VENTURE CAPITAL IN PAKISTAN: PERFORMANCE, ISSUES AND THE FUTURE PROSPECTS

Abstract

The thesis has two objectives. First, is to analyze the current performance of the VC industry in Pakistan. Second, is to examine the issues faced and the future prospects of the industry. As Venture capital is the success model in the west and created a positive impact by catalyzing the economic growth, employment creation and innovation. It helped entrepreneurs in turning their innovative ideas into reality. Developed Economies such as US, China, UK, Japan, and Germany all have succeed in developing the VC industry and reap the results in the form of socio economic impact. Other economies such as Singapore, Israel and Canada also have done considerable efforts in the creation of VC systems in their economies to be in place. The model yet to prove its potential in Pakistan as it is still in the nascent stages. Even though the VC exist in Pakistan since 1990 when two companies were established however since after twenty years there are only three companies that are in the business of VC with little venture investments and one angel network that brings together the investors and the entrepreneurs. There are issues on the demand and supply side of the VC which needs to be addressed to bring forth the industry on the growth direction. These issues are Limited exit options, limited entrepreneurial ventures, non supportive legal framework, inadequate source of funding and the insufficient government role/ efforts. There is a need to replicate the success stories of the countries that developed the industry in their countries and formulate the strategies and policies by folding into the local environment. As Pakistan is the country of 180 million people with each year 1 million people enter into the job market. If the industry develops it would help in giving the alternative options to the professionals to start an entrepreneurial venture having promising ideas by financing through Venture capital and bring forth innovation resulting in creating the jobs and the growth of the economy as well.