COLABS, a Lahore-based startup that provides flexible workspaces to SMEs, entrepreneurs and freelancers, announced on Friday that it has raised $3 million in a seed round.

The latest investment paves the way for COLABS to expand its presence across major cities in Pakistan, as it looks to "knit together a community of 100,000 entrepreneurs and freelancers in the country, starting with 10,000 members within the next two years".

The round was led by Indus Valley Capital, Zayn Capital and Fatima Gobi Ventures, the company said in a statement.

“It is the first time these three leading Pakistan-focused VCs are investing together in a startup,” said the company. The funding round also saw the participation of Shorooq Partners, Kinnow Capital, Muir Capital, Sai Ventures, and some key angels, including Turner Novak, William Hockey, and Teddy Himler.

Founded in 2019 by Omar Shah, a former private equity and venture investor, and twin brother Ali Shah, COLABS started as a co-working platform with a facility in Lahore. It has since evolved to offer several additional services and tools to entrepreneurs and freelancers, including educational boot camps and a SaaS platform for back-office solutions such as business incorporation, talent sourcing and management, payroll processing and legal and tax compliance.

At present, COLABS has a partner network of 100+ organisations involved in taking initiatives to boost the Pakistani startup ecosystem’s growth, it says.

Aatif Awan, founder and Managing Partner of Indus Valley Capital, said, “We’re thrilled to partner with the COLABS team to help them build the leading platform and community that will power the growth of Pakistani tech across startups, freelancers and global companies expanding into Pakistan.”

Omar Shah, co-founder and CEO of COLABS, said, “We had founded COLABS to help accelerate the Pakistani startup ecosystem and we’re very proud of what we have achieved in a little over three years. Even though we’re mainly seen as a coworking operator, what we have built is a solid foundation to make it easy for freelancers, startups, and even international companies entering Pakistan, to start and manage their businesses.”

Omar said the capital raised will allow the startup to offer software-based solutions and productised services.

Talking to Business Recorder, Alina Dar, Growth Lead at COLABS, said that the funding will be utilised to fuel the company’s national expansion.

“We aim to expand into Islamabad and Karachi, and open a new site in Lahore,” said Dar, adding that the company is also looking to enter other cities as well.

The startup ecosystem of Pakistan has seen a massive boost, grabbing the interest of both local and international investors.

Dar believes COLABS could emerge into a unicorn - a privately held startup company valued at over $1 billion. She added that between 2024-25, some 5 to 6 unicorn companies would surface in the country.

Earlier this week, B2B ecommerce startup Jugnu announced it has raised $22.5 million in the form of initial strategic investment from MENA-based Sary.

The country attracted a record amount of investment in 2021 with 81 deals, securing roughly $350 million, according to Invest2Innovate (i2i). The amount raised is more than 5x of what was raised in 2020 i.e. $65 million.

Dar said the ongoing startup boom will continue in the coming years, as the ecosystem is currently witnessing a flurry of new entrants, especially in the fintech segment.

The story was originally published in Business Recorder on March 25, 2022.