Written by: Zainab Iqbal
Overview
This article explores how entrepreneurship centres are shaping economic growth globally and examines their role within Pakistan’s evolving start-up ecosystem. It outlines the contributions of Business Incubation Centres (BICs), the challenges limiting their impact, such as declining investment, weak industry academia linkages, and limited sector specific support as well as the opportunities emerging across high-potential sectors like SaaS, agritech, fintech, and healthtech. It also highlights global trends, including deep-tech incubation, AI-focused accelerators, and venture studios, offering a roadmap for how Pakistan can strengthen its entrepreneurship infrastructure and build a more innovative, export-oriented, resilient economy.
Why Entrepreneurship Centres Matter for Growth
In modern economies, entrepreneurship isn’t just about starting businesses, it’s a powerful engine driving jobs and innovation, Entrepreneurship centres (incubators, BICs, accelerators, university-linked innovation hubs, venture studios) serve as the vital infrastructure that connects talent, ideas, capital, industry and markets.
Over the past decade, Pakistan has seen a growing number of Business Incubation Centres (BICs), in universities and as independent hubs, offering start-ups support ranging from mentorship and business-model advice to investor readiness and networking. These BICs have helped transform many early-stage ideas into prototype ventures and, in some cases, market-ready start-ups. This increased institutional support has enabled a start-up culture, giving founders safer environments to experiment, fail fast, learn, and iterate.
Globally, small and medium enterprises (SMEs), often nurtured via entrepreneurship centres, contribute to economic growth. In the United States, for example, small businesses have created the majority of net new jobs in recent decades. A background summary estimates that 13 million jobs were created by small businesses since 1997.[1]
This number highlights that small enterprises, often early-stage ventures supported by incubators, remain critical job creators, driving employment expansion, absorbing young or returning workers, and generating resilient economic activity. By enabling entrepreneurship, ECs thus support one of the most stable sources of job creation worldwide.
BIC’s In Pakistan: Progress, Challenges, And What Needs to Be Done
However, despite this progress, several structural challenges limit the full potential of BICs in Pakistan:
- Dramatic decline in start-up investment: Pakistan’s start-up ecosystem saw a steep funding collapse in 2023, with total investment falling to USD 75.6 million, a 77.2% year-on-year decline. Deal volume also dropped by 47.9%, with 37 deals recorded during the year. More than half of all funding came in the last quarter of 2023 (October to December), which alone saw 15 deals worth USD 38.6 million. The average investment amount start-ups received in each funding deal fell sharply to USD 2.4 million, down 60% from 2022, reflecting a significant pullback from investors and a tightening of available capital in the ecosystem.[2]
- Unstable investor sentiment and capital drought: Investor sentiment in Pakistan’s start-up ecosystem has weakened drastically, resulting in an acute shortage of capital. In the first half of 2024, start-ups managed to raise only USD 3 million, a 92% year-on-year decline, representing the largest drop among all emerging markets. Deal activity also plunged, with just five deals closed, a 77% reduction compared to the same period last year.[3] This sharp contraction reflects broader global shifts toward safer investments such as, government treasury bills, Pakistan Investment Bonds (PIBs), real estate, and safe-haven assets such as gold, amid high interest rates, leaving Pakistani start-ups with limited access to early-stage funding and creating significant pressure on BICs and founders trying to scale and sustain their ventures. Many incubators remain oriented toward general start up training rather than facilitating deep-tech incubation, technology transfer, or industry-driven research. Without strong institutionalised tech-transfer offices or research commercialization pipelines, promising research often doesn’t translate into commercially viable ventures.
- Weak Links between academia/research and industry: Incubators focus primarily on general start-up training, while structured pathways to commercialise university research remain limited. Universities such as LUMS generate applied research in areas including AI, data analytics, energy systems, and embedded technologies, much of which hold strong commercial potential. However, without dedicated technology transfer processes, IP support, and industry pilot opportunities, research outcomes often do not progress into spin-offs or market-ready products. Strengthening collaboration between research labs, incubators, and industry partners can help unlock this potential and accelerate commercialisation.
- Limited sectoral and infrastructure support: For fields like agritech, biotech, climate-tech, deep tech, or regulation-heavy sectors (health, education), the absence of specialised labs, long-term support structures, or domain-specific mentorship limits meaningful growth.
- Low participation from women and underrepresented groups: Women remain significantly underrepresented in Pakistan’s entrepreneurial ecosystem. While women make up nearly half of the population, only around 23–25% participate in the labour force, and just about 1% are entrepreneurs.[4] This gap reflects structural barriers such as limited access to finance, markets, and targeted support programmes, which continue to restrict women’s participation in business and reduce overall equity and diversity in entrepreneurship.
- Poor post-incubation scaling support: Many start-ups “graduate” from BICs but struggle to scale because of limited access to follow-on funding, export-market linkages, regulatory support, or global exposure.
What Needs to Change (and How to Do It)
To unlock the full potential of BICs in Pakistan, stakeholders must consider several institutional reforms and strategic interventions:
- Introduce blended financing instruments: combining grants, concessional loans, and equity, to cushion against global investment cycles and reduce dependency on volatile VC funding. Similar blended finance models have been used in emerging markets in Southeast Asia, where donor-backed grants support early experimentation while concessional loans and equity are introduced at later growth stages, helping start-ups survive VC downturns.[5]
- Establish Technology Transfer Offices (TTOs): inside incubators/universities, paired with shared R&D labs and corporate-industry partnerships. This can help convert academic research into market-ready ventures. University consortia such as the UK’s SETsquared [6]partnership show how structured TTOs and industry engagement can significantly increase faculty-led spin-outs and research commercialisation.
- Develop sector-specific incubators: (especially for agritech, biotech, climate tech, AI, deep-tech), equipped with necessary lab infrastructure, regulatory guidance, and long-cycle financing. Dedicated agritech and deep-tech incubators in countries like Singapore and South Korea have enabled startups to navigate complex regulation and long development cycles more effectively than generalist incubators.[7]
- Design inclusion-focused incubator tracks: e.g., women-only cohorts, rural micro-hubs, digital incubators, flexible scheduling, and collaborate with financial institutions to ensure accessible credit and mentorship. Women-focused incubation programmes and digital cohorts in emerging markets have consistently shown higher retention and venture formation by addressing mobility, time, and financing constraints faced by women founders.
- Offer post-incubation growth and export support: such as growth accelerators, corporate procurement pilots, international soft-landing programmes, and global market-access facilitation. Export-oriented accelerators supported by OECD member countries have helped start-ups enter international markets early, particularly in SaaS and digital services, even when domestic demand remains limited.[8]
If implemented, these can transform BICs from early-stage support units into full-fledged engines of innovation, growth, and economic resilience.
Start-up Enablers & High-Potential Sectors in Pakistan
Even amid a downturn in funding, several sectors in Pakistan continue to show strong potential, especially when supported by well-structured start up enablers.
SaaS, IT Services, and Global Digital-Services Exports
Pakistan’s expanding pool of technical talent and competitive cost base position it well for SaaS and digital services exports. With support for export-ready product development, international market access, and clear IP and legal frameworks, Pakistani tech start-ups can scale beyond domestic markets and earn resilient foreign exchange. Companies such as Afiniti and Systems Limited demonstrate how Pakistani firms can successfully serve global clients. Entrepreneurship centres can further enable this growth by helping founders navigate international sales, compliance, pricing, and customer discovery, while connecting them directly with overseas buyers.
Fintech and E-Commerce
Fintech and e-commerce remain among the most active sectors in Pakistan’s start-up ecosystem but continue to face challenges such as regulatory uncertainty, low digital trust, and high customer-acquisition costs. Clearer regulations, incentives for digital payments, and stronger financial-literacy initiatives can help unlock growth. Local ventures are increasingly building solutions suited to Pakistan’s realities. KalPay, a graduate of the LCE Incubator, shows how Buy Now, Pay Later (BNPL) models can expand consumer credit through merchant partnerships and alternative credit assessments. Yet many people without bank records or formal income proof remain excluded from basic financial services, creating opportunities for platforms that use alternative data and simplified digital on boarding to advance financial inclusion and scale sustainably.
Logistics & Mobility
Given Pakistan’s infrastructure constraints and wide geography, logistics and mobility start-ups have real potential, particularly in urban transport, freight, delivery, and supply-chain optimisation. However, high capital needs, fuel price volatility, and regulatory fragmentation (inter-provincial, municipal) remain big challenges. Support can come via “logistics-as-a-service” models, EV transition funding, and regulatory harmonisation across provinces.
Agritech & Rural-Focused Innovation
Agriculture remains a backbone of Pakistan’s economy. Start-ups offering precision farming, digital advisory, supply-chain solutions, rural fintech, and smart-input distribution can revolutionize productivity and income. Success will require practical, on-ground support such as offering farmers combined services, affordable credit, reliable advisory, and access to markets, along with small rural incubators, partnerships with agricultural extension departments, and programmes that make digital devices cheaper and easier to use.
HealthTech and EdTech
Digital health and education solutions, especially telemedicine, remote learning, skill-based edtech, hold long-term promise. But to flourish, they need regulatory clarity (for telehealth, online education), compliance support, partnerships with institutions (hospitals, schools), and investment in trust-building among populations.
Artificial Intelligence (AI) and Tech Integration
Artificial Intelligence is emerging as a high-potential growth area across Pakistan’s tech ecosystem, supporting innovation in sectors such as SaaS, fintech, health, agriculture, and logistics. With growing technical talent and access to cloud-based tools, start-ups are increasingly integrating AI into products and services. However, wider adoption depends on reliable, uninterrupted internet access, affordable computing resources, and data availability. With the right support, AI can act as a powerful enabler of productivity and technology integration across the economy.
What Global Trends Mean for Pakistan and What Should Be Adapted
Globally, entrepreneurship centres are evolving rapidly. There is a shift toward deep-tech incubation, venture studios, AI-centric accelerators, and export-oriented start up models. The essence: ECs are no longer just support hubs for random founders, but strategic infrastructure labs, funding mechanisms, global market pipelines, and institutional bridges between research and commercialization.
For Pakistan, this evolution means BICs must grow beyond training and mentorship. They must become research-enabled, industry-linked, export-oriented platforms. They must align their programmes with global demand, support long-cycle innovations, and embed inclusion (gender, rural, underserved sectors) into their mandate.
Conclusion: Toward an Innovation-Driven Economy
Entrepreneurship centres are arguably the single most powerful institutional lever to build a resilient, innovation-driven economy in Pakistan. If we strengthen BICs, build deep-tech infrastructure, enable sector-specific incubation, stabilise funding flows, and facilitate global linkages, we can unlock start up potential across SaaS, agritech, fintech, health, logistics, and more.
The transformation will not be easy; it requires coordinated action from universities, investors, government, regulators, and ecosystem builders.
By investing in entrepreneurship centres as national infrastructure, Pakistan can move beyond surviving, towards thriving as a knowledge-driven, globally competitive economy.
References
[1] “What Does Entrepreneurship Do for Job Creation? | Economic Impact Catalyst,” n.d. https://www.economicimpactcatalyst.com/blog/entrepreneurship-job-creation.
[1] Business Recorder. “Pakistan’s Startup Funding Falls 77.2% in 2023.” January 1, 2024. https://www.brecorder.com/news/40281509.
[1] BR web desk. “6 Months of 2024: Pakistan’s Startup Funding Falls 92%, Amounts to Measly $3mn.” Business Recorder, July 10, 2024.
[1] Jalal, Asif. “From Kitchens to Corporations: Pakistan’s Women Entrepreneurs Creating New Narratives.” Associated Press of Pakistan, February 2, 2025.
[1] IFC. “The Role of Blended Finance in an Evolving Global Context,” n.d. https://www.ifc.org/en/insights-reports/2025/role-of-blended-finance-in-an-evolving-global-context.
[1] SETsquared. “SETSquared Partnership | The University Enterprise Collaboration.” SETsquared, December 23, 2025. https://www.setsquared.co.uk/.
[1] “Global Deep Tech Ecosystems: Catalyzing Innovation for Sustainable Development.” UNDP, 2025.
[1] OECD. “Incubation and Acceleration Tools for Entrepreneurship Promotion.,” n.d. https://www.oecd.org/en/about/projects/incubation-and-acceleration.html.
[1] “What Does Entrepreneurship Do for Job Creation? | Economic Impact Catalyst,” n.d. https://www.economicimpactcatalyst.com/blog/entrepreneurship-job-creation.
[2] Business Recorder. “Pakistan’s Startup Funding Falls 77.2% in 2023.” January 1, 2024. https://www.brecorder.com/news/40281509.
[3] BR web desk. “6 Months of 2024: Pakistan’s Startup Funding Falls 92%, Amounts to Measly $3mn.” Business Recorder, July 10, 2024. https://www.brecorder.com/news/40312224.
[4] Jalal, Asif. “From Kitchens to Corporations: Pakistan’s Women Entrepreneurs Creating New Narratives.” Associated Press of Pakistan, February 2, 2025. https://www.app.com.pk/national/from-kitchens-to-corporations-pakistans-women-entrepreneurs-creating-new-narratives/?utm_source.
[5] IFC. “The Role of Blended Finance in an Evolving Global Context,” n.d. https://www.ifc.org/en/insights-reports/2025/role-of-blended-finance-in-an-evolving-global-context.
[6] SETsquared. “SETSquared Partnership | The University Enterprise Collaboration.” SETsquared, December 23, 2025. https://www.setsquared.co.uk/.
[7] “Global Deep Tech Ecosystems: Catalyzing Innovation for Sustainable Development.” UNDP, 2025.
[8] OECD. “Incubation and Acceleration Tools for Entrepreneurship Promotion.,” n.d. https://www.oecd.org/en/about/projects/incubation-and-acceleration.html.

