Aitizaz Hassan ISLAMABAD, May 16 (INP-WealthPk): Pakistani startups raised $350 million through 81 deals in 2021, reports WealthPK. Several factors contributed to this growth in funding, especially the changes in policies instituted by the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP). However, a survey by Invest2 Innovate – a startup consultancy firm – says despite the SBP efforts, data shows over half of the founders in their sample feel that the current tax rates (55%) and tax administration (52%) constitute major obstacles to their businesses. Similarly, the Entrepreneur Support Organizations (ESOs) as respondents have concerns with regard to the business policies. 70% of respondents in tax administration, 75% in tax rates and customs and trade feel policies as an obstacle to the startups. On the other hand, only 35% of investors agreed that tax administration, tax rates and customs policies were barriers to the startups’ performance. This does not mean the issue doesn’t exist, as some of the investors surveyed later expanded on their views in the interviews and felt that a closed-ended question did not capture their perspectives. The survey says the current regulatory environment makes it difficult for any local or international fund to solicit funds from within Pakistan unless they are registered as a private fund in the country, which is rare considering only three investors (Lakson Investment Venture Capital (LIVC), JS Investments Limited (JSIL), and PNO Capital Limited) who participated in a round during 2021 and are the only funds that have the SECP’s Private Equity (PE) and Virtual Capital (VC) license. All the remaining funds actively investing in Pakistan are registered abroad and thus have difficulties raising money from the Pakistani institutions. Investors responding to a survey for the report echoed the same sentiment, with 65% of respondents agreeing that a lack of laws allowing for a seamless inflow of foreign investment capital into the country is an obstacle. Additionally, 59% of those surveyed thought that a lack of appropriate Virtual Capital-friendly legislation and processes poses a barrier to both local and international investors. According to Ambareen Baig, head of Insight – the research lab of Invest2innovate – policies are a challenge for all kinds of startups in Pakistan. A vigorous interaction is seen between regulated and regulatory environment. The stakeholders honestly see regulation in a much more organized manner than ever before. It is not just a fact that regulators are getting with the stakeholders but understanding challenges and everything. They are also acting upon the recommendation and ensuring follow-ups. Dialogue between the stakeholders and policy-makers is continuously and constantly going on. “I suggest that there is a need to build some sort of mechanism internally where a body of experts is created for local and international startups. This body of experts advises policy-makers in a much more agile manner. The body may comprise local and international investors, founders and stakeholders. Sometimes, we talk to the people who are not directly dealing with the problem in terms of exit and repatriation of fund. There is a lack of clarity in policies around and it is super important to address them,” Ambareen Baig told WealthPK. Khawaja Saud Masud, a well-known startups consultant and IT analyst, said international capital seeks market stability, on-the-ground talent, infrastructure, ease of business and ease of exit. I think, we are getting there but it’s not as simple as setting up a company in the SECP and opening a bank account.