Bangladesh's startup ecosystem is heating up with 1,200 active startups that attracted a total investment of $505 million in 2021 and another $498 million during the first half of 2022.
The country even saw the largest ever pre-seed round for any Bangladeshi startup to date last month amounting up to $1.8 million through agritech startup Agroshift. Meanwhile, GoZayaan acquired Pakistan's FindMyAdventure earlier this year, landing $4.6 million in fresh funding.
What is even more praiseworthy is the fact that Bangladeshi startups received funding even during the ongoing global economic downturn with venture capital firms (VC) cutting down on investment from the beginning of the second quarter of 2022.
According to Crunchbase, VC funding fell dramatically globally, slowing down in the second quarter of 2022 as investors shied away from later-stage funding bets.
Global early-stage funding totalled only $34 billion in the third quarter of 2022, a decline of 25% quarter over quarter and 39% year over year.
Bangladesh even saw its first unicorn in 2021 - bKash, the largest mobile financial service (MFS) player in the country.
In that regard, insiders and experts think that 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 to further enable economic growth of the country through startups.
With that in mind, the government has set out a target of creating five local unicorns or billion-dollar companies by 2025.
The ICT Division is working diligently in changing policies that assist emerging and growing startups in many aspects, whether it is policy level, training or development.
State Minister for ICT Division Zunaid Ahmed Palak said: “The government is a strong believer in innovation and technology and we believe startups are the changemakers and impact creators in society."
To support these innovative startups, the government has established Startup Bangladesh as a venture capital company that aims to support homegrown startups to grow and reach heights that generate higher standards for more foreign investment.
Startup Bangladesh, the first and only venture capital fund sponsored by the government, started its journey in March 2020 with an allocated capital of Tk500 crore and is currently working towards creating a policy for the sector.
Startup Bangladesh has invested in 16 companies with more than Tk50 crore to date.
Although the startup sector started over a decade back, there has been no policy for the sector. But once the policy is drafted and implemented, the sector is expected to gain momentum.
"Startup Bangladesh's role in supporting the startup ecosystem through investments in technology startups is vital towards building Smart Bangladesh,” Palak also said.
In that regard, according to Startup Bangladesh, the proposed draft will have a specific duration after which a startup will be categorized as any other normal business organization. But prior to that, businesses will receive benefits under the startup category.
According to sources, policymakers are considering the duration to be 10 years.
Other than that, according to Hasan A Arif of Startup Bangladesh, the government has already taken several initiatives to increase the flow of investments in the startup sector with the Bangladesh Securities and Exchange Commission (BSEC) already drafting rules that will allow loss-making good startups to be listed on the country's stock exchanges and offer IPO.
“We are collaboratively trying to build a triangle relationship with two vital regulatory bodies which are Bangladesh Bank and NBR to promote foreign investment, venture capital and private equity firms in Bangladesh,” the BSEC commissioner Dr Shaikh Shamsuddin Ahmed said last month.
Startup Bangladesh also said that almost all the startups that it has invested in are successfully operating with some startups also preparing to get registered on the Dhaka Stock Exchange.
“At the moment, Chaldal in the online grocery category and Ten Minute School in the education technology category have maintained their strong position as market leaders for a long time,” a source at Startup Bangladesh told Dhaka Tribune.
