Airlift — the Lahore-based online shopping delivery firm — has decided to “permanently” shut down its operations amid a global recession.
The company announced the decision via a press release on Tuesday.
“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,” read the statement.
“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,” the startup said.
According to the statement, Airlift was able to prove itself in recent years as one of the most “resilient and agile startups” coming out of emerging markets. The company was able to navigate the COVID-19 crisis, “pivoting into q-commerce and building scale in a new domain”.
The Pakistani startup secured $85 million Series B financing last year with an aim to expand internationally.
A pioneer in the recent wave of technology businesses, Airlift Technologies was started in Pakistan by local entrepreneurs for local populations.
According to a Techcrunch report, Airlift was operating a quick commerce service in eight cities including Lahore, Karachi, and Islamabad in Pakistan.
Users were able to order groceries, fresh produce, other essential items including medicines as well as sports goods from the Airlift website or app and have the items delivered to them in 30 minutes.
Response to recession
Airlift said that with the onset of the recession, it was “one of the first few companies in emerging markets to restructure business operations”.
The response 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 monetisation (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%,” read the press release.
According to the handout, as of July, 2022, Airlift was about three months away from operating profitability (i.e. positive cash flow from operations), and about six to nine months from company-level profitability (i.e. Free Cash Flow).
The company said that with the above developments in May, “one of our investors stepped up to lead Airlift’s Series C1 financing”.
It 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,” Airlift said.
So what happened?
In early July, Airlift had a clear path forward to close the round – the company pushed out documents for signatures to all participating investors.
Then, last week, amidst rapidly deteriorating conditions in the global economy, several participants shared uncertainty in wire schedules and their disbursements, said the press release, adding that “this ultimately meant that the company’s capital requirements would not be met”.
“Ultimately, the round was unsuccessful,” it added.
According to the statement, with the above clarity, “a complete shut-down was inevitable”, and that Airlift “could not risk leaving its employees unpaid or reneging from its commitments”.
The startup said that 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,” read the handout.
Settlements to team, third parties
Airlift said it will “ensure that all of its employees are sufficiently protected and catered for — this includes supporting teammates with two months of payroll for July and August, setting up a platform for job placement, and creating support systems for aspiring entrepreneurs from within our team that may be interested in starting new ventures”.
In addition, for suppliers, vendors and other third-parties, “our team will communicate proactively to manage arrears and liabilities as a part of our ongoing shut-down process”.
‘Work in emerging markets has just started’
The startup expressed its gratitude to all those it received support and assistance from in their journey so far.
“In closing, we are grateful to our teammates, investment partners, suppliers, vendors and other partners who have supported us throughout this journey,” said the statement, adding that “our management team will stay on until our shut-down process is complete”.
“While the future is unknown to us, we know that our work in emerging markets has just started,” said the company.
“Due to factors beyond our control, the Airlift journey must come to an end. However, our broader mission of creating positive change in the region will find a new life,” it added.