The World Bank has proposed a $50 million Fund of Funds to channel private money into Pakistan’s venture capital market, according to a project document reported by Dawn on October 22, 2026. The initiative carries the name “Pakistan Entrepreneurship and Private Investment Catalyst Project” and still needs approval from the World Bank Executive Board, which is expected to consider it in early 2027.
The structure matters more than the headline figure. The Pakistan fund of funds would not write checks to individual startups. It would invest in professionally managed venture capital funds, and those funds would back the companies. Nothing has been approved, disbursed or invested, and no fund managers, portfolio companies, allocations or launch dates have been named.
That makes this a story about design and timing rather than deployment. The scale is modest next to the $1.5 billion Tenstorrent round that topped our weekly roundup of AI funding rounds, yet for a market short on institutional capital, the architecture may count for more than the size. Below we break down what the proposal says, what remains unconfirmed, how it compares with Pakistan’s other startup programs, and what founders and fund managers should watch next.
Don't miss new tech stories on Google
Add Tech Insider once in the Google app and our stories appear in your news suggestions.
What the World Bank Pakistan Startup Fund Proposal Says
Dawn reporter Amin Ahmed saw the project document after it was made available to the paper on Wednesday, October 21, 2026. The story ran the next day. Dawn describes a plan in which the World Bank helps the government establish and capitalise the $50 million Fund of Funds, with the aim of strengthening what the document calls a nascent innovation and venture capital ecosystem.
The reported details come from Dawn’s account of the project document and the follow-up coverage that cites it:
- Project name: Pakistan Entrepreneurship and Private Investment Catalyst Project
- Vehicle: a Fund of Funds (FoF) for Pakistan
- Size: $50 million
- Investment targets: professionally managed venture capital funds, not individual startups
- Capital sources it aims to attract: domestic and international private investors
- Scope: all of Pakistan, with no specific locations identified at the concept stage
- Status: awaiting World Bank approval, with an Executive Board review expected in early 2027
The document also lists the outcomes the bank hopes to see over time. Better access to private capital should support firm growth, innovation, productivity and the creation of more and better-quality jobs. Dawn adds that the operation has a national scope, and that Pakistan’s environmental and social context is relevant to the anticipated portfolio of fund investments.
How a Fund of Funds Works, and Why It Is Not a Startup Grant
A fund of funds sits one layer above the usual venture model. Instead of buying equity in startups, it commits capital to venture funds run by professional managers. Those managers then pick the companies, negotiate terms, sit on boards and decide when to back a winner a second time.
Two layers of selection
The appeal for a development lender is leverage over market structure. One institution can shape a whole class of investors without picking winners itself. If the vehicle backs five or six managers, each of them builds a pipeline, hires analysts and raises matching money from other limited partners. The World Bank’s stated aim, as Dawn reads the document, is to crowd in domestic and international private investors so the public money does not carry the market alone.
What the structure rules out
Reports are clear that this is not a direct-investment program. A founder in Karachi, Lahore or Islamabad would not apply to the Fund of Funds. They would pitch a venture fund that happens to have it as an investor. That distinction separates the proposal from grant schemes, where a government body reviews individual companies. Any claim that the fund will invest directly in startups is unconfirmed and contradicts the reported structure.
The model also changes who carries the diligence burden. Public agencies are rarely staffed to underwrite hundreds of early-stage companies. Private managers are paid to do that work, and their own capital or carried interest sits behind each decision. For a market where deal flow is thin, outsourcing selection to specialists is the reason the structure exists.
The $50 Million in Detail: What Is Confirmed and What Is Not
Early coverage of any development-bank proposal tends to blur the line between a plan and a transaction. Best Investment made the point bluntly on October 25, noting that the money is not approved and not disbursed. We sorted the available reporting into three buckets.
| Detail | Status | What reports say |
|---|---|---|
| Project name | Confirmed | Pakistan Entrepreneurship and Private Investment Catalyst Project |
| Fund size | Confirmed (proposed) | $50 million Fund of Funds |
| Investment structure | Confirmed | Invests in professionally managed venture capital funds |
| Target investors | Confirmed (intent) | Domestic and international private investors |
| Geographic scope | Confirmed | All of Pakistan, no specific locations identified |
| World Bank approval | Pending | Executive Board review expected in early 2027 |
| Funds approved, disbursed or invested | Unconfirmed | No report supports this |
| Direct investment in startups | Unconfirmed | Contradicts the reported structure |
| Named fund managers or portfolio companies | Unconfirmed | None disclosed |
| Launch date and return targets | Unconfirmed | None disclosed |
The takeaway: only the architecture is public. Everything that would let an investor price the program, such as manager selection criteria, fee terms, ticket sizes and exit horizons, is still blank. Dawn’s account is built on a single concept-stage document, and those documents change before a board sees them.
Why Pakistan’s Venture Market Needs Fund Managers
The World Bank has described Pakistan’s startup financing gap before, and its earlier research shows why a manager-led approach appeals to the institution. In a 2021 report titled Shining the Spotlight: Gender-Lens Investments Enable Women Entrepreneurs to Thrive in Pakistan, the bank wrote the following about the investor base, in the report published on the bank’s document site:
“By 2019, Pakistan had 24 incubators and accelerators and around 20 key investors, with many funds catering to early-stage startups.”
World Bank, 2021 report on gender-lens investment in Pakistan
Read that sentence carefully. Twenty-four support programs sat alongside only around twenty key investors. The pipeline of ideas had outgrown the supply of institutional money, and most of the funds that existed were aimed at the earliest stage. The same document made a second point about the mix of capital:
“Venture capitalists accounted for 22 percent of investments in Pakistan’s startup ecosystem, while angel investors accounted for 44 percent.”
World Bank, same report
Angels outweighed venture capitalists two to one in that snapshot. Angels write smaller checks and rarely have the reserves to follow on in later rounds. A company that outgrows its first backers needs a professional fund with a larger balance sheet. A fund of funds aims at exactly that missing layer, which is why the proposed design backs managers rather than companies.
Historical Context: A Decade of Incubators Before Deep Capital
Pakistan did not skip the early building blocks. It built incubators, accelerators and coworking spaces earlier than many peers. What lagged was capital that can carry a company from a promising product to a regional business. The World Bank’s own Pakistan Development Update from fall 2017 counted 12 incubation programs, five acceleration programs, nine coworking spaces and nine active investor groups or funds that year. It also recorded 23 reported early-stage investment deals in 2016, and cited a 2014 Invest2Innovate survey in which 84 percent of respondents found raising startup investment difficult or somewhat difficult.
The IFC, the bank’s private-sector arm, also entered the market years ago. It announced an investment in Sarmayacar in 2019 to support tech startups in Pakistan, according to its press release. The new proposal fits a pattern of the bank returning to the same gap with a different instrument.
| Year | Marker | Source |
|---|---|---|
| 2014 | 84% of surveyed founders said raising investment was difficult or somewhat difficult | Invest2Innovate survey, cited in World Bank 2017 update |
| 2016 | 23 reported early-stage investment deals | World Bank Pakistan Development Update, fall 2017 |
| 2017 | 12 incubation programs, 5 acceleration programs, 9 coworking spaces, 9 active investor groups or funds | World Bank Pakistan Development Update, fall 2017 |
| 2019 | 24 incubators and accelerators, around 20 key investors | World Bank, 2021 gender-lens report |
| 2019 | IFC announces Sarmayacar investment for tech startups | IFC press release |
| 2021 report | Venture capital 22% of investments, angels 44% | World Bank, 2021 gender-lens report |
| Oct. 22, 2026 | $50M Fund of Funds proposal reported | Dawn |
Nearly a decade separates the first data point from the latest proposal. In that span the ecosystem added programs and investors, but the bank still describes a long-standing market gap in innovation financing. That framing, taken from the project document as Dawn reports it, explains the push for a structural fix rather than another round of grants.
Where the Proposal Sits Among Pakistan’s Other Startup Programs
Pakistan’s startup financing market has become crowded in 2026, and readers can easily confuse the World Bank proposal with schemes that already operate. Best Investment published a side-by-side comparison on October 25. We rebuilt it below from that reporting, so treat the figures as that outlet’s account of each program.
| Program | Size or form | Status in October 2026 | Operator |
|---|---|---|---|
| Pakistan Startup Fund (original) | Equity-free grants, up to 30% of a round | Operational, taking applications | Government |
| Pakistan Startup Fund Phase 2 | $10M now, targeting $25M to $50M | Announced Aug. 28, 2026, partners not finalised | Government, via an international fund manager RFP |
| SECP Venture Capital Bill 2026 | Regulatory framework, not capital | Draft legislation | SECP |
| Alfalah Investments and LMKR angel fund | Size undisclosed | Announced Dec. 2025, private vehicle | Alfalah Investments and LMKR |
| World Bank Fund of Funds | $50M (proposed) | Awaiting Executive Board review, early 2027 | World Bank and Government of Pakistan |
Best Investment points out that four of the five already exist in some working form. Only the Fund of Funds is still a document waiting for a board meeting. The outlet also notes that Phase 2 named the World Bank as a future partner in August, so the new project may be the formal version of that relationship rather than a separate pot of money. That reading is the outlet’s inference, not a confirmed link.
Small checks still dominate the early end of emerging-market venture. A $300,000 pre-seed round such as the one covered in our report on INVE’s pre-seed raise from Outliers VC shows the ticket size a first-time founder in a developing market often plays for. A fund of funds does not write that check. It backs the manager who does.
The IFC Track: A Parallel Conversation on an Entrepreneur Fund
The Dawn story is not the only recent signal from the World Bank Group. On October 6, 2026, Business Recorder reported that Pakistan and the IFC had advanced plans for a fund to support entrepreneurs and startups. The meeting brought together Finance Minister Muhammad Aurangzeb and Simon Andrews, the IFC’s director for Pakistan, Afghanistan, Kyrgyz Republic, Tajikistan and Turkmenistan.
According to the statement the paper cited, IFC representatives briefed the minister on progress toward establishing a fund for entrepreneurs, being developed with relevant stakeholders. The same meeting covered affordable housing, agricultural finance through the IFC’s AgriConnect initiative, and public-private partnerships in the water and power sectors. The minister stressed the government’s focus on entrepreneurship, SMEs and mobilising private capital.
Whether that IFC fund and the World Bank Fund of Funds are the same vehicle is not established in the reporting we reviewed. The Business Recorder piece gives no dollar figure, and Dawn’s account does not mention the IFC. We treat them as related conversations inside one institutional family, and we avoid merging them. Readers tracking the story should watch whether later documents link the two.
The Early 2027 Timeline and What Board Approval Would Mean
The World Bank Executive Board is expected to consider the project in early 2027, only a few months away. Approval is a gate, not a finish line. A positive vote authorises the project and its financing terms. It does not place $50 million in the hands of venture managers the next morning.
Best Investment offers an editorial estimate that a realistic first disbursement looks more like late 2027 or 2028, based on the pattern it says multilateral institutions follow with new vehicles. That figure is the outlet’s judgment, and neither the bank nor the government has published a deployment schedule. We repeat it only as a planning caution.
Several steps normally sit between a board vote and the first manager commitment. The government must finalise legal and governance arrangements for the vehicle. Selection criteria for managers have to be published. Candidate funds then need time to raise matching capital from other investors. Each step can slip, and a program that depends on private co-investors is sensitive to the investor mood at the time it launches.
Market Impact for Founders and Local Fund Managers
The nearest-term effect is on fund managers, not founders. A credible anchor commitment from a World Bank-backed vehicle can help a first-time manager close a fund, because other limited partners often want a respected institution in the cap table. Managers building a thesis now have a reason to prepare documents, track records and compliance processes ahead of any call for proposals.
Founders feel the effect later and indirectly. Money flows from the Fund of Funds to managers, then from managers to companies, so any lift in startup funding arrives after two fundraising cycles. In the meantime, rounds will keep closing the way they do now. Seed deals get tracked closely and often lack confirmed follow-ons, as our look at the Strawberry browser’s $6M seed with no confirmed Series A shows. A thinner investor base, as the World Bank’s own data suggests, leaves Pakistani founders with fewer follow-on buyers still.
International investors are the second audience. The stated goal of attracting foreign private capital suggests the bank wants the vehicle to lower the perceived risk of a market many global funds treat as a minor allocation. A fund of funds can package that exposure into a diversified entry point managed by locals who know the regulatory terrain. Nothing in the reporting says which foreign investors, if any, have shown interest.
What Software and Developer-Tools Founders Should Watch
The reporting does not name target sectors, so no one can say software will get a set share. Fund managers choose their own focus, and many early-stage venture funds back software because it needs little physical capital. Founders building developer tools, SaaS products and AI-assisted software are therefore natural candidates for the managers this vehicle could eventually back.
Technical teams can prepare in practical ways. Clean metrics, audited accounts and documented IP ownership shorten diligence for any institutional investor. Product engineering discipline matters too. Our walkthrough of Cursor Plan Mode and its edit drift checker covers one way small teams keep AI-generated changes under control, and diligence teams increasingly ask how startups govern such code. For more developer-focused coverage, see our software category.
One caution applies. Sector priorities have not been fixed in the reporting, so any list of favoured industries is speculation. Our read is that software is well placed in a manager-led model, but that is analysis rather than a confirmed feature of the World Bank proposal.
How Pakistan Compares With Other Emerging Startup Markets
Development lenders and governments in many emerging markets have used indirect investment structures to seed venture ecosystems. The common logic is that grants fund activity while manager-led capital funds growth. We are not citing program-specific numbers for other countries here, because the reporting behind this story does not compare them.
A useful regional contrast comes from Africa. Our report on Nigeria topping Africa’s startup funding at $635 million shows how a market with a deep pool of investors can look next to one still building that base. Pakistan’s reported gap in institutional capital explains why the bank chose a vehicle aimed at manufacturing investors rather than only funding deals.
- Government grant: a public agency picks the companies. Strength: fast, equity-free support for early teams. Limit: hard to scale selection and follow-on capital.
- Angel pool: angels or a pooled vehicle pick the companies. Strength: quick small checks and mentoring. Limit: limited reserves for later rounds.
- Venture fund: professional managers pick the companies. Strength: diligence, board support and follow-ons. Limit: needs enough limited partners to close.
- Fund of funds: the vehicle picks the managers, who pick the companies. Strength: builds many funds with one commitment program. Limit: slow to deploy and dependent on manager quality.
The list is our summary of how these models generally differ, not a ranking from the World Bank. Pakistan already has the first two in operation and the third in a thinner form. The proposal targets the fourth row, which exists to strengthen the third.
Risks and Open Questions
Several questions remain open, and the reporting answers none of them. We list the ones that will matter most once more documents surface.
- Governance: who sits on the investment committee, and how conflicts of interest are handled.
- Manager selection: whether the call for managers is open to first-time teams or favours established names.
- Co-investment rules: how much private money each manager must raise alongside the vehicle.
- Regulation: how the draft SECP Venture Capital Bill 2026, described by Best Investment as draft legislation, shapes fund structures and taxation.
- Returns and exits: how return targets and exit horizons are set. No targets have been disclosed.
- Timeline risk: the early 2027 board review could move, and approval does not fix a launch date.
A further risk is expectation management. Headlines about $50 million can raise hopes among founders who think they can apply directly. The reported design says they cannot. Misunderstanding that point could send teams chasing a program that will only ever reach them through a fund manager.
Five Predictions for the Next 12 Months
These are our analytical calls, not reported facts, and we flag the confidence level on each.
- The board review lands in the first half of 2027 (moderate confidence). The bank has pointed to early 2027, and project timelines at multilateral lenders tend to hold more often than they slip by a full year. A delay of a few weeks would not surprise us.
- Manager selection becomes the main news event (high confidence). Once the project is approved, the criteria for choosing venture managers will decide who benefits. Expect local and regional teams to start positioning well before any formal call.
- The SECP bill and the Fund of Funds move in step (moderate confidence). Fund structuring and tax rules affect any private manager, so the regulatory track will draw as much attention as the World Bank vote.
- Coverage separates Phase 2 from the World Bank vehicle (high confidence). Outlets that blurred the two programs will correct course as documents clarify roles, and the IFC conversation will be folded into the picture.
- Software and fintech-adjacent managers pitch first (low to moderate confidence). Sector priorities are unset, but these categories need less capital per company and fit a manager-led pitch. We would not bet on the exact mix.
The strongest sign of progress would be a published selection framework with named evaluation criteria. A named first manager would be a close second. Until either appears, the proposal stays a design on paper.
Pakistan Fund of Funds: Frequently Asked Questions
What is the Pakistan fund of funds the World Bank proposed?
It is a proposed $50 million Fund of Funds under the Pakistan Entrepreneurship and Private Investment Catalyst Project, reported by Dawn on October 22, 2026. It would invest in professionally managed venture capital funds that back Pakistani companies.
Has the World Bank approved the $50 million?
No. The proposal still requires approval, and the World Bank Executive Board is expected to consider it in early 2027. No report supports the claim that the money has been approved, disbursed or invested.
Will the fund invest directly in startups?
Reports say it would not. The vehicle would put money into venture capital funds, and those funds would choose the startups. Any claim of direct startup investment is unconfirmed.
Who will manage the money?
That is not known. Reports do not name fund managers, portfolio companies, allocations, launch dates or return targets, so treat any specific names as unverified.
Which parts of Pakistan would benefit?
The project is intended to cover all of Pakistan. Dawn reports that no specific locations had been identified at the concept stage.
Is this the same as Pakistan Startup Fund Phase 2?
Best Investment describes them as separate. It reports Phase 2 as a government program announced on August 28, 2026, with $10 million now and a target of $25 million to $50 million, while the World Bank vehicle is a $50 million proposal awaiting board review. The outlet suggests the two may be related, but that link is not confirmed.
Can founders apply for this money now?
No. The vehicle is not approved, and by design it reaches founders only through venture funds. Founders looking for capital today should look at programs already operating, such as the original Pakistan Startup Fund grants described by Best Investment.
What should readers watch next?
Watch for the Executive Board decision in early 2027, for any published manager selection criteria, and for progress on the SECP Venture Capital Bill 2026. Also watch whether later documents tie the World Bank project to the IFC’s work on a fund for entrepreneurs.
