FOR most of the past two decades, venture capital has sat at the margins of Pakistan’s economic conversation. Every economy that has crossed from emerging to advanced over the past half-century built its technology sectors and employment engines on equity-based risk capital, not bank lending. That’s starting to change. The federal grant programme for qualifying VC rounds is operational. Most consequentially, Pakistan’s first state-anchored co-investment fund — Pakistan Venture Fund (PVF) — has been put out for tender. Another VC fund is being raised by Gobi Partners.

Single-digit allocations via diversified private funds, with risk spread across dozens of portfolio companies and contained by prudential caps, are a normal feature of functioning financial systems. What’s less recognised is the asset this capital will actually finance. Between 2000 and 2025, Pakistan’s annual indexed research output grew 35-fold to over 45,000 papers. In engineering, computer and agricultural sciences, Pakistani citations per paper — net of self-citations — are comparable to those of the US, India and Israel. The asymmetry lies in what happens next: India converted that research base since 2000 into roughly $250 billion of high-technology exports — and........

© Dawn