July 13, 2022 (MLN): Airlift, Pakistan’s top startup, is shutting down its operations from today (Wednesday) amid the global recession.
The company announced the decision in a meeting yesterday, where the company informed their employees that it would be shutting down its operations in the country on Wednesday.
“While the global recession and recent downturn in capital markets have affected economic activity across the board, it has had a devastating impact on Airlift and rendered its shut-down inevitable,” the company said in a press statement issued on Twitter.
On July 12th, Airlift’s operations will shut down permanently. This has been an extremely taxing decision that impacts a large set of stakeholders and an emerging technology ecosystem, it added.
With the onset of the recession, Airlift was one of the first few companies in emerging markets to restructure business operations – “our response code included three adaptations: (i) an immediate reduction in headcount, (ii) shutting down operations across all expansion markets, and (iii) revision in platform configurations to ramp up monetization (i.e. introduction of higher prices and delivery fee).”
With the above adaptations, Airlift was able to achieve order-level profitability, maintain reasonable scale, and reduce financial burn by 66%.
As of July 2022, Airlift was about three months away from operating profitability (i.e. positive cash flow from operations), and about 6-9 months from company-level profitability (i.e. Free Cash Flow)
With the above developments in May, the company informed that it was planning a Series C1 financing round in which Airlift received tremendous support from the potential lead in opening doors to other investors to put together the round. First Round Capital, Indus Valley Capital, Buckley Ventures, 20VC and other investors agreed to participate in the round with sizable checks.
In early July, Airlift had a clear path forward to close the round – the Company pushed out documents for signatures to all participating investors.
However, last week, amidst rapidly deteriorating conditions in the global economy, several participants shared uncertainty in wire schedules and their disbursements – this ultimately meant that the Company’s capital requirements would not be met. Ultimately, the round was unsuccessful, the company said.
“With the above clarity, a complete shut-down was inevitable, Airlift could not risk leaving its employees unpaid or reneging from its commitments.”
The Board deliberated on this via multiple calls and ultimately decided to not assume the risk of leaving teammates unpaid. For our management team, and for the broader set of investors, the above became clear only on July 7th – a day before the Eid holiday in Pakistan, the company stated.
As a pioneering technology startup in Pakistan that had established a new precedent, Airlift’s success was viewed as a milestone for a burgeoning technology ecosystem in emerging markets.
Airlift was launched in 2019 as a mass transit service that operated an Uber-like service for buses in Pakistan. As the Covid-19 pandemic hit the country, Airlift scrapped its transit service and quickly pivoted to grocery delivery.
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