By Omer Bilal ISLAMABAD, Feb 15 (INP-WealthPK): Venture capital (VC) raised $76.6m in calendar year 2021, whereas in the last five years, over $200m had been raised by start-ups. Pakistan’s venture capital is a high-touch form of financing used primarily by high-growth, innovative, and risky companies. Venture capital firms invest in companies on behalf of limited partners, who are mostly large institutional investors. Venture capitalists provide not only financing, but also non-financial support such as mentorship, strategic guidance, and network access. While most VC-funded companies fail, some become runaway successes. Five private equity and VC firms are enrolled in Pakistan out of which Lakson and Sarmayacar provide leading platforms to innovative startups. Lakson made investment in Mandi Express, Knowledge Platform (Private) Limited, Bookme Tickets (Private) Limited, Bagallery (Private) Limited, and Roomy. Sarmayacar hold the portfolio of Bykea, Dawaai, Simpaisa, and Truck Shear. These venture-funded innovative start-ups are plagued with meaningful bonding between investors and entrepreneurs. Venture capital firms play a crucial role in the development of the economy through capitalising on promoting innovation, financing the development of new products, new technologies, and processes of the companies that are compelled to directly and positively influence the economy. VC intervenes as an intermediary in financial markets providing capital to small firms with high growth potential. The first private equity and venture capital fund worth $100 million under Private Funds Regulations 2015 registered in 2017. During Covid-19, e-grocery, e-food delivery, e-health and e-ticket fintech got huge market volume. This trend increased the turnover to 45 percent as compared to 37 percent during the last calendar year. Venture capital financing can provide a start-up or young business with a valuable source of guidance and consultation. This can help with a variety of business decisions, including financial management and human resource management. Making better decisions in key areas can be vitally important as a business grows. In a number of critical areas, including legal, tax, and personnel matters, a VC firm can provide active support, all the more important at a key stage of growth of a young company. Faster growth and greater success are two potential main benefits. Fintech startups begin by introducing a new product and process on the market. The social return on venture capital is much larger than the return on business or public research and development (R&D), probably due to a high-risk premium and large potential spill over of a product or process which is associated with lower risks and higher expected returns. Private funds have the potential to unleash funding of new profitable ideas in the small and medium enterprises SMEs and help achieve the much-needed economic stimulus with new employment opportunities. A high venture capital intensity further allows improving the economic impact of private and public R&D capital stocks. In other words, VC improves the crystallisation of knowledge into new products and processes. It is considered as an additional link explaining variations in economic performances. These results, therefore, call for innovative policy instruments to stimulate the participation of private VC funds available in the market.