There is no sugarcoating how bad this is: Careem is leaving Pakistan – and so far, only Pakistan – and this is a reflection of just how tough it is to grow a tech business serving the Pakistani market, specifically its middle class.
Careem is technically not a Pakistani startup, but it has a Pakistani founder and its Pakistan operations were a key part of its story. Its acquisition by Uber for $3.1 billion in January 2020 was marked as a turning point for the Pakistani tech sector: it was seen as a successful exit of a startup that also served Pakistan and helped put Pakistan on the map of global venture capitalists. The next two years saw the high-water mark for venture investing in Pakistan. Pakistani startups raised $352 million in venture funding in 2021, and $355 million in 2022.
In venture investing, however, being early is the same as being wrong, and Pakistan’s tech startup market is clearly way too early. Careem, like most tech businesses in the country, are discovering that despite the tales of a quarter billion people, Pakistan’s actual servable middle class is a tiny proportion of that massive population, and one can reach saturation very quickly.
Once you hit that point, further growth must await Pakistan’s economic take-off, which is still about a decade away. And if you are owned, as Careem is, by a foreign parent company that has many other targets for growth and claims on its growth capital, that means no room for spending resources on Pakistan.
So now, despite what appears to be a valiant effort on the part of Careem’s management in both Pakistan and the United Arab Emirates, including founder Mudassir Sheikha himself, Careem is exiting the Pakistan market for its ride-hailing business. The content in this publication is expensive to produce. But unlike other journalistic outfits, business publications have to cover the very organizations that directly give them advertisements. Hence, this large source of revenue, which is the lifeblood of other media houses, is severely compromised on account of Profit’s no-compromise policy when it comes to our reporting. No wonder, Profit has lost multiple ad deals, worth tens of millions of rupees, due to stories that held big businesses to account. Hence, for our work to continue unfettered, it must be supported by discerning readers who know the value of quality business journalism, not just for the economy but for the society as a whole.To read the full article, subscribe and support independent business journalism in Pakistan
