National Incubation Center


COVID-19 is the worst human tragedy to have struck the world in decades, affecting millions of people across the globe. The pandemic not only has serious implications for people’s health but is also significantly affecting businesses and the economy. Small businesses, startups, and entrepreneurs are one the most vulnerable economic groups to be directly affected by the situation. The rising economic uncertainty is posing significant threat to startups across the globe, making it imperative for governments and relevant stakeholder organizations to move quickly, and help sustain small businesses. 

To better understand the impact of this crisis on the Startup Ecosystem in Pakistan, and to equip the government and policymakers with insights to support businesses, the National Incubation Center has launched a report, ‘Impact of COVID-19 on Pakistani Startups and The Way Forward’. The analysis presented in this report is based on data collected through survey from 86 Startups based in Pakistan, and focus group interviews conducted with 10 startups. Based on analysis of the collected data, this report shares key insights on how startups across various sectors have been impacted by the pandemic, and puts forward set of recommendations for startups and various ecosystem players to collaborate and help sustain the nascent, yet evolving ecosystem during this challenging time.

An amalgamation of primary and secondary research techniques, this report takes into consideration a global and local perspective. The report explores the effects of the pandemic on startups with respect to four key areas- Investments and Capital, Markets, Consumer Demand and Revenues, Talent and Jobs, and Support from Government and Policymakers. Using secondary research, the report explores these areas in a global context, while using primary research to understand the impact in the Pakistani context. Based on analysis of data, the report puts forward a set of recommendations to startups, government bodies and policymakers, and incubation centers, on collaborating and helping startups sustain during these critical times.

86 startups from across Pakistan took part in an online survey questionnaire. Surveyed startups belonged to the verticals of Ed-tech, Health-Tech, Agriculture, IoT, Manufacturing and Production. Fashion, Event Management, Robotics, Travel and Tourism and E-Commerce.  

Some Key Findings from the report are

• 68% of surveyed startups have experienced reduced demand 

• 50% of surveyed startups have halted operations 

• 42% of surveyed startups are experiencing reduced valuation 

• 35% of surveyed startups have reduced salaries for employees 

• 21% of surveyed startups have shut down 

• 20% of surveyed startups have laid off employees 

The report findings reveal that startups working in verticals of Travel and Tourism, Event Management, E-Commerce, Health-Tech, Agriculture, Ed-Tech, IoT, and Manufacturing & Production, have been most affected by the pandemic. 

According to our survey, key support areas startups are looking for, from government, policymakers and incubation centers include: 
Special loans on relaxed terms 
Cash Injections to sustain operations 
Grant money to build capacity for COVID response 
Tax exemptions and holidays 
Waiving off custom duties 
Connections with partner organizations 
Support from NICs to expedite Ignite fund disposal process  

The findings of the survey reveal that while many sectors have been negatively impacted by the pandemic, yet some are experiencing increase in demand and revenues. Startups working in verticals of Health-tech, Ed-Tech, E-Commerce and Remote Work Solutions are likely to benefit from the current situation. This paints a promising picture for possible investment opportunities, with many investors expressing interest in domains of Ed-Tech, Heath-Tech, and Remote Work Solutions. 

The report highlights how many startups have been able to pivot and/or diversify to explore other opportunities, as demand for existing products and services has dropped. Indeed, the startups to survive amid the pandemic will be those who respond to the changing dynamics, while those who stick to status quo are likely to die out. With almost 90 percent of surveyed startups reporting cash runway of 6 months or less, coupled with a decline in investments, startups need to proactively seek alternate opportunities to generate revenue, and simultaneously reduce costs. Unfortunately, this need to reduce costs is forcing startups to resort to employee layoffs, or reductions in salaries, or both.

The report concludes with a set of recommendations for various stakeholders in the ecosystem, to come forward and facilitate startups to sustain themselves during these difficult times. This includes the government, private sector organizations, and incubation centers. The report highlights the need for systematic support from all stakeholders to help startups survive past the pandemic and continue to contribute positively towards the economic growth of Pakistan. 

Download the complete report here. 

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The National Incubation Center (NIC) Program is a funded project of Ignite – Ministry of IT & Telecom.