Startups say Pakistan's new China-like firewall is making it harder for them to raise funds, amid complaints about censorship and internet speeds falling by 40%
Kunwar Khuldune Shahid / Rest of World :
Context & Ripple Effects
Pakistan’s startup ecosystem had drawn substantial overseas investment in 2021, after a sharp acceleration in startup fundraising. The reported firewall now puts a basic operating dependency—reliable, open internet access—at the center of founders’ ability to maintain that momentum.
The complaints follow reports of a 30%–40% drop in internet speeds as the firewall was thought to be under testing. China’s experience shows how durable filtering can reshape the competitive environment by favoring locally adapted firms while limiting foreign platforms’ reach.
First-order effects
- Pakistan-based startups face degraded connectivity and reported censorship, complicating day-to-day operations and investor communication at the point they are seeking capital.
- Investors evaluating Pakistani companies must factor internet-access risk into diligence, potentially slowing fundraising processes or raising the bar for commitments.
Second-order effects
- Founders may shift more operational and investor-facing work to channels or infrastructure less exposed to the disruption, adding cost and complexity for young companies.
- Foreign technology platforms and cross-border startup service providers could face a less reliable route to Pakistani users; the relevant precedent is China’s firewall-driven advantage for local firms.
Third-order effects
- If restrictive network controls persist, Pakistan’s startup market could become more dependent on investors and suppliers willing to accept country-specific access constraints, reinforcing the fragility of its recent funding expansion.
- The longer-term outcome depends on implementation: a permanent, broad filtering regime would make state control of connectivity a more material determinant of which digital businesses can scale.
The trend: Pakistan is an instance of state-mediated internet controls becoming a capital-allocation and market-structure issue, not only a censorship issue.