Lack of access to finance, outdated valuation process, absence of adequate equity investment, and lack of proper incubation pose major challenges for the sustainability of startups, speakers said at a seminar on Saturday.
Also, due to deficiency of working capital and suitable policy support, the success rate of startups and cottage, micro, small and medium enterprises (CMSMEs) are quite low in the country, they said.
The Dhaka Chamber of Commerce and Industry (DCCI) organized the seminar on “Journey of CMSMEs from startup to scale-up: prospects & challenges” at its auditorium in the city on Saturday.
Presided over by DCCI President Rizwan Rahman, the seminar was attended by ICT Division Senior Secretary NM Zeaul Alam as the chief guest and Bangladesh Securities and Exchange Commission (BSEC) Commissioner Dr Shaikh Shamsuddin Ahmed as special guest.
Senior Secretary NM Zeaul Alam said the CMSMEs and startups, directly and indirectly, are creating noteworthy job opportunities in recent years for the country's youth.
Though the failure rate among the startups is pretty high, it is not making any loss, rather it can be considered as a learning process for the future venture, he added.
DCCI President Rizwan Rahman said the startups can be a great economic enabler for Bangladesh and a favourable ecosystem has to be in place for the growth and sustainability of the startups.
Referring that Bangladesh ranked 93rd out of 100 countries in the Global Start-up Ecosystem Index 2022, he said the startup index also claimed that financing and dearth of policy support are root causes of weak start-up growth in developing economies like Bangladesh.
He also informed that Bangladesh currently has over 1,200 active startups and about 200 new startups join the industry every year.
In total, these startups made around $ 800 million in investments, creating over 1.5 million formal and informal jobs in the past decade, he added.
He also emphasized the need for ensuring low-cost financing options for startups as well as bringing necessary regulatory reforms in industrial policy, export policy, fiscal policy, foreign exchange regulation and SME policy.
BSEC Commissioner Shaikh Shamsuddin Ahmed said though SMEs and startups got priority in the recent industrial policy, enhanced collaboration among different agencies is required.
In terms of valuation of the startups, he stressed the need for bringing changes in policies to simplify the valuation process.
Pathao CEO Fahim Ahmed, in a presentation, said startups are enabling the digital transformation of Bangladesh through linking the traditional SMEs with the market.
He also identified regulatory framework, policies, limited human capital, technology, finance and access to international markets as some of the challenges for this sector.
Terming access to finance a great challenge for the country's startups, Foodpanda CEO Ambareen Reza said more investments are needed in the fintech and its logistics sector because success stories of startups will encourage others to come in the market.
Tanveer Rashid, Director of Finance, Chaldal Limited, said that if the valuation process is simplified, more investment will come in the tech industry.
"Due to the risks associated with the startups, banks are reluctant to finance, which as a consequence, kill most of the startups at the early stage," he said.
Nirjhor Rahman, CEO of Bangladesh Angels, said liquidity is the key thing in this sector.
"We have to ensure investment and working capital for new startups."
