In this article, I’m extracting some gems from a podcast we had earlier this year with the One of Biggest VC in Pakistan and in the Region. The perspective of an expert who isn’t just watching the Pakistani tech ecosystem evolve, but is actively shaping its future – Faisal Aftab. Faisal, a Pakistani American who returned to Pakistan in 2017 with a crystal-clear investment thesis, approaches venture capital not just with spreadsheets, but with a deep, historical understanding of global monetary systems and geopolitical cycles.
If you’re a founder building from Pakistan, an investor eyeing frontier markets, or simply someone trying to understand where the next big growth story is unfolding, here you are! Faisal Aftab lives mentally in 2030, and he encourages us to do the same, believing that working backward from 150 years into the future is how you truly build successful businesses.
The Grand Shift – Welcome to the New Digital Order
Faisal’s entire investment philosophy stems from a pivotal realization during the 2008 global financial crisis – the mainstream narrative often misses the actual sources of power, the monetary system.
He believes that the financialized world order we’ve lived in since 1971 (predominantly 1980) effectively ended in 2020. We are now transitioning into a new digital order. What does this mean for us? It means everything will be documented through technology, involving tokens and the digital tracing of assets like real estate.
This acceleration towards digitization is linked directly to global liquidity cycles : 2008, 2020, and the subsequent cycle to come, with each cycle resulting in massive adoption of technology.
Here’s the massive opportunity for Pakistan: We were lagging in the industrial age and in the financialized world. But now, as money merges with the internet, what we call Fintech downstream, Pakistan is uniquely positioned to leapfrog into this new digital age where value is transacted and documented digitally.
Remember, around 2010, Goldman Sachs coined the “Next 11” countries, and Pakistan was included, noted for having a massive underlying black economy. This transition to digital documentation, partly driven by debt and global frameworks like FATF and OECD common reporting standards pushing for cashless systems, is the huge upside for accelerated adoption.
Pakistan’s Bullish Fundamentals – The Engine of Adoption
Faisal Aftab is extremely bullish on Pakistan, and when you look at the raw data, it’s easy to see why.
First, let’s talk demographics. We are a population of 250 million people. Crucially, 60% of the population is below the age of 30. That’s an incredibly young and dynamic demographic!
Second, consider the adoption curve. While India launched 3G and 4G in 2006 and 2011, respectively, Pakistan didn’t auction these data licenses until 2013 and 2014. This means the scaling of tech adoption really only started around 2015. But the growth since then has been staggering. Within just two years, 30 to 40 million people were using smartphones—a number equivalent to the total population of many European countries. Today, we have about 90 million active data users, and that number is still climbing.
Faisal shares a profound insight about who drives this adoption: intellect is not linked to pedigree schooling or speaking English. He notes that he has met many people from diverse demographics with very high intellect who simply face language barriers.
This is where the next paradigm shift—AI and voice technology—becomes revolutionary. When voice becomes the new command, someone with a naturally high IQ in a remote part of Pakistan can communicate and solve problems collaboratively with someone across the globe, say, in Brazil. Eventually, connectivity driven by satellite systems (like Starlink or China’s Quang), combined with AI-based governance, will allow technology to solve our massive systemic problems like corruption and traffic. This potential for unlocking human capability is why he remains so positive.
The Investment Focus – Fintech, AI, and the Blockchain Merger
Looking at Faisal’s own investment journey, we can trace the accelerating thesis:
1. Fund 1 (Laxen Venture Capital): Focused on baseline e-commerce disruption. Investments included Roomy Hotels (targeting Millennials/Gen Z, asset light), Bookme (Expedia Pakistan), and Bag Gallery (beauty/personal care).
2. Fund 2 (International Institutional Investors): This fund confirmed that the exchange of value disruption (Fintech) was accelerating. The focus shifted primarily to Fintech, backed by international investors, primarily institutions from the Gulf, US, and UK, often including successful Pakistani expat entrepreneurs.
For the future, the message for founders is clear: focus on Blockchain, AI, and the merger of the two.
Think of the major Large Language Models (LLMs) like iOS and Android; the app stores are launching now. The opportunity is in developing local agents with local use cases to solve local problems.
But here’s the crucial part: Blockchain is the authentication of data. Today’s internet runs on a trust-based database (where multiple fake profiles can exist). Blockchain locks and authenticates data, ensuring ownership comes back to the user. Since AI thrives only on locked and authenticated data, Blockchain is indispensable for AI’s future success.
This synergy opens up life-changing opportunities, especially in finance and real assets. Since everyone in Pakistan loves real estate, imagine the power of asset tokenization. Currently, if you own a house and need 10% liquidity (for education or health), you typically have to sell the whole asset due to a trust deficit. With tokenization, you could sell 10% of the tokenized house to an investor abroad. An automated wallet would manage the fractional ownership, splitting sales and rent payments, with AI potentially governing legal issues. This changes the velocity of money.
While Climate Tech is a real issue, Faisal admits that focusing on the returns makes it painful and drawn out, often requiring allocation only if it aligns with hardware like EV or IoT.
How to Build and Fundraise in a Frontier Market
Building in a market like Pakistan requires abandoning the Silicon Valley playbook and embracing financial resilience.
For Founders = Build Smart, Not Fast
1. Ignore the “Burn Rate” Model: The idea of “here’s $10 million, we’ll reward you for how quickly you burn it” only worked in the US during near-zero interest rate environments. In Pakistan, you must prioritize profitability and sustainability. Once you raise, the scrutiny on delivery is 10 times harder.
2. Understand Economic Cycles: If you’re building in Pakistan or Egypt (net importers of energy), you must understand that global interest rate fluctuations affect oil prices, which causes severe currency pressure. When the economy grows, due to low rates, importing goes up, leading to a balance of trade issue and a currency pressure rollover within approximately 36 months. You must be ready to ride these “pings”.
3. Target the Right Scale: The economies of scale exist for the middle-income and lower-income demographic. Your solutions must be designed for this massive segment of the population.
4. Strategic Co-Founder Pairing is Key: International investors often err by backing founders who look exactly like them (e.g., ex-Google). The ideal formula is pairing a co-founder with a “bird’s eye view” from a developed market who understands lag effects, with a co-founder who has “street smarts” or “street intellect” in Pakistan, having been in the trenches. Also, solve problems you have personally experienced.
5. Master Market Timing: Don’t get caught up in large narratives without dissecting local reality. Take EdTech: despite 43 million school-going kids, the Total Addressable Market (TAM) wasn’t ready because most households had only one phone. For EdTech to scale, Fintech had to scale first to enable installment plans for middle/lower-middle-income families to afford $100 tablets.
For Investors and Exits = Beyond the Unicorn Dream
1. The Investment Gap: The gap has shifted. While Seed and Pre-Seed were the focus for early funds, the urgent need now is for capital at Pre-Series A, Series A, and sometimes Series B. The winners have likely already been backed; the focus should be on scaling these existing platforms.
2. Unicorns are Overrated: In emerging markets, pursuing billion-dollar valuations is often misleading. Exits are typically achieved through growth by acquisition (M&A) within the region. Good companies, entered at a 5 millions cap ,have exited or are anticipated to exit within two years at valuation caps ranging from∗∗50 million to $200 million**.
3. The Acquisition Engine: This M&A model is driven by global Big Tech networks (Chinese and American) acting like Pac-Man or the Borg, acquiring regional players to expand their global reach. For instance, a mobility platform was acquired because Pakistan is seen as the seventh strongest market globally by a major mobility company.
4. Avoid FOMO Traps: The year 2021 saw the “dotcom bubble for Frontier Market VC”. Funds with a 10% opportunistic allocation jumped into Pakistan out of FOMO, and when global liquidity burst, these deals deflated like a house of cards, giving the ecosystem a bad reputation. Smart investors must do rigorous due diligence and avoid relying purely on salesman gamesmanship.
5. Relocate to Scale: To access deep regional capital and build a broader MENAP play, Pakistani founders must maintain their strong lead position locally while actively relocating their headquarters to hubs like Riyadh, Abu Dhabi, or DFC. Egyptian and Pakistani founders possess some of the strongest technical talent in the region, making them attractive for regional expansion.
To sum it up, we are witnessing a unique historical transition. The opportunity in Pakistan is generational, fueled by demographic youth and the mandatory transition to a documented digital economy. For founders who approach this landscape with clear discipline, a grasp of monetary cycles, and a sharp focus on AI, Blockchain, and localized solutions, the time to build highly valuable companies is undeniably now