Bangladeshi startups finally getting the investment they deserve

ShopUp scored investments from Peter Thiel’s Valar Ventures and Prosus Ventures, while bKash scored investments from Japanese multinational conglomerate SoftBank Group Corporation through the purchase of 20% of its shares

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Bangladeshi startups alone bagged $150 million to $200 million investments in 2021, landing almost half of the amount it had received from either venture capital firms or individuals over the past decade, according to industry insiders.

Of those, around 75% were scored mostly by three tech firms — ShopUp, bKash and Pathao — with the country seeing its first-ever unicorn being born through the mobile financial service provider (MFS), while the mobile-based retail service provider ShopUp raised $75 million alone.

ShopUp scored investments from Peter Thiel’s Valar Ventures and Prosus Ventures, while bKash scored investments from Japanese multinational conglomerate SoftBank Group Corporation through the purchase of 20% of its shares.

Pathao, through its ride-sharing, food delivery, and e-commerce logistics, also raised around $35 million venture capital till 2021 while investments raised by Paperfly, Praava, Chaldal and Shohoz were $11.8 million, $10 million, $10 million and $25 million respectively. 

In between 2016-2021, startup firms raised a total of around $400 million and starting the very first month of the current year, it has also seen funding flow in from both international and local sources. 

Two local startups, 10 Minute School and Shajgoj have been selected for Sequoia Capital's prestigious accelerator program, from a total of 20 startups from South-East Asia, for this year's Surge Accelerator cohort. 

Upon completion, the startups will be receiving $1-2 million of seed funding as well several company-building workshops, global immersion trips and support from a network of successful investors and co-founders. 

The startups will also get company-building workshops, global immersion trips and support from a network of successful investors and co-founders

The 20 selected startups will receive a total of $60 million in funding. The founders of these companies will also participate in a 16-week virtual program hosted by Surge, beginning from January 27. 

With this sixth cycle of Surge, the program has now featured 112 startups with 246 founders and has evaluated over 10,000 companies in the US, Australia, India, Malaysia, Thailand, Taiwan, Bangladesh and other countries. 

In addition to the seed funding from Sequoia Capital India, the beauty e-commerce platform Shajgoj will also receive funds from the SBK Tech Venture, one of the pioneer tech-focused VC based in Bangladesh. 

Meanwhile, Green Grocery, a startup that has been catering to the need for safe-organic food through its website and Facebook page, has also recently received investment.

Talukder Mohammad Sabbir, founder and managing director of Green Grocery, confirmed the matter to Dhaka Tribune.

However, the funding amount was not revealed as of yet.

He also informed that a group of young investors, led by M Asif Rahman, founder of ARCom & WPDeveloper, a software services company, have recently invested in Green Grocery.

CEO of Bangladesh Angel Network (BAN) Nirjhor Rahman says it is a very interesting time to get involved with and invest in startups in Bangladesh. 

“Startups are generating and growing revenues, creating strong partnerships with each other and the corporate sector, and garnering pre-seed angel-stage investments much faster and easier than before,” he added. 

However, according to Rahman, some of the lingering challenges include a lack of liquidity, including follow-on funds, a growing need for more product development and management expertise, as well as creating a compelling story and proposition for big-ticket investors, including foreign angels and venture capitalists, “who can literally invest their capital anywhere”.

Speaking about neighbouring markets such as India and Pakistan, he said that there is a flourishing industry of domestic venture capital, particularly in the early stages within the fundraising value chain, often affiliated with local corporates and family offices. 

“Although more and more Bangladeshi corporations and financial institutions are looking at startups for potential investment, they are still cutting relatively small — $250,000-$500,000 — cheques, or just monitoring the companies,” he explained. 

“If we can create more domestic liquidity, and through access to that liquidity more and more startups in Bangladesh can start scaling and get to Series A, B, and C, more foreign investors will start looking at Bangladeshi startups, because their minimum cheques are much larger and range in the millions of dollars,” Rahman further said.

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