In Bangladesh, where climate vulnerabilities are a daily reality, startups focusing on sustainability and eco-friendly solutions face formidable challenges in securing funding and support. While sectors like finance, garments, and education have drawn significant investments, raising $49 million in 2023 alone, climate-focused startups remain largely overlooked, securing a mere $3m in the same period. The reasons are multifaceted.
I had recently been selected to participate in the prestigious "Impact Pioneers '24" program, a pilot initiative organized by the Swedish Institute in collaboration with the Embassy of Sweden. Held in Stockholm, the program brought together 63 distinguished leaders from 22 countries to foster collaboration in entrepreneurship and exchange ideas on sustainable business development. I had the chance to visit various impact hubs in Stockholm and was rather taken aback to discover that Sting, a notable incubator in the city, boasts a portfolio of 60 climate tech startups, firmly establishing itself as a heavyweight in this arena. The city's flair for innovation shines brightly with initiatives like the Swedish Climate Startup Map, showcasing a dazzling array of 508 environmental startups and scale-ups.
Funding gap for climate-focused startups
While Sweden thrives on eco-innovation, Bangladesh faces hurdles in scaling similar ventures. Climate-focused ventures often require large-scale capital and a long runway for returns, deterring risk-averse investors. Investors in Bangladesh often prioritize obtaining immediate cash flow, which is why they often choose to invest in ventures that yield higher revenue and have a lesser social impact. Furthermore, the absence of clear policy frameworks and market readiness for innovative energy solutions compounds the problem.
At COP29 in Baku, Bangladesh rightly called for increased grant-based financing to mitigate debt burdens. Yet, climate-focused startups -- critical for sustainable adaptation -- were notably absent from the discussion. For local climate-focused entrepreneurs, the struggle to move beyond the early stages is all too familiar, with insufficient grant funding and lukewarm private sector interest stifling potential breakthroughs.
The role of SustainLaunch Labs
One bright spot in this landscape is SustainLaunch Labs. The Dhaka-based venture studio is pioneering a model that empowers aspiring entrepreneurs to tackle climate challenges head-on. By partnering with universities and hosting hackathons, the organization has become a breeding ground for innovative ideas. These ideas are then nurtured in their accelerator programs, helping promising projects evolve into sustainable businesses.
Distinguishing itself from conventional accelerators, SustainLaunch focuses on fostering nature-based solutions, reducing external funding dependencies, and building sustainable businesses. Last month, SustainLaunch Labs unveiled its “Climate Innovation Acceleration Program.” Supporting 21 startups across Southeast Asia, the program has fostered groundbreaking products like graphene-based energy storage systems and eco-friendly construction materials.
These scalable solutions not only address critical environmental needs but also inspire confidence in the profitability of sustainable ventures.
These scalable solutions not only address critical environmental needs but also inspire confidence in the profitability of sustainable ventures
Lessons from Sweden's ecosystem
I further explored Sweden’s thriving entrepreneurial ecosystem, gaining insights into transformative policies like the “Home PC Revolution Program,""Safety Nets,""Ecosystem Effects,” and initiatives that made Stockholm a global unicorn hub. By visiting Swedish innovation hubs such as Epicentre and Vinnova, I noted strategies that Bangladesh could adopt -- emphasizing the importance of government-backed initiatives, technological education, and safety nets for supporting our entrepreneurs.
Establishing a supportive environment could elevate Dhaka to the status of a regional tech hub, fostering the development of startups that have the potential to emerge as industry leaders or even unicorns. Being an "Impact Pioneers '24" participant with the Swedish Institute, I had the incredible privilege to attend TECHARENA -- the largest innovation ecosystem platform in the Nordics. I was involved in the roundtable discussion on the collective capacity of the global impact entrepreneurship ecosystem.
A call for action
During the discussion, I pointed out that getting early-stage funding for these kinds of ventures is tough because investors are hesitant, and there aren't many grants out there. To tackle climate change, a multi-pronged approach is needed, including collaborative investment models, supportive policies, and targeted funding through initiatives like the Green Climate Fund, involving local and international stakeholders to share risks and resources.
I suggested setting up a joint impact fund and invited other incubation hubs to join a consortium to drive larger-scale solutions together. I believe that eco-startups in Bangladesh, driven by high demand and cost-effective operations, could yield substantial returns alongside significant social impact. Moreover, the country’s emerging market and focus on sustainability provide unique opportunities for impact-driven entrepreneurs.
The path forward
Bangladesh is brimming with talent and ideas waiting to flourish. By fostering partnerships, improving resource access, and advocating for government support, we can transform the startup ecosystem into a global leader in sustainability. Climate-focused startups, like those under SustainLaunch Labs, have the potential to bring tailored solutions to underserved communities.
By addressing urgent needs -- such as access to clean water and electricity -- these startups can drive rapid adaptation and significant social impact. Organizations like SustainLaunch Labs are already paving the way, but the journey requires collective effort -- from policymakers, investors, and entrepreneurs alike.
Fahim Shahriar is the CEO & Co-Found of SustainLaunch Labs and Peer Mentor at Asian Institute of Technology Entrepreneurship Centre. Before setting up SustainLaunch Labs, he was Asia Relationship Manager of Hult Prize Foundation.
