SINGAPORE -- Fatima Gobi Ventures, a joint venture between Pakistani venture capital firm Fatima Ventures and Shanghai-headquartered VC Gobi Partners, expects to close its first fund of $20 million by the end of November.
The Pakistan-focused joint venture was first announced at the Pakistan-Malaysia Business and Investment Roundtable in March this year.
Fatima Gobi Ventures CEO Ali Mukhtar said the firm had seen healthy fundraising despite its Pakistan-only focus, due to the combined expertise of Fatima's expertise on the ground in Pakistan and Gobi's experience in Southeast Asia and China.
Its limited partners include development finance institutions and companies from Pakistan and the Middle East. Fatima Group, a Pakistani conglomerate with businesses in fertilizers, textiles, sugar, trading, mining and energy, has also agreed to invest in the fund.
Mukhtar added that the fund would likely seek more capital from Southeast Asia and China in the future.
Fatima Gobi Ventures will typically write its first cheque for in the region of $100,000-$200,000, with room to deploy up to $2 million. It aims to invest in about 15 to 20 startups across the e-commerce, fintech and mobility sectors.
Prior to its tie-up with Gobi, Fatima Ventures had already made investments in six startups including bus-hailing company Airlift, price comparison site PriceOye and Clicky.pk, a fashion portal backed by Souq.com. In 2017, Souq.com was acquired by Amazon for $580 million in a bid by American e-commerce group to penetrate the Middle East market.
Pakistan's venture capital market and startup ecosystem are still in extremely nascent stages. According to the i2i Pakistan Startup Ecosystem Report 2019, Pakistani startups raised just $18.8 million in venture funding this year, with most capital raised at the pre-seed and seed stages.
The South Asian market has seen an increase in the number of local venture capital groups in the past year, including the likes of Sarmayacar, i2i Ventures and Fatima Gobi Ventures. Deal sizes in the market have also grown, with transportation startups such as Airlift and Bykea passing the series A stage.
Pakistan is also drawing increased interest from foreign investors. Last week, Airlift closed a $12 million series A round led by U.S.-based venture capital firm First Round Capital. In October, Karachi-based online pharmacy Dawaai was reported to be raising capital from Silicon Valley seed investor 500 Startups.
Mukhtar told DealStreetAsia that he anticipated more follow-on capital to come from overseas due to the nascent nature of the Pakistani market. However with ticket sizes in the domestic market likely to be too small for foreign investors, the country's startups might need to rely more heavily on local companies and angel networks to fill in funding gaps, he added.
The Pakistani diaspora community could play a larger role in supporting the country's fledgling startups, he pointed out.
According to the Ministry of Overseas Pakistanis & Human Resource Development under the Pakistan government, there are close to 9 million Pakistanis living outside the country, many of whom reside in the Middle East, the U.S. and Europe.
Many of these diaspora Pakistanis send significant sums of capital back to the country. According to World Bank data, close to $22 billion has been remitted home so far in 2019, making it one of the highest remittance inflows in the world.
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