Venture capital is slowly returning to Pakistan, with mobility startup BusCaro raising $2 million last week, bringing its total funding to $3.5 million.
The latest funding round was led by UAE-based Daman Investments, with participation from US/Saudi Cartography Capital, New York’s Epic Angest, UK’s Wahed Ventures, the Aga Khan Development Network’s Accelerate Prosperity, and a group of angel investors.
BusCaro, which offers shared commute services, was launched in late 2022, during a difficult time for mobility startups. The world was emerging from the pandemic, the Russia-Ukraine war had sparked a global crisis, Pakistan was dealing with floods, and the local mobility sector was collapsing. Major players like Airlift and Swvl had folded, and Uber exited Pakistan.
Despite the difficult circumstances, the startup has made significant strides. Founder, Maha Shahzad says she faced over 400 rejections before securing a crucial $160,000 in the first year of operations, which set the company on its growth trajectory. Today, BusCaro processes over 900,000 monthly bookings and expects to generate $8.6 million in annual revenue by December. However, scaling up has presented its own challenges, particularly in financing.
“Equity financing is the least of my problems — and that’s true for most founders,” says Shahzad. “Working capital is the main bottleneck.”
BusCaro operates on an asset-light, tech-first model, meaning it doesn’t own vehicles, operates out of co-working space Collabs, and has no land or collateral for borrowing. With a topline too large to qualify as a small or medium enterprise, and with Rs5 million being insufficient, the company is forced to rely on venture funding for its day-to-day operations.
“Startups raise equity to fuel high-octane growth. It’s ridiculous that we need to raise it for working capital,” Shahzad adds. Despite being incorporated with a strong credit history, a portfolio of formal clients, and credit lines from major fuel companies like Total and Parco, BusCaro struggles to secure financing against its invoices, highlighting the challenges facing Pakistan’s tech-based private sector.
