SIFC, SECP Told to Revise Pakistan Venture Capital Bill
The federal government has directed the Special Investment Facilitation Council (SIFC) and the Securities and Exchange Commission of Pakistan (SECP) to revise the draft Pakistan venture capital bill, after a cabinet committee found that the current rules hold back investment in startups.
The decision was taken at the 16th meeting of the Cabinet Committee on Regulatory Reforms (CCoRR), which reviewed the regulations that govern Pakistan’s venture capital industry. The committee asked SIFC and SECP to consult private-sector representatives and bring back a revised draft.
The committee pointed to several hurdles. It said investors face uncertainty over licensing requirements, high taxation, and difficulty in moving foreign investors’ funds out of Pakistan. It also flagged double taxation, with tax applied at both the venture capital fund level and the investor level.
SIFC and SECP will now review the proposed law together and consult industry stakeholders before they finalise the revised draft. The committee will take up the revised bill at its next meeting.
Why the Pakistan venture capital bill needs changes
Much of Pakistan’s venture capital activity is still structured offshore, which adds cost and complexity for funds that want to invest in Pakistani startups. A clear domestic framework would let funds register and operate inside Pakistan, and it could draw in institutional investors that stay away from offshore structures.
The funding gap is clear in the latest figures. Pakistani startups raised $74.7 million across five deals in the third quarter of 2026, nearly five times the $15.3 million raised a year earlier, according to a quarterly ecosystem report carried by Nukta. But $68 million of that total came from a single deal, Fasset’s Series C round, which valued the stablecoin-powered neobank at $1 billion. Without Fasset, startups raised only about $6.7 million in the quarter.
Funding in the first nine months of 2026 reached $133.7 million across ten deals, the report said. The report added that the figures mask continued scarcity of early-stage capital, even though a handful of companies have attracted large international rounds.
The ecosystem has still had bright spots. Pakistani startup rLabs recently won an award at a Silicon Valley summit, showing that local founders can compete abroad. The Pakistan Stock Exchange is also emerging as a possible exit route for growth-stage startups, and Islamic SME lender Adalfi raised Rs652 million through an IPO.
The government has also moved on a separate track. It has announced a $10 million fund under the second phase of the Pakistan Startup Fund, and it is engaging the World Bank, the International Finance Corporation and the Asian Development Bank on a larger fund that could make $25 million to $50 million available to startups over the next several years. The first phase of the fund gives startups matching grants of up to 30 per cent of their latest funding round.
What SIFC and SECP must do next
The committee directed SIFC and SECP to review the draft law jointly and to consult relevant industry stakeholders before finalising it. The revised bill will go before the committee at its next meeting.
SIFC is the civil-military body set up to attract foreign investment into Pakistan, while SECP regulates companies and capital markets. The two bodies will need to settle how funds are licensed, how they are taxed, and how foreign investors can repatriate their money.
SIFC is already involved in investment work in the provinces, including a push to revive investment in Khyber Pakhtunkhwa. It has also backed investment drives in other sectors, including the Pakistan Minerals Investment Forum.
The committee also reviewed progress on seven approved regulatory reform packages. It directed SIFC to contact the relevant regulators and make sure pending reforms are carried out within their set timelines.
What happens next
The revised draft goes back to the committee first. Only after it clears that stage can it move towards becoming law. For startups, the test will be whether the final text fixes the tax and licensing problems that investors have raised, and whether funds can be set up in Pakistan without routing through offshore structures.
Frequently asked questions
What is the Pakistan venture capital bill?
It is a draft law that would set the rules for venture capital funds in Pakistan, covering licensing, taxation and how foreign investors can move their money in and out of the country.
Why is the bill being revised?
The Cabinet Committee on Regulatory Reforms found hurdles in the current rules, including uncertainty over licensing, high taxation, difficulty in repatriating foreign investors’ funds, and double taxation at both the fund and investor levels.
Who will revise the bill?
The Special Investment Facilitation Council and the Securities and Exchange Commission of Pakistan will revise it jointly, after consulting private-sector representatives and industry stakeholders.
How much did Pakistani startups raise in the third quarter of 2026?
Pakistani startups raised $74.7 million across five deals in the third quarter of 2026, according to a quarterly ecosystem report. But $68 million came from Fasset’s Series C round alone, and startups raised only about $6.7 million without it.
What is the Pakistan Startup Fund?
It is a government programme that supports startups. Its first phase gives matching grants of up to 30 per cent of a startup’s latest funding round. A second phase, with a $10 million fund announced, will invest at the fund level through a privately managed fund.
