There is a new unicorn in town, and its name is Airlift. Profit has confirmed that the erstwhile mass transit startup will soon be announcing the $1 billion valuation. This announcement will come with another announcement that the startup has managed to raise another successful round – $350 million (approximately Rs 63 billion) this time. Add the previous $85 million they raised and their funding alone accounts for more than half of what has been raised in total by Pakistan’s startups this year.  

As they sit poised to become Pakistan’s first unicorn tech startup that derives the bulk of its value from Pakistan operations, it is worth looking at how Airlift got here. In the past three years, Airlift has been conceived, been launched, raised money, been brought to its knees by Covid-19, been reimagined during the pandemic, has raised a record breaking $85 million in series B funding, and is now on the brink of announcing a billion dollar valuation and a second record breaking series of funding.  

This journey has been celebrated, questioned and scrutinized. Back when they raised their initial $85 million in funding and declared a valuation of $275 million, the market was rife with rumours that there was something amiss here. Industry sources were suspicious, and soon enough rumours were abound. The scrutiny could easily have been the result of competitors being alarmed at Airlift’s significant gains which could be detrimental to their own business. 

At the core Airlift is very much a story of success. That is because they have played the startup game well and have consistently managed to stay relevant and keep the money rolling in. There are, however, certain aspects of the startup playing field in Pakistan (and elsewhere) that mean there is often less to this success than meets the eye.  

Beginning with their great pivot from mass-transit to grocery delivery, and going all the way down to their record valuations, this is the brief yet very telling history of Airlift. Our main characters are Usman Gul, the dedicated CEO of Airlift and Aatif Awan – the venture capitalist who took a huge gamble and now wants to see it pay off. This is the story of Airlift and all it stands for.  

The evolution of Airlift 

In late 2018, Usman Gul and one mysterious Daniyal Khan conceived the idea of Airlift – a mass transit system to provide an alternative to dilapidated public transportation. For the first six months, Securities and Exchange Commission of Pakistan (SECP) records show Daniyal Khan was the CEO but very little is known about him. The man is a ghost with no public profile, no mention in Airlift’s media coverage, and no Linkedin profile. After this initial period, Usman Gul took over and there has been no looking back since.  

Airlift’s model was simple – they would hire privately owned buses on rent and run them through selected routes all over the cities they were operating in. The users would book their seat on these buses through the app, arrive on time at designated bus stops, and then be taken to the bus stop closest to their destination –  you know, how buses work but through an app. 

The idea gained some early momentum, and vast fleets of privately owned buses with the Airlift branding on them started popping up everywhere in Lahore and Karachi. Airlift offered five free rides to new customers, and during office hours these buses ran filled with salaried passengers and students commuting to their universities. 

Things really started heating up around the summer of 2019. In July, Airlift got its first taste of competition when the Egyptian company Swvl entered Pakistan. Swvl, which has now been acquired in a $1.5 billion SPAC (Special Purpose Acquisition Company) deal decided to launch decentralised mass transit operations in Egypt back in 2017. It entered Pakistan after raising $42 million in June of the same year. After the SPAC deal, SWVL is somebody else’s headache now. Why it’s a headache comes below.

Swvl had raised $30 million in November 2018 and $8 million in April 2018. While Swvl did not have any immediate plans to enter Pakistan, it was probably because of Airlift’s presence that they wanted to enter the market early and not let Airlift cement its feet and let Airlift threaten SWVL in other geographies if it grew in Pakistan. The next month, in August 2019, Airlift got its first public validation as a serious business that had investors’ attention when the startup announced a seed round of $2.2 million (approximately Rs347 million) – then Pakistan’s largest seed round with participation from international investors, one of which was Aatif Awan. 

Aatif is a former Linkedin executive turned investor who launched his own fund by the name of Indus Valley Capital (IVC) to invest in startups primarily in Pakistan. A little over two months down the line, Airlift scored $12 million (approximately Rs1.8 billion) in Series-A financing – again Pakistan’s largest Series-A funding round at that time, giving an impetus to the public perception that mass-transit was a serious business. The eyes were turning and international investors had started looking with interest at Pakistan. In the times to come, Airlift’s big rounds would get investor attention on the rest of Pakistani startups as well. 

The round was announced in the beginning of November 2019. By October, as per numbers available with Profit, Airlift had crossed the threshold of 10,000 bus bookings per day, generating annualised revenue of $1.42 million. Subsequent injection of $12 million Series-A financing pushed bookings to over 17,000 per day in November, over 22,000 per day in December and over 33,000 per day in January, having grown over 200% between October and January. 

The strategy at play here is called Blitzscaling. Derived from the German war strategy in World War 2 known as ‘Blitzkrieg’ meaning ‘lightning war’ – the term was a portmanteau coined by LinkedIn founder Reid Hoffman. The core value of the strategy is spending money to gain customers by giving incentives and cheap rates. Essentially, you are burning lots of cash, fast, to attract users to the platform in the hopes that your product will become essential to them, and competition will not be able to keep pace. Later on, when Airlift would make its quick commerce pivot, they would use the same technique. Even though this would be the technique that got their mass-transit model in trouble in the first place. 

Blitzscaling makes sense on some level since it does result in rapid growth. And Airlift’s investor, Aatif Awan, was one of the key people in charge of implementing Reid Hoffman’s blitzscaling ideas at LinkedIn. But this growth then needs to be backed by solid business fundamentals and an unwavering resolve.  

While Airlift was growing and showing great numbers, the problem here was that these bookings were not happening naturally. With competition heating up from Swvl and customer acquisition a constant expense, keeping up the growth and keeping Swvl at bay was coming at the expense of a cash burn of over $1 million minimum each month. Staying true to Blitzscaling, Airlift investor Aatif asked for more money in an email to investors. 

In an update to investors sent on January 29, 2020, Airlift told its investors that “Airlift’s current cash runway goes until mid June, giving the company 4.5 months to secure additional capital.”

Airlift was promising its investors that they were about to strike gold if they just kept up their effort and belief for a bit. By February, the startup would have scaled to 41,000 bookings for buses, aiming to hit 50,000 rides by March. By the start of March 2020, the company had a little over $5 million in its purse which gave it a runway till June 2020.

In a scenario where Covid-19 had never happened, Airlift was going to continue operating as it was. And why would it not? Things were looking up after all. Weren’t they? 

What investors didn’t necessarily know 

There was nothing wrong with Airlift asking for more money from investors. There was also nothing wrong with them presenting a rosy picture. To be fair, Airlift must have thought that they were going to win the battle. What they did not tell investors, and understandably so, was that the horns they had locked with Swvl were now digging into their skull and causing serious headaches. 

As mentioned earlier, the main motivation for Swvl to enter Pakistan was to not allow competition to brew in another country in the region. If Airlift had been allowed to operate freely in Pakistan, it could one day have challenged Swvl in its international expansion plans. So when Swvl raised $42 million in June 2019, the first thing it did was use some of that funding to enter Pakistan in July 2019. Sources that have worked with Swvl told Profit that they entered Pakistan in a rush to stop Airlift from possibly becoming big enough to challenge it in other geographies. This meant they entered Pakistan in a bit of a hurry, without realising that Airlift was not sure it would really break through in Pakistan, and international expansion was not even a distant dream for them. 

At this point the major cost in Airlift’s operations was on the supply side. Both Airlift and Swvl were renting out buses, and they kept raising how much they were willing to pay bus owners  to try and undercut each other. In the last month before shutting down because of the pandemic, January 2020, Airlift burnt $1.54 million in cash to keep their operations afloat. Out of this, an overwhelming $1.12 million was spent on the buses and their maintenance. 

Swvl did much the same, and both companies found themselves spending money in the hopes that the other would blink first and the space would be open for them to do whatever they wanted. No one was willing to bring their cost down just yet. And that is when they were both saved by the bell. 

Covid-19 to the rescue? 

Right at the precipice of destruction, a light emerged. Airlift and Swvl were two warriors engaged in an epic battle. Exhausted, wounded, and unable to turn away because of their egos, they suddenly found themselves with an honourable way out – a larger threat that required them to turn their attention elsewhere. Ferdowsi or Homer could not have s