Fatima Ventures is the investment arm of one of Pakistan’s leading conglomerates, Fatima Group, and is a frontrunner amongst the Venture Capital firms in the country. What sets this VC apart from others? Besides offering incubation and acceleration in partnership with LUMS, and providing access to an extensive network spread across various industries, Fatima Ventures has recently partnered with Gobi Partners, one of the most successful VC’s in Asia, to launch Fatima Gobi Ventures.
To better understand the vision of the company, we sat down with CEO of Fatima Ventures, Ali Mukhtar, talking sustainability, the startup ecosystem in Pakistan, his partnership with Gobi, and more.
TH: Taimoor Hassan
AM: Ali Mukhtar
TH: What is your position in the company?
AM: I am the founder and CEO of Fatima Ventures and General Partner Fatima Gobi Ventures
TH: What is your educational background and what did you do prior to starting Fatima Ventures (FV)?
AM:Prior to launching FV, I was overseeing Fatima Group’s strategy and investments. I am a board member of Fatima Group and a board member of the National Incubation Center (NIC) Lahore that is housed in the Lahore University of Management Sciences (LUMS). I am a graduate of University of Pennsylvania in the US.
TH: What was the motivation/ inspiration that got you started in this business?
AM: I think the motivation and inspiration for any business ultimately comes down to identifying need gaps and prevalent opportunities in the market. I have always been interested in technology and its potential for positive impact.
This is especially relevant to a place like Pakistan that, as a developing market, is greatly positioned to provide considerable returns in both social and monetary terms.
TH: What people or life experiences have influenced you to enter the Venture Capital (VC) space in Pakistan?
AM: Pakistani tech entrepreneurs have been extremely successful in the Silicon Valley in the US and other parts of the world. Successful companies such as Careem, FireEye, Afiniti, Keeptruckin and many others have all been developed by Pakistani entrepreneurs. That shows that we have exceptionally dedicated and talented entrepreneurs and if the same opportunities can be provided in Pakistan, there is no reason why we won’t see great companies that are homegrown.
TH: When did FV start its operations and what is it about?
AM: Fatima Ventures was established in 2015 and co-launched an early-stage tech fund with Gobi Partners in March 2019.
Fatima Ventures is an early stage VC fund that invests in scalable tech companies. This includes providing capital to our founders, helping them develop successful market strategies in order to enable growth, and connecting with a global network of mentors, investors, and customers.
Fatima Ventures, in partnership with LUMS and Ignite, has also setup NIC Lahore; an incubation center which is aiming to create 200 companies over the next five years, and hopefully create thousands of jobs in the process.
In the incubation center, startups are offered a plug and play facility and have access to mentorship from global experts to help them test and scale their minimum viable products (MVPs).
TH: What is the operating philosophy of Fatima Ventures?
AM: In any business success can and should be considered in two parts: i) what are the financial returns? ii) and what is the impact on the community at large? Our vision is to be a major contributor towards the development of the tech ecosystem in Pakistan.
TH: What is the ultimate cause that you have dedicated this business towards? (earning profits, boosting entrepreneurship, social impact or others?)
AM: I am motivated by enabling a new generation of entrepreneurs through providing them with the opportunity to build businesses that serve millions of customers. Ultimately, Venture Capital has many stakeholders, so whether it’s our shareholders, our founders, or the community in which we operate, we are dedicated to seeing that they all come out as winners.
TH: What opportunity did you see in Pakistan in the VC space to start this business?
AM: Pakistan is positioned to be one of the fastest growing digital markets. With a population of 220 million people and consumption of close to US $300 billion, Pakistan’s demographics show a growing middle-class and a sizeable young population, indicating a much higher propensity to consume as compared to previous generations.
The internet penetration in Pakistan is also amongst the fastest growing in the world, enabling the ‘connected consumers’ within the country to adopt technology in their day to day activities.
Pakistan provides its startups with unique opportunities that are otherwise saturated in other markets. Pakistan also has an advantage to learn from global trends such as in China, South East Asia, and India, and to accordingly tailor a model that is suited to its market.
TH: What are the strengths of your company that help to exploit those opportunities?
AM: Fatima Ventures is the first venture capital firm in Pakistan that is a Fund, as well as an incubator and accelerator; allowing us to support our startups at various stages of their life cycle. In addition, we have one of Pakistan’s leading conglomerates Fatima Group at our back, allowing Fatima Ventures to access a vast network of industries and expertise. This, coupled with our partnership with Gobi Partners, has helped us leverage their investment experience of over 250+ companies and establish a diverse pool of tech founders and mentors both locally and abroad.
TH: What is the competition like in the VC space in Pakistan and who are your competitors mainly?
AM: We believe that Pakistan’s startup ecosystem is at an inflection point and more funding will quickly enable the sector to develop. We look forward to collaborating with other local and foreign VCs and investors to co-invest and support the tech startups.
TH: What challenges have you faced in Pakistan as a VC fund?
AM: The government is working on various programmes to promote the sector which include incubators/accelerators, digital skills training programmes, financial inclusion policies and various tax incentives. The current government is also actively pushing further regulatory interventions and incentives for the sector. However, a major challenge will be the timely and effective implementation of these regulations and to see that they operate in harmony with all the relevant bodies.
TH: Please give a little background on Gobi VC and the size and scale at which they operate
AM: Established in 2002,Gobi Partners is a China and South East Asia based venture capital firm with over $1.2 billion in assets under management (AUM). Gobi Partners has raised 13 funds thus far and invested in over 250 startups. It has expanded to ten offices across Asia including Bangkok, Hong Kong, Beijing, Shanghai, Ho Chi Minh, Jakarta, Kuala Lumpur, Manila, Singapore, Tokyo, and now Lahore.
TH: What is Gobi’s operating philosophy?
AM: Gobi adheres to hypothesis-driven investing. Instead of chasing the hottest trends, they stick to what they know and only invest in what they believe in.
TH: Why does Gobi want to invest in Pakistan?
AM: For the same reasons why we established Fatima Ventures. Pakistan is positioned to be one of the fastest growing digital markets – not only because of its demographics, but because of the high internet penetration in the country.
Gobi has also previously compared Pakistan’s potential for growth to that of South East Asia, particularly Indonesia’s. So as an early investor in that market, it is well positioned to identify and implement successful business models that can be applied to Pakistan’s startup ecosystem.
TH: What is the size of the Fund?
AM: It is US $20 Million
TH: How many startups are you looking to invest?
AM: Our target is to invest in around 20 to 25 startups.
TH: What type of startups or sectors would be the focus of your Fund?
AM: Sectors we will be investing in include e-commerce, fintech, travel, logistics, SaaS, consumer-tech, healthcare, and Taqwatech – an investment vertical that targets innovative startups offering products and services to the global Muslim population.
TH: What would you look for in startups/entrepreneurs before you make those investments?
AM: I am sure this has been repeated many times, but really the most important factor is the founder and his ability to build a talented team that is better than him/her and that shares the same level of motivation. Later on, as the company grows from seed to various series of funding, it is the size of the market, the traction, and in the later rounds, it is about revenue growth and positive unit economics.
Separately, Profit talked to Managing Director at Gobi Partners and member of the investment committee (IC) of Fatima Gobi Ventures, JamauludinBujang, about the state of entrepreneurship in Pakistan.
Jamal has 18 years of corporate experience in the private sector and five years of experience in the public sector. He was appointed as the CEO and Board Member of Malaysia Venture Capital Management Bhd. (MAVCAP). Jamal worked with two foreign-based finance institutions for a cumulative period of three years and spent 13 years in Malaysia’s leading investment bank.
TH: What is your definition of entrepreneurship?
JB: Entrepreneurship is self-empowerment. It is a self-driven initiative taken on by someone to improve himself and the society around him by solving real life problems with innovative solutions.
TH: What is your perception about the state of entrepreneurship in Pakistan?
JB: The entrepreneurship ecosystem in Pakistan is nascent but growing and flourishing at a fast pace. The country has all the right components to be a thriving tech ecosystem, such as a growing economy, a large population base (40% of which are middle-class consumers), and it has a significant amount of diaspora that are returning to set up businesses in their home country; all of which point to a strong emerging ecosystem.
TH: What are the challenges to boosting entrepreneurship in Pakistan?
JB: The key challenge is domestic regulations. To facilitate foreign investments, policymakers should come up with a strategy to liberalize the current systemin order to facilitate foreign direct investment (FDI) in the country.
TH: In the present form of the Pakistani economy, to what extent can entrepreneurship alleviate Pakistan’s economic issues?
JB: Technology can greatly assist Pakistan to transition into sustainable economic growth. It could enable the country to be better integrated with the regional markets and technology could also assist Pakistan by tackling the structural issues it is facing in areas such as financial inclusion, energy, education and health.
Entrepreneurship not only has the potential to alleviate Pakistan’s societal issues, but also can create mass employment opportunities leading to wealth creation.
TH: How should the government intervene, if at all, to enable entrepreneurship as a key driver of the economy?
JB: The government has done quite well thus far to encourage entrepreneurship through a number ofprogrammes, one of which is the setting up of five incubators around the country to help spur the formation of new tech companies. To ensure these early stage companies are supported post incubation, the government should also set up initiatives to empower local VC fund managers as well as attract foreign VCs via funding programmes. The government could also encourage private sector participation in the tech space by providing tax breaks for groups that invest in the domestic ecosystem.
TH: In the context of Pakistan, what impact can universities have on the entrepreneurial ecosystem?
JB: Universities can play a key role in identifying problems across various industries, and by promoting entrepreneurial programmes that enable startup founders to solve real life problems by engaging with experts and mentors, both from academia and industries.
TH: Tech incubators have recently gained traction to launch and support new businesses. How successful have they been?
JB: Tech incubators have played an instrumental role in creating awareness of the startup ecosystem in Pakistan. They have also played an important role in connecting various stakeholders in the industry which include startups, investors, mentors, as well as customers. These incubators have rigorous programmes that enable startups to launch and grow their businesses successfully.
TH: Incubators only focus on disruptive businesses but a vast majority of the businesses are conventional. How can they be supported and promoted besides promoting disruptive businesses?
JB: Incubators should promote the use of innovation and technology regardless of the nature of the business, be it conventional or disruptive. Conventional businesses can enjoy great benefits from adopting tech which can increase efficiency, reduce costs, as well as unlock new customer segments that could not be addressed without the use of technology.
TH: A word of advice for aspiring entrepreneurs
JB: Don’t just start a venture unless it’s something you truly love and are good at, or unless you can dedicate yourself to becoming an expert in that field over the coming years.