Why Bangladesh wants to be a startup goldmine

  • Post category:Clickety
Why Bangladesh wants to be a startup goldmine

Bangladesh has immense potential to be a startup goldmine with its USD 460 billion economy. In 2023, the popular magazine The Economist tagged the country as ‘South Asia’s standout economic performer.’

Its increasing young tech-savvy population offers a massive consumer market, expected to be the 9th largest globally by 2030. In 2022, the country had 126 million mobile internet users along with a 75% internet penetration rate.

The ecosystem offers Bangladeshi startups to stand firm among the 327 unicorns in Asia. The government itself is providing hands-on support for startups. Innovation is being incentivized through publicly financed initiatives like iDEA (an incubation hub) and Startup Bangladesh (a venture capital), coupled with its Startup Policy.

Zooming into the ecosystem

Bangladesh’s startup ecosystem is relatively small or is promisingly growing. Between 2013 and 2023, Bangladeshi startups have raised over USD 909 million through 377 deals. From 2014 to 2022, indigenously-grown mentoring programs like the Founder Institute, Toru, TiE Dhaka, GP Accelerator, and Makerlab have popped up in the country’s startup ecosystem.

Homegrown startups have already raised big-ticket investments (with over a million dollars) in recent years.  Some mention-worthy ones are Priyo.com, Surecash, Cloudwell, AjkerDeal, Direct Fresh, and Pathao. The startups are dealing with local problems in various spheres of life, including traffic, access to finance, and supply chain efficiency.

On a broader picture, the country launched its first geospatial satellite the Bangabandhu I (aided by SpaceX), entering the space era. Many successful startups have scaled up their reach like bKash (in mobile finance), Shohoz (ticketing solutions), Chaldal (retail services), ShopUp (B2B commerce), Augmedix (IT services), and SOLshare (energy tech). There are also private investment and incubation hubs (Bangladesh Angels, Startup Dhaka Incubator, and Anchorless) that are providing their services to local startup companies.

Bangladesh’s government is also nurturing ideas with seed funds, which especially target the youth who cannot access private investors. It launched a fund called ‘Shoto Borshe Shoto Asha,’ (translates as 100 Dreams for a Century), and a micro-grant student competition called Bangabandhu Innovation Grant (BIG). These initiatives have become immensely popular among the curious youth.

Unicorns proliferating

Bangladesh has big plans with its startups. It aims to nurture 5 unicorns by 2025, and 50 by 2041. A startup needs a valuation of $1 billion as the threshold to be called a ‘unicorn.’ Bangladesh has witnessed unicorn reach, exemplified by Bkash and Nagad’s recent ascent (both in mobile finance). They have encouraged different entrepreneurs in the ecosystem to scale their operations.

Policy support agenda

Bangladesh has formulated its Startup Policy to offer the following incentives:

    • Tax exemptions up to 15 years for foreign investors;
    • Import duties waiver on export initiatives;
    • Retained earnings treated as fresh investments;
    • Foreign companies can access long-term financing from local institutions.

Startup Bangladesh, the government’s flagship venture capital fund, and the iDEA (Innovation Design and Entrepreneurship Academy) project, a coworking incubation hub, are aimed at targeting the gaps where private sector engagements are less. It offers funding, mentorship, education, network, legal and IP support, and coworking space to nurture startups.

The iDEA has touched about 385 startups through initiatives like the BIG, iDEAThon, Student 2 Startup, and Startup Compass. Many international participants also compete and win in these competitions. A global approach has had a spillover impact on ideas for the country’s startup ecosystem. Bangladesh also organizes an annual retreat for startups, called the Startup Summit (hosted by Startup Bangladesh). This summit is patronized by the country’s highest policymakers and is attended by almost the whole startup community. It also invites startups and experts from innovation centers across the globe.

Bangladesh also has 28 state-of-the-art tech parks governed by an agency called the Hi-Tech Park Authority. These parks are spread across different cities and towns (even in places where tech-related investments were traditionally absent). These parks have become catalysts for tech innovation and manufacturing. They also house many startups.

Bangladesh initiated its flagship public sector innovation agency called a2i (Aspire to Innovate), in 2009. a2i’s research and outreach programs have helped both the government and private partners digitalize their operations. It also promotes entrepreneurship through innovative funding efforts.

The promises  

The main challenges for startups in Bangladesh are limited resources, capacity limitation, access to the market, and new disruption. But their potential in fintech, agriculture, health-tech, and education are truly untapped. The ecosystem also needs to welcome more female-led startups, not only for diversity but also for better reach. The public-private collaboration will be central to shaping a conducive startup ecosystem.