Why Did Airlift Shut Down?
The story of Airlift’s rise and fall contains valuable lessons for entrepreneurs everywhere. As someone who’s built startups and now invests in them, I find Airlift’s journey particularly fascinating – a rocket ship that soared high before crashing back to earth.
Introduction: Pakistan’s Shooting Star
Imagine building something from nothing, watching it grow into your country’s most promising startup, raising nearly $110 million from top investors, and then… shutting everything down in just three years.
That’s what happened with Airlift, once Pakistan’s brightest tech hope.
Founded in 2019 as a bus-hailing service (think Uber for buses), Airlift later transformed into a quick commerce platform promising grocery deliveries in 30 minutes or less. For a brief moment, it seemed like Pakistan had produced its first tech unicorn – a privately held startup valued at over $1 billion.
Until July 2022, when everything came crashing down.
The founder’s heartbreaking announcement shocked Pakistan’s tech community: “While the global recession and recent downturn in capital markets has affected economic activity across the board, it has had a devastating impact on Airlift and rendered its shut-down inevitable.”
How did things unravel so quickly? As an entrepreneur and investor who’s seen many startups rise and fall, I believe Airlift’s story offers crucial warnings and wisdom. Let’s dive in.
The Airlift Origin Story
Airlift began with a clear problem: Pakistan’s crowded, unreliable public transportation. The four co-founders – Usman Gul, Ahmed Ayub, Awaab Khaakwany, and Meher Farrukh – created a platform allowing commuters to book seats on premium buses that followed fixed routes.
The idea clicked. By late 2019, Airlift was operating hundreds of buses across Lahore and Karachi, carrying thousands of passengers daily.
Early success brought investment. In just four months after launch, Airlift secured $2.2 million in seed funding led by Indus Valley Capital. Soon after, the company raised a $12 million Series A round – at the time, the largest Series A in Pakistan’s history.
Everything changed when COVID-19 hit in early 2020.
Pivoting During COVID-19
When pandemic lockdowns emptied public transportation overnight, Airlift’s bus business became instantly unsustainable. While many startups would have folded, Airlift’s team made a bold decision: completely reinvent the company.
In just two weeks, they transformed from a bus-hailing service into a quick commerce platform delivering groceries, fresh produce, medications, and household essentials in 30 minutes or less.
This pivot showed remarkable entrepreneurial agility. As lockdowns kept people home, demand for home delivery skyrocketed. Airlift opened dozens of “dark stores” (small warehouses in residential areas) across major Pakistani cities, enabling rapid delivery of thousands of items.
The timing seemed perfect. Quick commerce was booming globally with players like Gorillas, Getir, and GoPuff raising billions of dollars.
Record-Breaking Funding Rounds
Airlift’s transformation attracted serious investor attention. In August 2021, the company announced a $85 million Series B round led by Harry Stebbings’ 20VC with participation from Josh Buckley, Sam Altman, and others. This represented the largest single private funding round in Pakistan’s startup history.
Here’s how Airlift’s funding journey progressed:
| Funding Round | Amount | Date | Lead Investors |
|---|---|---|---|
| Seed | $2.2 million | July 2019 | Indus Valley Capital |
| Series A | $12 million | November 2019 | First Round Capital |
| Extension | $10 million | March 2020 | – |
| Series B | $85 million | August 2021 | 20VC |
With this capital, Airlift began expanding internationally, launching operations in South Africa. The company was reportedly valued at $275-350 million and seemed destined to become Pakistan’s first tech unicorn.
Founder Usman Gul announced ambitious goals: reaching $1 billion in annualized revenue by 2022 and expanding to 15 new markets.
But beneath the celebration lurked serious problems.
Warning Signs Behind the Growth
Looking back, several red flags indicated trouble despite Airlift’s impressive fundraising:
1. Unsustainable Unit Economics
Quick commerce is notoriously difficult to make profitable. The model requires:
- Expensive real estate in prime locations
- Significant inventory investment
- Costly delivery infrastructure
- Huge discounts to attract customers
Airlift was burning cash rapidly without proving it could become profitable even in its most mature markets.
2. Expansion Without Consolidation
Rather than perfecting operations in core markets, Airlift expanded aggressively. When you’re still figuring out your business model, geographic expansion multiplies problems instead of solutions.
3. Overreliance on Fundraising
Airlift operated as if capital would always be available. The company maintained a high cash burn rate assuming future funding rounds would cover losses.
4. Global Comparisons Without Local Context
Investors valued Airlift using comparisons to quick commerce startups in Europe and the US. However, Pakistan’s significantly lower purchasing power meant Airlift couldn’t charge delivery fees or margins comparable to Western counterparts.
The Perfect Storm of Challenges
By early 2022, several external factors converged to create an impossible situation:
Global Tech Downturn
The tech funding environment changed dramatically. After years of abundant capital and growth-at-all-costs thinking, investors suddenly demanded profitability and sustainable unit economics. Global quick commerce companies that had raised billions began struggling, with many shutting down or drastically reducing operations.
Rising Inflation
Pakistan experienced severe inflation, with food prices rising over 17%. This squeezed Airlift in two ways: higher procurement costs and customers becoming more price-sensitive.
Political Instability
Pakistan underwent significant political turmoil in early 2022, culminating in the ousting of Prime Minister Imran Khan in April. This uncertainty further weakened the Pakistani rupee and damaged investor confidence.
Failed Funding Round
According to reports, Airlift was close to securing another $40 million in funding, but the deal fell through at the last minute as investors grew concerned about global economic conditions and Airlift’s path to profitability.
Key Mistakes That Doomed Airlift
As an entrepreneur and investor myself, I see several critical errors in Airlift’s journey:
Prioritizing Growth Over Unit Economics
Airlift focused intensely on growing gross merchandise value (GMV) and expanding to new markets without solving fundamental business model issues. In quick commerce, getting delivery times under 30 minutes while achieving profitability is incredibly challenging.
Taking On Too Much Capital Too Quickly
While raising $85 million seemed like a victory, it created enormous pressure to grow exponentially to justify the valuation. This pushed Airlift to expand prematurely and spend aggressively.
Lack of Financial Discipline
According to former employees, the company maintained lavish offices and high overhead costs. When funding dried up, Airlift didn’t have enough runway to adjust its business model.
No Clear Path to Profitability
Even in its most mature markets, Airlift never demonstrated that customers would pay enough to make the model sustainable without subsidies.
Lessons for Other Startups
Airlift’s collapse offers valuable wisdom for entrepreneurs:
1. Fundraising Isn’t Success
Many entrepreneurs and media outlets treat fundraising as the ultimate metric of success. But raising capital is just a tool, not an achievement in itself. Money without a viable business model just postpones failure.
2. Local Context Matters
Business models that work in the US or Europe don’t automatically translate to emerging markets. Pakistan’s economic realities, customer behaviors, and infrastructure challenges required unique solutions.
3. Focus on Unit Economics Early
A business must eventually make money on each transaction. Testing and proving unit economics in a small area before scaling widely would have given Airlift more resilience.
4. Build Runway for Tough Times
The most successful startups maintain enough cash reserves to weather unexpected storms. When funding environments change suddenly, having 18-24 months of runway provides crucial flexibility.
5. Consider Measured Growth
While “blitzscaling” works for some businesses, it’s extremely risky. Building more gradually with stronger fundamentals might have given Airlift a stronger foundation.
Impact on Pakistan’s Tech Ecosystem
Airlift’s collapse sent shockwaves through Pakistan’s emerging tech ecosystem:
Chilling Effect on Investment
In the months following Airlift’s shutdown, funding for Pakistani startups dropped significantly. Investors became more cautious, demanding clearer paths to profitability.
Brain Drain
Airlift had attracted some of Pakistan’s top tech talent. Many of these professionals left the country after the shutdown, seeking opportunities in more established ecosystems.
Damaged Perception
The failure of such a high-profile startup reinforced perceptions that Pakistan remains a challenging environment for tech businesses.
However, not all effects were negative:
Talent Redistribution
Former Airlift employees took their experience to other Pakistani startups, strengthening the overall ecosystem.
Reality Check
The collapse pushed other Pakistani startups to focus on sustainable business models rather than just fundraising.
Lessons Learned
The next generation of Pakistani founders now has a clear example of both what to do and what to avoid.
TL;DR
Airlift rose to become Pakistan’s most promising startup, pivoting from bus-hailing to quick commerce during COVID-19 and raising a record-breaking $85 million. However, unsustainable unit economics, premature expansion, overreliance on future funding, and external economic challenges led to its sudden shutdown in July 2022.
The collapse offers crucial lessons about prioritizing business fundamentals over growth at all costs and adapting global business models to local market realities.
Q&A
Q: Could Airlift have survived if they hadn’t pivoted from bus-hailing?
A: Possibly, but they faced an impossible situation with COVID-19. The bus business would have struggled during lockdowns, but they might have preserved capital and resumed operations later rather than entering the capital-intensive quick commerce space.
Q: Was Airlift’s failure unique to Pakistan or part of a global trend?
A: Both. While many quick commerce startups globally struggled or failed (Flink, Gorillas, Getir, GoPuff), Airlift faced additional challenges specific to Pakistan’s economic conditions and smaller market size.
Q: Who bears responsibility for Airlift’s failure – founders or investors?
A: Both share responsibility. Founders made critical strategic errors, while investors pushed for aggressive growth without ensuring sustainable fundamentals. However, ultimate responsibility always rests with founders who make day-to-day decisions.
Q: Could better timing have saved Airlift?
A: Timing certainly played a role. Had Airlift raised its $85 million a year earlier or built more runway, it might have weathered the downturn. However, the fundamental business model challenges would have eventually surfaced.
Q: What’s the future for quick commerce in emerging markets like Pakistan?
A: Quick commerce will likely survive but in modified forms. Successful models will have narrower product selections, focus on high-margin items, charge realistic delivery fees, and expand more gradually.
Startup Failure Risk Quiz
Are you building a sustainable business or the next Airlift? Take this quiz to find out.
- Do you know the exact unit economics of your core offering?
- Yes (Safe)
- No (Risky)
- Could your business survive if you couldn’t raise more money for 18 months?
- Yes (Safe)
- No (Risky)
- Are you expanding to new markets before proving profitability in existing ones?
- Yes (Risky)
- No (Safe)
- Is your growth strategy dependent on offering heavy discounts or subsidies?
- Yes (Risky)
- No (Safe)
- Have you adapted your business model specifically for local market conditions?
- Yes (Safe)
- No (Risky)
Scoring:
- 0-1 Risky answers: Low failure risk – You’re building on solid foundations!
- 2-3 Risky answers: Moderate failure risk – Review your fundamentals and make adjustments.
- 4-5 Risky answers: High failure risk – You’re showing several warning signs that doomed Airlift. Time for serious strategy changes.
The fall of Airlift reminds us that entrepreneurship isn’t just about bold visions and big funding rounds. It’s about building businesses that can stand on their own two feet, generating real value for customers while creating sustainable economics. As Pakistan’s tech ecosystem continues to evolve, Airlift’s lessons will hopefully guide the next generation of founders toward more durable success.
