Thank you, and Goodnight

Note #053

A decade can feel like a lifetime, especially when you’re immersed in the dynamic world of startups. For me, it's been a whirlwind—from the scrappy beginnings to the multimillion-dollar peaks—all observed from 8,000 miles away. 

It's crucial to note that I don’t live in Pakistan, yet this journey has been incredibly personal.

What began as a passion project evolved into an obsession, a constant through life's ups and downs, outlasting even my first marriage. 

But now, it’s time to bow out. My heart isn't in it anymore. And if it isn’t apparent now, it will be soon - or so I fear.

Looking Back

It was a vastly different landscape when I first started following the Pakistani startup scene.

Plan9 incubator opened its doors in 2012, marking the official kickoff of the ecosystem with just four startups. It was a bold government experiment that, against many expectations, worked.

I learned about the ecosystem in 2013 after reading this article by Adam Dawood. He was a product manager at Daraz.pk and one of the first employees. He started sharing news and insights in his newsletter, giving me perspective on the evolving tech landscape.

I was hooked. I wanted to contribute, and as a content creator, I did what I could from afar—profiling startups and eventually focusing on funding, given my comfort with numbers.

In those early days, venture capital was almost non-existent, and smart money was hard to come by. The turning point came in 2018 with Sarmayacar’s $30 million fund, followed by Fatima Gobi, Indus Valley Capital, i2i Ventures, and Zayn VC announcing Pakistan-focused funds.

Startups sprouted like mushrooms, and dreams took flight as money flowed in. It was thrilling to see the VC asset class interested in Pakistan.

This influx of Pakistan-focused VC funds indicated that there is an opportunity for me to go from merely doing funding roundups to covering every funding round. This newsletter was launched in September 2019.

By this time, startups were getting decent media coverage, allowing me to curate news and views from all the stakeholders involved. Things got really exciting in late 2020 and early 2021, allowing me to hire a full-time staff writer to keep up. Later, I decided to start a podcast, something I had wanted to do for a long time.

Between 2020 and 2022, funding poured in like never before.

Everyone wanted in—VC funds, PE funds, crossover funds, tourist funds. But then, the funding dried up as the Fed funds rate increased. Term sheets were rescinded, startups shut down, and layoffs ensued. 

The party—fueled by cheap capital—was over.

In the aftermath, the ecosystem turned to window-dressing and cheerleading, trying to maintain a facade of optimism. But as hopelessness set in, so did the desire to sugarcoat the harsh realities. 

I am pragmatic. I prefer tangible results over endless speculation. I love hopium as much as the next guy, but in small doses, not binges.

The VC asset class’s bet on the market size and other emerging market metrics was largely a folly. Tech companies in Pakistan will be built in the old-fashioned way. 

Pakistan will maintain its edge as long as labor arbitrage persists. Opportunities will flourish as businesses undergo digitization. And as long as incumbents deliver mediocre experiences, the potential for innovation remains wide open.

The startup ecosystem isn’t finished; it’s merely navigating the Trough of Disillusionment as described by the Gartner Hype Cycle. I doubt we’ll ever see a repeat of the boom during zero-interest rate environments, as higher interest rates are here to stay. The landscape will vastly differ in five years and be unrecognizable in a decade.

Why Quit?

Creating content is a labor of love. 

You do it because you want to, not because you have to. But when the passion wanes, tasks like editing podcasts, drafting articles and curating news become chores. 

I can’t stay interested and invested while rolling my eyes at the latest ecosystem updates. It’s not you, it's me. Or maybe it’s both.

To everyone who has tolerated me, thank you for sticking around. Special thanks to Mutaher Khan and Zubair Naeem Paracha for being my sounding boards over the years and keeping me honest.

Housekeeping

The domain techshaw.com will redirect to this newsletter sometime in the next few months. That’s because Substack is free, but hosting the website costs $14/month. Pulse funding tracker will also sunset soon, saving me $300/year.

Until next time, ✌️