had returned, but explosive growth remained distant.

Comparatively, India’s startup ecosystem raised $3.1 billion in Q1 2025 alone, dwarfing Pakistan’s full-year $36.6 million equity tally. Pakistan’s total VC funding since 2015—approximately $1.037 billion across 368 deals, per Invest2Innovate—pales against India’s $161 billion deployed since 2014. The gap is structural: India’s scale, deeper capital markets, and diaspora networks create self-reinforcing flywheel effects Pakistan lacks.

Yet within emerging markets, context matters. Southeast Asia saw VC funding drop 42% YoY to $1.71 billion in H1 2025, while Africa’s $676 million (up 56%) remained concentrated in Nigeria, Kenya, and Egypt. Pakistan’s $74 million, while modest, outperformed its own recent trough—and the hybrid financing pivot offers a replicable playbook for markets where traditional VC flows remain constrained.

Challenges Ahead: The Structural Headwinds

Despite 2025’s recovery, Pakistan’s startup ecosystem confronts formidable obstacles:

Limited Domestic Capital

Institutional venture capital remains nascent. Gobi Partners’ Techxila Fund II ($50 million, announced Q4 2024) and Sarmayacar’s Climaventures Fund ($40 million target, $15 million anchor from UN’s Green Climate Fund) represent progress, but Pakistan lacks the density of local VC firms—family offices, pension funds, and corporate venture arms—that India, Indonesia, or even Kenya enjoy. Without robust domestic LP pools, international investors’ risk perceptions dominate, and Pakistan’s geopolitical optics (terrorism concerns, political instability) deter allocations.

Regulatory and Infrastructure Gaps

Startups cite slow regulatory approvals, opaque tax frameworks, and energy/internet outages as persistent friction. The IMF’s 2025 Governance and Corruption Diagnostic estimated Pakistan loses 5-6.5% of GDP annually to “elite capture”—policy distortions favoring entrenched interests. For startups, this manifests as uneven playing fields: established businesses leverage connections for subsidies or licenses, while digital-first ventures navigate bureaucratic mazes.

The State Bank of Pakistan has made strides—Raast adoption, licensing frameworks for digital invoicing (Haball was the first fintech to receive such a license from the Federal Board of Revenue)—but broader structural reforms lag. State-owned enterprise (SOE) losses hemorrhage fiscal resources that could otherwise fund innovation, and privatization efforts (e.g., Pakistan International Airlines) proceed glacially.

Talent Retention and Brain Drain

Pakistan produces over 15,000 IT graduates annually, yet emigration rates are high. Gulf markets, Europe, and North America offer salaries multiples higher than local startups can afford. Top founders increasingly “de-risk” by incorporating in Dubai or Delaware, maintaining development teams in Pakistan but moving corporate entities offshore—a pragmatic but double-edged strategy that limits ecosystem depth.

Exit Drought

Pakistan has recorded zero venture-backed IPOs since Careem’s 2019 acquisition by Uber (a $3.1 billion exit, though Careem was Dubai-domiciled). Without consistent exits—IPOs, strategic acquisitions, or secondary sales—early investors cannot realize returns, limiting LP appetite to reinvest. The absence of a Nasdaq-style tech exchange or active M&A market (few multinational acquirers operate locally at scale) perpetuates this cycle.

Future Outlook: Toward 2026 and Beyond

What does Pakistan startup funding 2025’s hybrid pivot augur for the ecosystem’s next phase?

Optimistic Case: The hybrid model becomes a sustainable competitive advantage. If Haball successfully scales across GCC, MedIQ replicates Pakistan learnings in Saudi Arabia, and debt-equity blends prove scalable for B2B SaaS, logistics, and agritech verticals, Pakistan could carve a niche as a “hybrid capital lab” for emerging markets. Islamic finance alignment is non-trivial: GCC investors managing trillions in shariah-compliant assets seek deployment opportunities, and Pakistani startups fluent in murabaha, tawarruq, and wakalah structures have first-mover advantages.

Further, macroeconomic stability—if sustained—creates virtuous cycles. Lower inflation and interest rates reduce cost of capital, IMF program credibility attracts development finance institutions (DFIs) and multilateral capital, and sectoral growth (IT exports surpassed $3.2 billion in FY25, per government data) generates wealth reinvestable locally.

Cautious Case: 2025’s recovery is a dead-cat bounce. If global VC remains concentrated in AI and developed markets, Pakistani startups continue battling for scraps. Hybrid financing, while pragmatic, may limit upside—debt requires repayment, constraining burn rates and growth velocity. Founders opting for conservative capital structures might achieve profitability but miss transformative scale. Meanwhile, India’s ecosystem compounds advantages, Gulf markets attract Pakistani founders directly, and the domestic market’s 240.5 million people remains fragmented by low digital penetration and purchasing power.

The likeliest path lies between extremes. Pakistan’s startup ecosystem in 2025 demonstrated resilience, adaptability, and strategic pragmatism. It won’t replicate India’s scale or Silicon Valley’s density, but it could build sustainable, profitable tech businesses solving real problems for Pakistan’s SMEs, diaspora, and underserved populations—and increasingly, for GCC markets seeking culturally aligned solutions.

Key signposts for 2026 include:

• Fund Formation: Will local LPs (family offices, corporates) launch more $20-50 million seed/early-stage vehicles? Climaventures and Techxila II are starts, but scale matters.
• Exits: Any M&A activity (e.g., Bazaar-Keenu)? Secondary sales via platforms like Forge/EquityZen?
• Government Policy: Will the new administration (post-2024 elections) deliver on promised tax incentives, streamlined approvals, or tech-zone infrastructure?
• GCC Traction: Do Haball, MedIQ, and others convert Saudi/UAE market entry into revenue scale validating cross-border models?

Azfar Hussain, Project Director at National Incubation Center Karachi, captured the moment succinctly: “2025 marked a period of correction and maturity. Capital became more selective, filtering out hype-driven ventures while strengthening founders focused on solving real-world problems. Growth in 2026 will increasingly favor founders who invest in governance, product depth, and regional scalability rather than pursuing rapid expansion or vanity metrics.”

Conclusion: A Pivot, Not a Peak

The story of Pakistan startup funding 2025 is not one of triumphant return to 2021’s heady days. It is, instead, a narrative of adaptation—founders and investors recalibrating expectations, structures, and strategies in response to prolonged capital scarcity and macroeconomic volatility. The pivot to hybrid financing, far from signaling weakness, reflects ecosystem maturation: recognition that sustainable growth, not blitzscaling on cheap capital, suits Pakistan’s current conditions.

When Omer bin Ahsan closed Haball’s $52 million round in April, or Dr. Saira Siddique secured MedIQ’s $6 million in May, they weren’t just fundraising—they were validating new templates. Templates where debt and equity coexist, where Islamic finance principles align with venture returns, where regional expansion to GCC markets complements domestic consolidation, and where profitability timelines matter as much as user acquisition curves.

For Pakistan’s digital economy—still nascent, still fragile, still shadowed by structural challenges—2025’s $74 million across hybrid and equity instruments represents neither arrival nor defeat. It is progress, incremental but real, toward an ecosystem that may never match India’s scale but could nonetheless produce resilient, profitable businesses improving millions of lives. In venture capital, as in geopolitics, survival itself can be a victory. Pakistan’s startups, battered by funding winters and macro headwinds, survived 2025—and in doing so, they sowed seeds for the next phase of growth.

The question is no longer whether Pakistan can build a startup ecosystem. It already has one. The question is whether it can sustain, deepen, and scale what 2025’s hybrid financing surge began.

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This analysis synthesizes data from Invest2Innovate, Data Darbar, IMF reports, KPMG Venture Pulse, MAGNiTT, and reporting by Business Recorder, The Express Tribune, Arab News, Financial Times, and other premium sources. All figures current as of January 2026.