It is not a prerequisite for a tech startup to be surrounded by other tech companies in order to succeed, but Silicon Valley provides irrefutable proof of the fact that geographically grouping tech companies together helps all involved parties. If nothing else, a company at least reaps the rewards of being located in Silicon Valley by sending out a message to the world that they have made it into the big league in their genre.

Following the success of Silicon Valley, the model of a dedicated city or area for tech companies has really taken off. Dublin has a thriving tech scene around the Silicon Docks, with Apple among many major players to set up their European headquarters in Ireland. Another great example is Berlin, where the tech companies are in such vast numbers and have enjoyed so much success in recent years that it is being termed as the new Silicon Valley of Europe by many.

In Pakistan, much like the original Silicon Valley, the startup ecosystem wasn’t planned out from the beginning. Tech companies started gravitating towards Lahore when the city’s infrastructure was improved in the late 90s. It took many flashes of individual brilliance and dedication for the industry to get on the right track, with contributions from industry leaders like Umar Saif who helped setup ITU, the government-backed startup incubators Plan9 and PlanX. These efforts helped garner the right kind of attention from investors and incentivized startups financially.

Success stories from Pakistan

Although the tech industry faces distinct kind of challenges in all countries, the Lahore tech scene has a brand of problems that can be considered quite unique to it. Issues with security, political stability, and distrust from the customer-base and foreign clients alike might have been enough to slow down the progress of any startup ecosystem, but the tech industry in Pakistan has survived and is now thriving. It might be too early to call Lahore the next Silicon Valley of Asia, but it certainly has the potential and resources at its disposal to be an even bigger success than it currently is. Currently Lahore has a startup ecosystem that is regularly churning out companies and brands that gain popularity among the masses and are functioning robustly against all odds. On the surface, this might seem counter-intuitive, but on closer examination there are a few factors that definitely play a major role in boosting the startups working out of Pakistan.

In recent past, Pakistan has seen some major consumer behavior and market changes. This shift in trends has helped various companies gain momentum and prove that Pakistan is finally embracing local ingenuity and entrepreneurship. Another indicator of the burgeoning startup culture in the country is the acquisition of startups by foreign companies. Savaree was acquired by Careem and it has helped them in their ceaseless competition against Uber. Orient acquired Smart Devices, to make use of their IoT concepts. The trend of acquisition has gone beyond startups, and has extended to well-established companies like Engro and Dawlence (acquired by a Turkish company).

So, what do we have now that we didn’t have 10 years ago?

A decade ago, an average Pakistani wouldn’t have thought of using an app to order food on a Nokia Symbian device, or felt that their internet connection was good enough to stream a funny video posted by a blog. If you want to know what the key enablers are for giving us a healthy startup ecosystem, just take a look around and the signs are all there.

1)     Increase in Smartphone Adoption Rates

It is a documented fact that Pakistanis have warmed up to smartphones in the last 5 years, with the adoption rate going through the roof. Ever since QMobile introduced the strategy of bridging the price gap between smartphones and feature phones, people have started opting for touch-screen mobiles with internet capabilities. Even before that, a lot of people were using Apple iPhones and Samsung’s Galaxy latest series was gaining popularity as well but a lot of credit must go to the advent of online purchasing and price comparison sites like PriceOye.pk, which helped allay people’s fear of getting a bad deal when buying a new device.

2)     Launch of 3G/4G & Its Fast Uptake

Regardless of increase in smartphone sales, there was a brief period of time when smartphones were mostly being used on WiFi or 2G networks, which isn’t really conducive to the development of a startup ecosystem that relies on consumers being able to stay connected throughout the day. When 3G came around in Pakistan, people started realizing the full potential of their phones, and this led to a lot of apps that tapped into this newfound avenue of development. Though slow at the start, the uptake gained momentum and currently there are about 37.6 million 3G and 4G users in Pakistan. In the past couple of years, all mobile carriers started offering data packages and the price of having decent internet access on your smartphone went down dramatically.

Without 3G/4G, a lot of startups and service like OLX, SlideApp, Savaree, Careem, and Uber wouldn’t have existed since their whole premise is serving customers round the clock. Even for services and apps that are generally used indoors (where you have access to WiFi), 3G opened up new possibilities and allowed new startups to gain traction.

3)     Multimillion Dollar Marketing Campaigns

It was admittedly a bit disconcerting and totally out of the blue for the Pakistani customer base to see ads for e-commerce services in newspapers and television, but once these services started getting more attention, the end result was widespread popularity of services like OLX, Zameen.com, Yayvo.com, etc. On the surface, this only helps the company running the ad, but it has some very positive by-products. All it takes for a person to start trusting and using online services is one good experience. If you get a sweet deal on OLX and everything comes through fine, you are likely to search online before buying any product in future. This is how the increase in overall digital awareness of Pakistanis has created a plethora of opportunities for startups and old companies alike.

4)     Increasing Foreign Investor Interest

A Washington Post article published earlier this year has made the rounds, praising Pakistan’s improving economy and predicting that things will continue being bullish. This isn’t a one-off accolade for our economy or stock market, as earlier this month Bloomberg termed Pakistan’s Stock Exchange the world’s most underrated and Forbes recognized Pakistan’s economic situation to be doing better than India in metrics like geopolitics and equity. As a result of the Stock Exchange doing well, Pakistan’s startups have also learnt the art of getting foreign investors to take their ideas seriously and lots of companies have raised considerable funds. Zameen.com comes to mind as the prime example of being a startup that has been around for nearly 10 years now, but recently took things to the next level by raising $29 million in the second half of 2015. Mangobaaz is another startup that raised $115,000 last year, despite being from a niche that has almost no history of major investments in Pakistan. Even existing foreign companies are now seeing Pakistan as an emerging market with lots of opportunities. Case in point, Careem has pledged to invest $150m in Pakistan over the next 5 years.

While all the above enablers are present in a lot of other regions of the world, Pakistan has something that gives it an edge; its population of 200m. With the bullishness in the economy, our huge population has become an attractive factor in luring foreign companies to expand their business and investment into Pakistan. This has the two-pronged effect of boosting the economy further and encouraging new local entrepreneurs to form startups taking advantage of a receptive market. In fact, we are already seeing some of this in Pakistan, with many startup services becoming a part of routine lives. The trend is sure to continue, which means we can expect some exciting times ahead as the startup boom continues across Pakistan.