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Venture capital is starting to return to Pakistan. In the latest round, mobility startup Buscaro raised $2 million last week, with a total funding of $3.5 million.
The round is led by Daman Investments in the UAE, with participation from US/Saudi graphical capital, epic narcotics in New York, Wahed Ventures in the UK, accelerating boom in Aga Khan Development Network and a mix of angel investors.
Buscaro, which offers shared commuting services, was born in late 2022 – a period when it is not very favorable for mobility startups. The world emerged from the pandemic, the Russian-Ukrainian war triggered a global crisis, Pakistan ruled from the flood, and the local travel sector collapsed. Air freight and SWVL folded, Uber quits Pakistan. The hottest space suddenly became an area that couldn’t do it.
At that time, former SWVL general manager Maha Shehzad launched the Buscaro-the day after SWVL closed, putting its first bus on the road.
From then on, the journey has never been stable. Ms. Shehzad said she received a game-changing $160,000 in her first year of operation, putting the fledgling startup on its current growth path. Today, Buscaro claims to be processing more than 900,000 monthly bookings and is expected to earn $8.6 million in annual revenue from December to December. But expanding the scale has brought about my own financial headaches.
Financing difficulties
“Equity financing is my least problem – for most founders,” Ms. Shehzad said. “Working capital is the main bottleneck.”
Buscaro operates Asset Light, a technology-first model: it does not own a vehicle, is not in a joint space cooperation, and has no land or collateral to borrow. Its top line is too big to be eligible for SMEs, and even if so, the loan cap of Rs 5 million will be too small. As a result, Buscaro was forced to turn to the business for daily finance.
“Start-ups have increased their equity to fuel high octane growth. It is ridiculous for us to raise it for working capital,” Ms. Shehzad said. Although it has been fully merged and has a strong credit history, formal clients are willing to provide guaranteed formal clients and credit lines from major fuel companies such as Total and Parco, but Buscaro is still working to finance its invoices for the technology-based private sector.
Correct and correct
So, what are Buscaro doing differently, and other places with deeper pockets fail?
Oil prices, economic downturns and a sharp rise in global financing have made it impossible to maintain business models such as air freight and SWVL that earn profitability growth through subsidized services. When the economy shifts globally, venture capitalists no longer distribute blank checks to acquire expensive customer acquisitions; instead, they ask startups to prioritize early revenue growth.
However, according to Buscaro, it gained positive unit economics from the start – simply put, each ride cost can provide income from the fare. Although its fare is related to fuel prices, shared commuting is still cheaper than traveling alone.
Unlike his ex, Buscaro has not subsidized its per capita yet. This balance is achieved by driving aggregation in two vertical industries: business-to-business (B2B) and business-to-business-to-consumer (B2B2C).
On the B2B side, Buscaro cooperates with institutions. Sometimes, the employer’s commuting costs as an employee are a percentage of the commuting costs; in other cases, if the employee pools enough demand, Buscaro offers the option of shared transportation.
For B2B2C, it can work with facilitators such as housing society or co-reading spaces, which can aggregate commuters at pickup points. This approach cuts customer acquisition costs and creates positive unit economics. Onloard with 80 customers, about 60% or Buscaro’s business comes from B2B and 40% comes from B2B2C, including its parent-facing app.
The app also opens a niche: School commuting. Decades ago, school trucks were everywhere. Nowadays, parents are scrambling to find reliable options. Buscaro’s app enables parents and schools to track rides in real time and provides manual check-out and check-out options for minors. Ms. Shehzad believes that this is a problem and it has great potential – not only in Pakistan but throughout the GCC, especially for working mothers.
Start the combustion
Not that Buscaro is profitable. Currently, it burns about $15,000 a month, with an EBITDA of -2.8% (earnings before interest, taxes, depreciation and amortization) – almost entirely due to additional technical expenditures. Ms. Shehzad mentioned the 36% interest rate faced by Buscaro, and debt financing alone would increase to huge expenses, thus making the bottom line more deeply redo – an issue that ultimately led to its previous squad withdrawal.
But demand exceeds supply. Ms. Shehzad claimed: “My pipeline is five to six times more than I can do now.” The logic seems simple: Sharing commuters outside of public transportation will always be the cheapest way to move people. But to make the most important thing stand out from the red, the company will need to grow at a high line of 28%.
From non-air-conditioned 80-seat buses to air-conditioned corolla, Buscaro offers cross-price options, more than most alternatives with average converged fares per ride. It currently operates in Karachi, Lahore, Islamabad and nearby cities.
Buscaro claims that safety is also a difference. Since its inception, Buscaro has reported nearly 19 million bookings since its inception, saying zero reports of harassment cases. The nature of shared rides, where 70% of passengers are women and children, inherently reduces the risk, although the company also makes drivers fat.
While talking to it dawnMs. Shehzad has a simple advice for startups struggling to raise funds: Don’t get stuck in FOMO. “A few years ago, everyone was eager to get into Finestech. Now it’s AI. Instead, it’s solving boring problems on the ground – and doing that while keeping the unit positive.”
