In the face of global recession, one of Pakistan’s top startups Airlift told its employees on Tuesday that it was shutting down its operations from Wednesday.
The startup was attempting to put together a new round as recently as last week but “multiple” investors told the firm that it will take them at least two months to wire the money, TechCrunch reported quoting slides presented to the employees.
“Other investors unwilling to assume the risk of wiring ahead of others,” the slide said.
According to DealStreetAsia, Airlift had paused all deliveries across Pakistan during the three-day festival of Eidul Azha, which typically sees a surge in demand for delivery services. In addition, the company had been emptying warehouses and moving inventory in the run-up to the announcement.
My heart goes out to everyone working hard in the Pakistani tech ecosystem
Airlift raised a monster Series B ($85M) & was the poster child for the burgeoning Pak startup scene
I ~really~ hope their failure is taken in context & not as a reflection on the entire ecosystem https://t.co/DbaoLu4ksz
— Ankur Nagpal 🔥🔥 (@ankurnagpal) July 12, 2022
Read more: Airlift secures $85m in series B financing
“Slack has been dead and no one has been working. We’re all just waiting for the announcement,” the report quoted a management-level Airlift employee ahead of the meeting as saying.
In August 2021, Airlift announced $85 million series B financing led by investors around the world and was one of the largest financing in the Middle East and North Africa (MENA) region co-led by Josh Buckley (Buckley Ventures) and Harry Stebbings (20VC).
The financing was about twice the size of the largest private company initial public offering (IPO) in Pakistan’s history and the highest in the MENA region.
Also read: Airlift realigns strategy amidst global recession
DealStreetAsia, quoting sources, said that Airlift was in talks to secure bridge financing of $20 million to tide over its funding crisis. However, it was told by multiple investors that they needed more than two months to wire the money.
While fundraising remained an issue for Airlift, said the report, operational challenges pushed the firm over the brink, several employees pointed out.
Despite the layoffs and scaling back measures in May, Airlift did not implement austerity measures and continued to overlook the core of its operations, the sources added.
“Things would always be out of stock. Consumer platforms on social media were full of complaints,” said a member of the operations team.
Sources state that co-founder Usman Gul was looped in and was looking into it personally but the problem could not be addressed in a timely manner. This is likely due to the working capital and liquidity crunch the company was facing as the runway was drying up.
“While branding and communication are important, instead of focusing on the core of their business and getting operations sorted, priorities remain fixated on optics at such a critical juncture,” added the source.