For the longest time, our country’s private sector has dealt with obstacles that don’t fully allow small companies to flourish. These obstacles combined with lack of opportunities cause a lot of frustration and reduce the ability to move forward.
In some respects, startups are not too different. After all, they also take birth in the same corporate culture. So naturally one wonders if regulations, opportunities, efficiency, and the business environment were more conducive, would our entrepreneurs be able to do things differently?
Could there be an area where progressive rules were introduced and one could monitor the changes and see if that made a major difference to the mechanics of the industry?
The Current, Pakistan’s first digital news-lifestyle platform that simplifies news for Pakistani millennials, is a startup. After winning the Google News Innovation Challenge in 2020, we faced immense challenges. When Google was sending over the first half of our grant, we were unable to meet the requirements to open a US Dollar bank account. We reached out to six different banks and were refused every time. Frustrated, we kept at it, until one bank took a chance and allowed us to open the account, granted we provide details that the money was indeed coming in from Google. We did and waited for our money to come in. When it did, the bank sent it back, citing that, according to State Bank regulations, getting the money into the country would be tough. Desperate, we appealed to the then Science and Technology Minister, Fawad Chaudhry, as well as contacting State Bank’s President Reza Baqir. Chaudhry was receptive and got us in touch with the right people to help us get our grant across. We were lucky that tech giant Google was in the picture. We finally got our money through and now, will be launching Pakistan’s first membership program.
The Current now comes around bearing good news for all startups. After we became the catalyst that pushed the State Bank of Pakistan (SBP) to understand the issues being faced by tech startups, the SBP introduced a new policy to facilitate startups and provide them a way to get their money home.
“You won the Google grant and there were issues bringing the money to Pakistan. Since I was the Science and Technology Minister at the time, I discussed the issue with Reza Baqir (President State Bank of Pakistan). Since the State Bank is in very capable hands, they made a new policy to facilitate startups,” says Fawad.
Chaudhry further added, “The credit goes to State Bank President, his team and to The Current, the reason why this issue was highlighted in the first place.”
SBP officially removed a major obstacle that has been subsequently thwarting the growth of the startup companies by allowing them to avail foreign loans as convertible debt.
Startup firms face funding issues due to the unavailability of collateral or security. Foreign investors, including equity funds and angel investors, show interest in startups but they try to cover the risk through alternative means like high return on loan, reports Dawn.
A company may raise funds from abroad in the form of convertible debt, i.e. the lender shall have the option to convert the loan into the equity of the borrowing company.
“It is expected that this initiative will help in attracting more foreign investment as it will provide another option to the international investors to invest in startup companies operating in Pakistan,” said the SBP.
We at The Current are immensely happy that we have helped carve a way and provide an easier path for Pakistani startups.