Pakistan Stock Exchange Limited (PSX) and Punjab Information Technology Board (PITB) signed a Memorandum of Understanding (MoU) on Monday, 17th April 2017 for mutual cooperation and collaboration to facilitate technological entrepreneurship in Pakistan and to provide a nurturing ecosystem for the growth of technology startups.
Mr. Umer Saif, Chairman of PITB, and Mr. Nadeem Naqvi, Managing Director of PSX, signed the MoU.
Pakistan Stock Exchange plans to launch the PSX Private Market soon, contingent on the approval of the PSX Board of Directors and SECP.
It should be noted that this will not be a crowd funding platform. The PSX Private Market would be a web based platform designed to bring together startups and investors. The Private Market would be the third tier capital raising platform offered by PSX, the second tier being the PSX SME Board and the first tier being the PSX Main Board. The objective of the Private Market would be to enhance access to potential eligible investors for startups by providing them an online platform where they can sign up and register themselves.
Under the MoU, PITB will share their database of registered startups with PSX so that technology startups can be encouraged to sign up on the online PSX Private Market aimed at bringing together startups and potential investors. The launch of the Private Market will be subject to PSX Board and SECP’s approval.
Furthermore, PITB’s technology incubators/accelerators/co-working spaces shall collaborate with PSX to promote the growth of startups.
The parties may coordinate for exploring ways and means to initiate common business support programs/projects for startups. The parties would consider organizing joint events (e.g. conferences, workshops) with representation from both parties in promoting entrepreneurship. Moreover, PSX and PITB will jointly create awareness amongst stakeholders regarding the three capital raising platforms offered by PSX, i.e. Main Board (first tier), SME Board (second tier) and Private Market (third tier).
The MoU envisages that PSX and PITB will jointly approach relevant regulatory bodies to advocate the case of startups and will propose framework to assist startups in raising equity financing by introducing favorable listing terms particularly in terms of paid-up capital.
PSX and PTIB also discussed establishment of a Fund backed by the Government of Punjab which will invest in start-ups focused on IT driven hardware, software and ecommerce. Initial fund size will be Rs. 300 million and the Fund will follow aid model, similar to ICT R&D Fund and Universal Service Fund.
The Fund will be managed by a steering committee comprising of members from reputable incubation firms, Legal Councils, IPR specialists, entrepreneurs, industrialists, fund managers, venture capital firms and angel investors. The fund will be disbursed in tranches based on fulfillment of mutually agreed upon KPIs to ensure accountability and effective utilization. Startups will be required to maintain proper budgets and accounting records and would subject to regular annual audits.
Mr. Nadeem Naqvi, Managing Director of Pakistan Stock Exchange, in his speech, said that technology is rapidly reshaping our world and making dramatic changes in the fields of artificial intelligence, robotics, medical science, nanotechnology, etc. Technology startups are at the forefront of innovation and they are the “disruptors” of the old order. He gave several examples which highlighted the infinite possibilities and potential in B2B, B2C and C2C transactions as the world steps into the digital age. He gave the example of the many useful data aggregation applications e.g. applications for tourists for sightseeing and shopping, applications for foodies with restaurant guides and home delivery services, etc.
He mentioned how there were massive opportunities in e-education and e-learning as many connectivity apps were being devised for students, educational institutions, and corporate / business recruiters. Health and medicine is also progressing at a fast pace as apps are being devised which connect doctors with patients and also help individuals monitor their health conditions. Technology is helping the public sector too, e.g. apps providing traffic congestion reports at key junctions are being developed. Technology can help financial industry by creating digital credit history for the large unbanked population, thus enabling increased lending outreach to micro and small businesses.
Dr. Umer Saif, Chairman PITB, in his speech said that the startup culture in Pakistan is mainly driven by the nation’s young talent working with accelerators and incubators. PITB’s technology incubators, such as Plan9 Tech Incubator for early stage startups, and PITB’s technology accelerators, such as PlanX for mid-stage startups have incubated more than 130 startups. Plan9 and PlanX are now a whole eco-system for technological innovation and entrepreneurship along the lines of the Silicon Valley, with impact all over Pakistan.
He said that in Pakistan the future for entrepreneurship in general and technology-based startups, in particular, looks promising. Dr. Umer Saif also shared success stories of some Pakistani technology-based entrepreneurs which include Mr. Ateeq Raza of AMD, Mr. Tariq Farid of Edible Arrangements and Mr. Mudassir Sheikha of Careem, all of which went to have US $ 1 billion market valuation. He also discussed the formation of National Entrepreneurs Network (NEN) to provide a forum for all leading incubators, accelerators and VC firms to join hands to further promote this fast evolving sector. National Entrepreneur’s Network (NEN) will provide a collective voice to the national entrepreneurial ecosystem. He said that they had agreed that PSX will work in collaboration with the NEN to develop a platform for startups and investors which will act as a cost-effective bridge between startups and investors.
Both PSX and PITB agreed that partnership can indeed serve as an important stepping stone for budding entrepreneurs who are looking to raise investment locally. This will not only encourage employment growth but also increase the technological and economic power of Pakistan.