The country’s primary investment promotion agency Bangladesh Investment Development Authority (BIDA) has signed with US-based venture capital firm Anchorless Bangladesh to target global investments for Bangladesh.
BIDA Executive Member Mohsina Yasmin and Chief Executive Officer (CEO) of Anchorless Bangladesh Rahat Ahmed signed the MoU on behalf of their respective organizations in presence of the BIDA Executive Chairman Sirazul Islam.
The MoU includes provisions for attraction and facilitation of targeted global investments, joint promotion of investment opportunities in Bangladesh and abroad, attraction of high-value technology and high-impact investments in key priority sectors, and support and advisory relating to FDI and equity investment.
"Bida is strongly focused on building strategic partnerships that will allow us to access investor communities in our target markets for foreign direct investment and equity investment," said Md Sirazul Islam.
“Both institutions will work together to design investment outreach that is targeted, customized and therefore more effective," he further said, assuring full cooperation of BIDA to Anchorless Bangladesh.
Based in New York, and founded in 2019, the venture capital firm works to unlock business opportunities across Bangladesh by bringing in the global capital and so far has invested over $8 million in Bangladeshi startups across multiple verticals, including fintech, agriculture, education and logistics.
The Anchorless Bangladesh team has experience in emerging markets public and private equity, venture capital and emerging technology startups.
Anchorless Bangladesh CEO Rahat Ahmed started investing in Bangladesh in 2004. His investors at Anchorless Bangladesh are primarily American and European.
"We at Anchorless strongly believe that Bangladesh is one of the best investment opportunities in the world with an incredible story to be told—and we look forward to working with Bida to do so," said Rahat Ahmed, founding partner and CEO of Anchorless Bangladesh.
Referring to Bangladesh as a safe destination for investments, Rahat expressed hope that Bangladesh will reach the status of a higher middle-income country in the next ten years with the continuous desire from the private and public sectors in working towards a common goal of increasing international investment in a thriving Bangladeshi economy to further strengthen the country's global positioning.
“So, one of our goals is to bring international capital into the market. One of the things we've learned is that for a lot of funds out there - say in Singapore, Hong Kong or New York - we went to talk to a lot of them and what they want is to feel more comfortable about the market, as most of these companies don't have offices on the ground,” he added.
Bangladesh has been attracting an abundance of FDI and an increase in inbound merger and acquisition (M&A) transactions and activities prior to the pandemic.
Between the years 2018 and 2019, Bangladesh experienced some of the largest FDIs in the country's history. The $1.47 billion acquisition of Dhaka Tobacco by Japan Tobacco Inc (JTI) was at the forefront of notable M&A activities.
In 2021, Bangladesh got $2.9 billion FDI, registering 13% growth year-on-year and recovering from the drop to $2.56 billion the previous year caused by the pandemic, according to the report released at the United Nations Conference on Trade and Development (UNCTAD) on June 9.
However FDI in the country rose by 39% to $4.7 billion in the fiscal year 2021-22 compared with that $3.38 billion in the previous fiscal.
In FY22, net FDI inflow also increased by 61% to $2.17 billion against $1.35 billion in FY21, according to Bangladesh Bank data.
But according to insiders, the FDI inflow can be much more if the government offers multiple benefits for the startup and ecosystem players such as ease of access to debt finance, reducing the cost of doing business, ease of doing business, fiscal policy support - VAT/tax exemptions and rebates for attracting foreign investment in the startup ecosystem.
Over the last decade, Bangladeshi startups have raised over $800 million in investments, spearheading the economy and creating 1.5 million direct and indirect employment opportunities while positively impacting the citizens’ day-to-day lives.
Startups in Bangladesh are gaining increasing global traction, as $412 million out of a total of $415 million investments raised in the past decade came from global sources with Bangladeshi startups raising over $90 million just in the first half of 2022.
According to industry insiders, the Bangladeshi startup industry boasts more than 1200 startups. More than 200 new startups are emerging each year and insiders said, the impact made by startups makes the sector an economic powerhouse that needs more attention and support.
Insiders earlier also expressed the need for the government to ensure an investment-friendly environment in Bangladesh and reduce entry barriers, introduce tax benefits and ease the repatriation of profits of foreign investors to attract foreign investments by streamlining business processes, policies and regulations that are more comfortable to start and operate startups/SMEs.
Booming digitization catalyzed by the Covid-19 pandemic, changing population demographics with increasing consumer demands, as well as increased public and private attention to supporting the startup landscape has cemented Bangladesh’s position as a maturing startup hotspot, even drawing international attention.
However, according to industry insiders, as the startup ecosystem in the country matures, the support for startups needs to evolve to enable Bangladesh’s economic growth further.
In that regard, insiders and experts think a strengthened startup policy to facilitate ease of starting and operating startups, with streamlined regulations and requirements, as well as encouraging investments towards startups through better incentives for investors is crucial.
