“Founder capital is more important than startup capital,” according to ScaleX founder Adnan Faisal, who has a history of working with successful tech startups and in the investment management industry on a global scale.
Faisal is helping startups in Pakistan with an international approach. His Islamabad-based ScaleX is the only privately funded and commercially run accelerator in Pakistan. They believe in having a high execution oriented mindset, and they believe the same thing for the startups they accelerate.
An IBA Karachi graduate of the 1994-98 batch, Faisal has worked with local multinationals. He started his first technology startup in 2000 to provide software services to Pakistan’s banking sector and top pharmaceutical companies.
He then joined the fund management industry, and established a research department at one of Pakistan’s fund management companies. After that he worked as a technology sector senior analyst with a US hedge fund from 2008 to 2013. “I used to look after their technology portfolios,” he said.
He was looking to moved back from the US to Islamabad while the National University of Sciences & Technology (NUST) was looking for someone to head their innovation and incubation centre. Although he was overqualified for the role, he went for the opportunity. He realised his background converged there.
He had done bottom-up startup building for his own startup in 2008. He had also worked with global technology companies and worked top-down study for them for six years.
He pointed out that Pakistan’s economic market is very limited. “There’s high quality talent which needs access to the international market with grooming,” he said, adding that they needed to familiarise raw talent with international trends. Local talent lacks strategy and commercial skills, he remarked.
They pitched this idea to the US State Department. They decided to groom raw talent and take them there. The US liked the idea and they gave $450,000 to NUST in 2018.
They took 12 startups to Silicon Valley in two groups. There was three months of training for each group. It was a global acceleration programme. The participants raised more than $5.5 million in funding.
The US embassy appreciated the project. They said that other startup support programmes help build startups, but his programme at NUST focused on founders, as they were grooming them while being focused on capacity building of founders. “Sophisticated training of raw talent in a guided manner is important,” said Faisal.
People in the US also appreciated the programme, and showed their interest in funding him privately because they were not willing to indulge with governmental agencies. Pakistani expats became his funders, and he formed ScaleX.
This is Pakistan’s first private accelerator. Since the government does not pay them, their revenue model charges 10 per cent equity against the help they provide, once the startups they support get grants and funds.
They have worked with some nine companies, out of which a few did not work, but a few did. “Our expenses are met by our investors, then we give our services to these [startups] and our revenue comes from the 10 per cent equity from the startup stake,” he explained.
He said that their complete focus is on startup success, as this is a truly commercial, private sector approach. If a startup is successful and is sold for Rs100 million, they will get 10 per cent.
He explained that one of their startups has top technology for the poultry industry in which they use sensors and artificial intelligence, and improve mortality and weight gain of birds.
“They conducted a detailed research in Pakistan and sold it in Pakistan, but it had a slow growth in the country,” he said, adding that they went to Europe and Saudi Arabia, where they were very impressed. The largest poultry producer gave them a contract.
“Founder capital is far more important than financial capital,” he pointed out. ScaleX is a privately financed accelerator of startups. Their survival is dependent on the success of the startups they work on, which Faisal said is a unique approach.
They think more than financial capital, as strategy skills, business model skills and market access are important. They work on global ideas because Pakistan’s market size is limited.