Pakistan is taking another step toward strengthening its startup ecosystem as the government has announced a $10 million loan scheme under the second phase of the Pakistan Startup Fund (PSF).
Federal Minister for IT and Telecom Shaza Fatima Khawaja made the announcement during the Fintech Roundtable 2026 at the Sindh Governor House in Karachi. The government also plans to expand the funding available to Pakistani startups to between $25 million and $50 million over the next few years by bringing international financial institutions into the initiative.
What Is the Pakistan Startup loan scheme 2.0?
The Pakistan Startup Loan Scheme 2.0 is intended to improve access to capital for startups and support the development of Pakistan’s technology and innovation ecosystem.
According to the IT minister, the first phase of the Pakistan Startup Fund has already started deployment. Under the second phase, the government has established a $10 million base Loan Scheme.
The government is also in discussions with major international development and financial institutions, including the World Bank, International Finance Corporation (IFC), and Asian Development Bank (ADB), with the objective of attracting additional funding for the country’s startup ecosystem.
Pakistan Plans to Increase Startup Funding to $25–50 Million
The government’s longer-term goal is significantly larger than the initial $10 million allocation.
Shaza Fatima Khawaja said the government is working toward making between $25 million and $50 million available to startups over the next few years.
The proposed structure could involve an international fund manager selected through a Request for Proposal (RFP) process. The government wants the Loan Scheme to provide stronger support and greater confidence for international investors interested in Pakistan’s startup market.
This could be particularly important for Pakistani startups that have struggled to raise investment since the global startup funding slowdown that began after 2021.
Why Startup Funding Is Important for Pakistan
Access to capital has been one of the biggest challenges facing startups in Pakistan.
Many entrepreneurs may have promising business ideas but lack the funding required to develop their products, hire skilled employees, market their businesses and expand into new markets.
The global funding slowdown after 2021 also made it more difficult for startups around the world to secure investment. Pakistan’s technology companies were affected by this broader decline in startup financing as well.
The new Pakistan Startup Fund initiative is therefore aimed at helping create better opportunities for entrepreneurs and technology businesses.
Government Pushes for a More Digital Economy
The announcement about startup funding came alongside a broader government push toward digitalisation.
According to the IT minister, the federal government has already digitalised 100% of government-to-government (G2G) payments across federal ministries and departments.
The government believes that increasing digital payments and transactions can help Pakistan move toward a more documented and formal economy.
Shaza Fatima Khawaja said Pakistan’s formal economy is currently estimated at around $400 billion, while a significant portion of economic activity remains informal.
She suggested that formalising 25% of the informal economy could potentially add around $100 billion to Pakistan’s national GDP.
Digital Wallets and BISP Payments
The government is also using digital financial systems to transform how social welfare payments are made.
Speaking about the digitalisation of Benazir Income Support Programme (BISP) payments, the minister said approximately 825,000 women had created digital wallets.
The government has also distributed 10 million free SIMs as part of the initiative to facilitate digital wallets and digital payments.
According to the minister, beneficiaries are not only receiving payments digitally but are also using their wallets for utility bills, rent, children’s expenses and other transactions.
What Could Pakistan Startup Fund Mean for Entrepreneurs?
The expansion of startup funding could create new opportunities for Pakistani entrepreneurs, particularly those developing technology-based products and innovative business models.
Potential areas that could benefit include:
- Artificial intelligence and machine learning
- Fintech
- E-commerce
- Software and SaaS businesses
- Digital payments
- Health technology
- EdTech
- Logistics technology
- Cybersecurity
- Export-oriented technology companies
However, the announcement of the fund does not automatically mean that every business owner can receive a $10 million loan or grant. The fund is designed as part of the broader startup investment ecosystem, and specific eligibility criteria, funding mechanisms and application procedures will determine which startups can benefit.
Entrepreneurs should therefore wait for official details regarding applications, eligibility and investment terms before assuming that funding is immediately available.
Pakistan’s Startup Ecosystem Could Get a Boost
The government’s plan comes at an important time for Pakistan’s technology sector.
Pakistan has a large young population, a growing pool of software developers and freelancers, and an increasing number of entrepreneurs building businesses for both local and international markets.
Additional startup capital could help promising companies move beyond the early stages and invest in product development, talent, marketing and international expansion.
Bringing institutions such as the World Bank, IFC and ADB into the funding ecosystem could also help attract international investors and increase confidence in Pakistani startups.
Final Thoughts
The announcement of the $10 million Pakistan Startup Fund 2.0 represents another major step in the government’s efforts to support entrepreneurship, technology and digitalisation in Pakistan.
More importantly, the government is targeting a much larger $25 million to $50 million startup fund over the coming years.
If successfully implemented, the initiative could provide Pakistani startups with greater access to capital and help more technology companies develop, scale and compete internationally.
For entrepreneurs, the next important development will be the announcement of the official application process, eligibility requirements and funding structure for Pakistan Startup Fund 2.0.
As these details become available, startups should closely follow official announcements from the relevant government and IT authorities.
