Airlift — one of Pakistan’s top startups — has announced to shut its operation in the country citing “global recession and the recent downturn in capital markets” as the reasons behind its closure.
The q-commerce startup had already curtailed its operations in several cities a few months ago.
“While the global recession and recent downturn in capital markets have affected economic activity across the board, it has had a devastating impact on Airlift and rendered its shut-down inevitable,” the company said in a statement, announcing that on July 12th, Airlift’s operations will shut down permanently.
The company termed the development an “extremely taxing decision” that impacts a large set of stakeholders and an emerging technology ecosystem.
In recent years, it said, Airlift has proven to be one of the most resilient and agile startups coming out of emerging markets and the company was able to navigate the COVID-19 crisis, pivoting into q-commerce and building scale in a new domain.
The company said that with the onset of the recession it “restructured” its business operations and in response to the situation adapted three codes which include; (i) an immediate reduction in headcount, (ii) shutting down operations across all expansion markets, and (iii) revision in platform configurations to ramp up monetization (i.e. introduction of higher prices and delivery fee).
“With the above adaptations, Airlift was able to achieve order-level profitability, maintain reasonable scale, and reduce financial burn by 66%. As of July, 2022, Airlift was about three months away from operating profitability (i.e. positive cash flow from operations), and about 6-9 months from company-level profitability (i.e. Free Cash Flow),” it added.
Mentioning the fast-changing scenario in the industry, the firm said that in May one of its investors stepped up to lead Airlift’s Series C1 financing.
“We’ve received tremendous support from the potential lead in opening doors to other investors to put together the round,” the statement added, noting that investors including First Round Capital, Indus Valley Capital, Buckley Ventures and 20VC agreed to participate in the round with sizable checks.
“In early July, Airlift had a clear path forward to close the round – the Company pushed out documents for signatures to all participating investors. Last week, amidst rapidly deteriorating conditions in the global economy, several participants shared uncertainty in wire schedules and their disbursements – this ultimately meant that the Company’s capital requirements would not be met. Ultimately, the round was unsuccessful.
“With the above clarity, a complete shut-down was inevitable, Airlift could not risk leaving its employees unpaid or reneging from its commitments. The Board deliberated on this via multiple calls and ultimately decided to not assume the risk of leaving teammates unpaid. For our management team, and for the broader set of investors, the above became clear only on July 7th – a day before the Eid holiday in Pakistan.”
The company has also announced a severance package for its employees, providing them two months’ pay and setting up a platform for job placement.
“For suppliers, vendors and other third parties, our team will communicate proactively to manage arrears and liabilities as a part of our ongoing shut-down process,” it added.
Airlift hoped that the closure will not affect the overall technology ecosystem in the country and “will continue to thrive and that some of the most valuable technology companies in emerging markets are still yet to be started.”