When the Covid-19 pandemic hit Pakistan in early 2020, Airlift, then a mass-transit startup that operated an Uber-like service for buses, was in a tight spot. “The big question at the time was: Do we keep operating? Do we keep burning or do we pull back?” Airlift’s co-founder Usman Gul recalled in an interview with Rest of World on June 29. Gul and his team took a bold step, pivoting Airlift to instant delivery, to meet the needs of millions stuck at home.

It was a gutsy decision, but it paid off: Airlift went on to become Pakistan’s most valued startup and raised $85 million in the single largest round the country had ever seen.

But around two years after the company’s first pivot, faced with another changing economic landscape, Airlift failed to repeat history.

On July 12, Airlift announced it was shutting down, blaming the “global recession and [the] recent downturn in capital markets.” In a statement, the company said that until early July, it had a “clear path forward” and was in talks to raise “Series C1 financing.” But “amidst rapidly deteriorating conditions in the global economy,” several investors expressed uncertainty around their disbursement schedules. So, a complete shutdown was “inevitable.” Airlift employed nearly 300 people and had more than 1,000 additional staff across its warehouses and delivery operations.

“We’re such a new economy, every single company becomes an ambassador — especially Airlift.”

The shutdown has rattled Pakistan’s nascent startup ecosystem. “When your poster child gets assassinated overnight, everybody kind of freaks out,” Shehryar Hydri, a partner at the early stage Pakistani fund Deosai Ventures, told Rest of World.

In an interview this June with Rest of World, Gul acknowledged Airlift’s influence on the Pakistani tech startup scene. “There’s a lot of responsibility that comes by being the front-runner, or being in a leadership position, as everything we do at this stage will be viewed as the way things should be done,” he said.

Others say Airlift should not be indicative of the entire industry, as the company had its own challenges that led to its shutdown.

“My concern is that it [Airlift’s shutdown] reflects on all of us in the ecosystem and is a take on Pakistan as a whole — and I don’t think it should be,” Kalsoom Lakhani, co-founder of the $15 million Pakistani venture capital fund, i2i Ventures, told Rest of World. “The challenge with Pakistan is that we’re not a ‘too big to fail’ ecosystem. We can’t afford anybody failing at this point, as it’s bad for perceptions about our environment. As we’re such a new economy, every single company becomes an ambassador — especially Airlift.”

The last two years in Pakistan saw a flurry of new entrepreneurs building startups, in part inspired by Airlift’s success. While Airlift’s collapse will reverberate through the ecosystem in the coming months, some argue that Pakistani startups have matured enough to withstand this shock. “When you take a company that’s still figuring out its fundamentals and an overinflated valuation, and you start pitching them as the poster child that’s going to be the first unicorn of Pakistan— when it doesn’t pan out, and sort of implodes like this, it does shake the foundation of the ecosystem,” said Hydri. “But I definitely don’t think it’s a nail in the coffin. Thankfully, we’ve reached a critical mass over the last two years, which is not something that’s going to be wiped out.”

Founded by Usman Gul, Meher Fahrukh, and Ahmed Ayub in 2019, Airlift successfully raised over $100 million dollars over three years, an unheard-of amount in Pakistan. “When we got started, there was a lot of disbelief in the air,” 32-year-old Gul said during the interview last month. “I heard that [the] top credible investors would never invest in Pakistan … and that there was a scarcity of talent … So yeah, there’s a lot of disbelief, but I think it’s important to not let that cloud your thinking.”

Airlift’s lightning rise and fall were propelled by an ambitious and aggressive growth-at-all-costs ethos, which some observers blame for its downfall. “This is not indicative of all Pakistani startups that have really grown and built strong businesses,” Lakhani said, underscoring that the company’s “growth for growth’s sake” approach represented an outlier in the scene.

Airlift’s challenges began when it pivoted to the 30-minute grocery delivery model. Quick commerce has proven to be a notoriously difficult business to crack. The experiences of Gorillas in Europe and Getir in Turkey suggest that the business is a cash guzzler and needs constant fund infusion to stay afloat. In June, Berlin-based delivery app Gorillas exited Italy, Spain, Denmark, and Belgium after operating on a monthly cash burn rate of $50–$75 million. Getir laid off 4,000 people or 14% of its workforce in May. Both companies are unicorns with valuations that eclipse that of Airlift. 

Gul was aware of this challenge. “We’re building a capital-intensive business in emerging markets, and that’s a very vulnerable position to be in just by virtue of those two things,” he told Rest of World last month.