Reasons behind Airlift collapse after 18 months
Airlift has a bittersweet history that will forever go down in the history of Pakistani startups, as it was perhaps considered Pakistan’s first unicorn (the company is worth over $1 billion). The growth of the business skyrocketed, but soon after the initial success, Airlift Pakistan ceased all operations nationwide on July 12, 2022.
What happened to Airlift and why did Airlift team decided to pack his bags and go home? We find it in this article.
Usman Gul, Ahmed Ayub and Meher Farrukh, three recent graduates from Lahore, founded this company in 2019 as a local transport company operating an Uber-like bus service in Pakistan. But as soon as the covid struck, Airlift stopped its mass transit operations and started a grocery / e-commerce business.
Less than a year ago, Airlift’s growth skyrocketed, raising $85 million in a Series B funding round, the highest single investment round raised by a startup in Pakistan. The country’s then prime minister also tweeted a note to the three-year-old startup congratulating them on their success. Every YouTube banner and video was filled with Airlift ads.
But the company’s umbrella began when the global startup financing crisis erupted. Some bad business decisions that increased operating costs also helped the devil’s cause. After a few months, in May this year, Airlift announced a “strategic realignment”, laying off nearly a third of its workforce and ceasing operations in five of Pakistan’s eight cities as well as South Africa.
Everyone believed that just like the Covid-19 situation, Airlift would also get out of this trap and come back up. But it is rather the opposite that happened as the situation of the company continued to deteriorate, to the point that the leaders decided to stop all activity.
Airlift made the statement as follows: “While the global recession and the recent downturn in capital markets have affected economic activity across the board, they have had a devastating impact on Airlift and made its closure inevitable. Airlift activities will be permanently suspended on 12 July. This was an extremely stressful decision that affected a wide range of stakeholders and an emerging technology ecosystem. ”
In an interview in June, Usman Gul, one of the co-founders of Airlift, seemed concerned that the closure of Airlift was certainly creating an atmosphere of demotivation in the Pakistani startup scene. He also recognized the amount of influence Airlift had given to the industry and it would have been great for Pakistan if he could.
“There is a lot of responsibility that comes with being the lead or being in a leadership position as everything we do at this stage will be seen as the way things should be done”, he said.
The final nail in the coffin was the decision not to go for a funding round this year because they suspected there was no imminent death. As a result, they had to lay off employees and reduce the target area. However, the company had a lot of commitments it needed when it sent the final documents to investors on July 5th.
Unfortunately, the main lender delayed sending the money because they wanted more investors to transfer money with it. Other investors have been asking for two to three months, fearing a global recession and a downturn in capital markets. Less than a week into the negotiations, Airlift’s coffers had dried up and the company had no choice but to shut down Pakistan’s first potential unicorn.
Reasons behind Airlift collapse after 18 months
Gul explained the situation as: “The biggest mistake on our part is not prioritizing a multi-stage institutional investor. You need that multi-stage institutional investor, someone like Accel or Sequoia, who believes in the project and can issue bigger checks.”
Usman Gul is passionate and wants to learn from this experience to move forward and all startups in Pakistan can learn a lot from the history of Airlift and what caused it to fail after skyrocketing.
Gul closed the interview with a paranormal statement without revealing whether or not Airlift will return: “We want to learn from this experience. Market reversals are a reality that requires better planning and preparation on our part. “
