The World Bank has proposed a $50 million financing package to establish a Pakistan Fund of Funds, aimed at drawing domestic and international private investment into the underdeveloped venture capital sector of the country.
The financing, to be provided through the International Bank for Reconstruction and Development (IBRD), covers the entire estimated project cost, leaving no financing gap.
According to the initial project information document, the Pakistan Entrepreneurship and Private Investment Catalyst Project will be implemented by Ignite, under the Ministry of Information Technology and Telecommunication. A review is expected on January 20, 2027, and the project is scheduled for approval consideration on March 24, 2027.
The project aims to mobilise private investment and expand access to risk capital for innovative and high-growth firms. Instead of financing individual companies, it will invest public funds in professionally managed venture capital funds, using public capital as an anchor investment to attract additional private investors.
The document notes that venture capital investment per capita in Pakistan is less than one-tenth of the levels in Egypt, Indonesia and Vietnam. Access to patient equity capital and professionally managed funds remains limited, leaving many startups and high-growth businesses without risk capital.
The operation has two components: the capitalisation and investment of the Pakistan Fund of Funds, and the project management arrangements needed to establish, operationalise and oversee it.
The model draws on international experience, including the Innovative Startups and SMEs Fund in Jordan. The World Bank expects the initiative to support business expansion, productivity, innovation and job creation.
The proposal comes as Pakistan places digital transformation, artificial intelligence and innovation-led growth at the centre of its economic agenda. The document also cites the country’s commitment to invest $1 billion in the national AI ecosystem by 2030.
The World Bank identified limited institutional capacity in the domestic venture capital industry and weak environmental and social risk management among local fund managers as challenges to implementation. Past startup investments have been concentrated in fintech, e-commerce, health technology, education technology and logistics technology.
While these sectors have a limited direct environmental footprint, the document flags risks related to consumer protection, data privacy, gig-economy labour conditions and unequal access to digital services.
The project must also address gender disparities in access to finance, digital services and entrepreneurship, as well as workplace harassment and exploitation in portfolio companies.
The World Bank has classified the environmental and social risks of the project as moderate and stated that appropriate safeguards will be required as the fund’s portfolio develops.
