Executive Summary

Bangladesh is often overlooked with MENA funds flowing into Pakistan and India securing its own focused funds, attributed to its country size. Additionally, Bangladesh is also isolated from ASEAN. However, the country, home to 165 Mn people, is one of the fastest growing economies in Asia, with a GDP per capita higher than India. In recent times, the country has attracted global attention attributed to its remarkable economic and social progress, over the past decades. Even with the setbacks of the COVID-19 pandemic, the South Asian nation has demonstrated noteworthy resilience and is on track to become a middle-income country within the next few years.

The startup scene has also surged, as businesses emerge to satisfy unmet demand across the country. This growth in Bangladesh’s vibrant startup ecosystem is driven by three key factors:

  • Booming digitization catalyzed by the COVID-19 pandemic: With a young tech adaptable population, comprising 48 percent smartphone usage penetration and 68.4 percent internet usage penetration, Bangladesh is on the road to a digitally inclusive future. This momentum was further propelled by the COVID-19 pandemic, as the need for digitization was amplified across sectors during and after the pandemic.
  • Changing population demographics with increasing consumption demands: The population of 165 Mn has a mean age of ~28, with 62% of the population under the age of 35. The country also has a growing Middle and Affluent Class (MAC) population, which will become 35 Mn by 2025 (larger than the population of Malaysia). As post-pandemic consumption patterns are expected to boom globally, Bangladesh is at an inflection point fueled by a digitally savvy population with a swelling appetite for consumption, leaving many opportunities to be seized by startups.
  • Increased public and private attention to supporting the startup landscape: Through policies encouraging investments, as well as Startup Bangladesh Limited, a flagship venture capital fund under the ICT division, the government has displayed an increasing interest in building a more enabling environment for startups. This momentum is amplified by private sector enthusiasm, which has manifested in the form of multiple accelerator and incubator programs for startups.

Bangladesh’s position as a maturing startup hotspot has also grabbed international attention. Currently, the country boasts more than 1, 200 active startups creating drastic impacts in day-to-day Bangladeshi lives through new, innovative products and services. The country has attracted a total investment of USD 505 Mn in 2021 and 2022 (up to quarter 2), with a total contribution of USD 498 Mn from global investors. In 2021, bKash – the largest mobile financial services in Bangladesh, raised USD 250 Mn from Softbank, for more than a 10% stake, raising its valuation to around USD 2 Bn, making it the country’s first unicorn.

Over the past decade, the country has received an average investment of USD 2.40 Mn (excluding the bKash-Softbank deal) over 232 deals. Nearly 70 percent of all deals were made by Venture Funds and Angel Investors, with seed and pre-seed stages making up almost 75 percent of all deals. Even excluding the bKash-Softbank deal, Venture Funds contributed the majority of total investments raised, with around 82 percent of USD 804 Mn raised over the last 10 years coming from Venture Funds. Larger investments from Venture Funds and Corporate Investors were mostly injected at Series-A or Series-B+ stages of startups, whereas smaller-ticket investments from Angels and Accelerators, and Incubators went into the pre-seed and seed stages.

As the startup ecosystem in the country matures, the support for startups needs to evolve. While increasing digitization across the country and enhanced public and private initiatives are major enablers for the ecosystem, a number of challenges slow down the growth. Inconsistencies in policy and regulatory frameworks, finite supply of skilled labor, and limited access to financial markets are significant hurdles for Bangladeshi startups. To further enable the evolving ecosystem, there needs to be widespread advocacy for startups, supportive policy, and regulatory frameworks, stronger capacity building, and continued public-private partnerships.

The way forward for startups relies on a strengthened startup policy to facilitate ease of starting and operating startups, with streamlined regulations and requirements. Encouraging investments towards startups is also crucial, requiring better incentives for investors as well as a fund of funds set up through public-private partnerships. In addition, the startup ecosystem needs to be nurtured through industry-academia collaborations to encourage innovation and talent development at the school and university levels. Last but not least, the budding startup ecosystem in Bangladesh needs continued government support through enabling policies and regulatory sandbox frameworks to foster innovations in the country.


Bangladesh’s Thriving Economy Is the Next Asian Tiger

Startup Growth Has Been Taking off All Over the World With Asian Startups Increasingly Gaining Global Traction

Hot spots for startup growth have spread beyond Silicon Valley, from China to India:

  • Venture funding worldwide soared by 95 percent from USD 148 Bn in 2020 to USD 288 Bn in the first half of 2021
  • As of June 2022, there are over 1,100+ Unicorns (valuation over $1Bn), 50 Decacorns (valuation over $10Bn) and 3 Hectacorns (valuation over $100Bn) with a cumulative value of USD 3.8 Tn
  • The composition of top performers in the startup ecosystem is slowly moving away from North America to Asia and the Middle East & North Africa (MENA)

While the last decade has been favorable for startups amidst a bull run and record highs, the current crippling implications of the pandemic and market slowdown might bring this run to a halt. Amidst the looming threat of an economic slump, startups may face a reset in capital flows and valuations.

Startup Investment in Bangladesh Grew Almost 10 Times Despite Low Investments to GDP Ratio

Compared to its peers, Bangladesh’s startup investment is still a relatively smaller portion of its GDP, at only 0.10 percent of the current GDP. Despite this, between 2020 and 2021, Bangladesh experienced the largest increase in startup investments among comparable countries, with a nearly ten-fold increase.

Bangladesh Is the 37th Largest Economy in the World With a Booming Business Sector and a Tech-Savvy Population

Despite the COVID-19 pandemic, Bangladesh has been able to sustain a GDP growth rate of around 6.80 percent in 2021. The country has had strong vitals in exports, with a total export of USD 52 Bn and a USD 2.90 Bn FDI Inflow in 2021, indicating a strong competitive business sector, With more than half of its population under the age of 35 and growing numbers of mobile and internet connections across the country, a digitally-savvy population heads the future of Bangladesh.

A Stable and Resilient Economy Makes an Ideal Time for Startups Despite Challenges in Business Environment

Doing business in Bangladesh remains challenging for a number of reasons. Lengthy bureaucratic processes, limited access to finance and markets, as well as weak infrastructure, hinder entrepreneurship in the country. However, the country has also seen an immense amount of progress in these areas:

  • Facilities in equity investments, funding and grants, accelerator and incubator programs, and innovation labs through initiatives such as the iDEA and Startup Bangladesh Limited demonstrate an increasingly supportive policy framework.
  • Microfinance Institutions (MFI), Mobile Financial Services (MFS), improved digital infrastructure, and increased funds through public and private initiatives are transforming access to finance.
  • The country had a 35 percent women’s participation rate in the economy in 2021, which was one of the highest in South Asia, compared to 19 percent in India and 21 percent in Pakistan.

In the past 50 years, Bangladesh has pulled itself out of its underdeveloped and impoverished status, graduating from its LDC status to become a middle-income economy.

  • The country has maintained a consistent GDP growth rate of over 5 percent for 15 consecutive years.
  • The economy has maintained a stable inflation rate of around 6 percent per year as well as a stable and low debt-to-GDP ratio and government deficit.
  • The country has made long strides in human development, with one of the highest life expectancy rates in South Asia, a growing urban population, with a remittance flow of USD 21.03Bn in FY 2021-22 compared to USD 24.77 Bn in FY 2020-21.
  • According to Nikkei Covid-19 Recovery Index, Bangladesh ranked 1st in South Asia and 5th out of 121 countries in combating Covid-19 as of May 2022.

Three Levers Unlocking the Startup Ecosystem in Bangladesh: Digitization, Changing Population Demographics, and Supportive Policies

As the Bangladeshi population moves towards increased adoption of digitalization and new technologies and a growing MAC population, paired with a younger digitally-savvy population, drives consumption, Bangladesh is at an ideal point for startups to seize opportunities. This is supported by encouraging policies incentivizing foreign investments and facilitating the startup ecosystem.

Government Initiatives and Private Sector Participation Is the Winning Formula for Bangladeshi Startups Right Now

Since the conception of the startup ecosystem in Bangladesh in 2014, the country has come a long way in developing its startups. Almost a decade later, the country boasts its first unicorn, bKash, with increasing numbers of startup enablers in the ecosystem, including Startup Bangladesh Limited, the flagship venture capital sponsored by the Government of Bangladesh.

Increasing Number Of Ecosystem Builders Are Acting as Enablers in the Ecosystem

Between various types of investors, development partners, accelerators and incubators, private sector partners, academic institutions, competitions, and government support initiatives, Bangladeshi startups now have a robust range of supportive enablers in the ecosystem.


Bangladesh’s Startup Landscape Is Driving the Country to Unimaginable Feats

There Are Over 1,200 Startups in Bangladesh Generating More Than 1.5 MN in Employment

The trends in startups in Bangladesh indicate increasing levels of development in the ecosystem, with more than 200 new startups emerging across the country every year, supported by more than USD 80 Mn in registered alternative investment funds and more than 200 active angels. Startups have also become more and more crucial to the economy, supporting 1.5 Mn in employment as well as more than 750K SMEs.

Bangladeshi Startups Raised More Than USD 800 Mn Investments Since 2013 With Global Investors Making Up Almost 96 Percent of All Investments Raised

Over the last decade, the Bangladesh startup ecosystem saw a total investment of USD 804 Mn through 232 deals. In 2021 alone, nearly USD 415 Mn was raised in investments, including SoftBank’s capital injection of USD 250 Mn in bKash.

Since 2013, almost USD 36 Mn investments were raised locally across 101 deals, with an average ticket size of USD 354 K in pre-seed, seed, or pre-Series A rounds. Meanwhile, global investors, mainly VCs, invested USD 773 Mn across 132 deals. With a bigger risk appetite, the average ticket size is USD 3.99 Mn (excluding bKash) mostly put in Series A, B, or venture rounds.

The Fintech Sector Grabbed Around 70 Percent Of All Investments In The Last Decade Followed By Logistics & Mobility And Ecommerce & Retail Startups

Following global trends of increasing traction towards fintech, fintech startups in Bangladesh grabbed the largest amount of investments in Bangladesh. Logistics and Mobility, Ecommerce and Retail, and Healthcare were the subsequent largest sectors in terms of startup investments.

Pre-seed and seed stages received the most attention from investors, with angel investors making the most number of deals, throughout the past decade.

The Top 6 Sectors Raised More Than USD 692 Mn in the Last Ten Years Of Which More Than USD 500 Mn Went into the Fintech Sector

Fintech startups such as ShopUp, Shadhin, iFarmer, and SureCash raised more than USD 500 Mn in the past ten, making up 70 percent of the amount raised by the top 6 sectors.

The Biggest Deals of the Decade Include Startups in Fintech, Logistics & Mobility, and Ecommerce & Retail

The following table captures some of the largest deals since 2013.

Notable Mergers and Acquisitions From the Past Year

As startups continue to grow to new heights, mergers and acquisitions mark key milestones in the startup landscape.

The Social Impacts Created by Startups Over the Past Decade Have Led to Multifaceted Transformations for Bangladeshi Lives

The Social Impacts Created by Startups Over the Past Decade Have Led to Multifaceted Transformations for Bangladeshi Lives

Investor Trends Demonstrate Confidence in Bangladeshi Startups

Increasing Local and Global Investors Are Investing in Bangladeshi Startups

Notable Investors Leading the Local Investment Landscape

Investors From Vibrant Investor Groups Are Pushing the Startup Ecosystem Forward

Investor Participation Trends Over The Decade

Angels & Early Stage Investors/ Platforms

Over the past decade, angel investors have invested an average of USD 292 K in over 88 deals, with more than 95 percent of the deals being made in seed and pre-seed funding stages.  Notable local angel investors include Bangladesh Angels Network, the largest angel network in Bangladesh, SBK Tech Ventures, BYLC Venture, GP Accelerator, and YY Ventures. Key Highlights: Sectors of Investment:

  • 28.3% – Ecommerce & Retail
  • 24.0% – Healthcare
  • 13.1% – Consumer Services

Rounds of Investment:

  • 71.0% – Seed Rounds
  • 25.9% – Pre-Seed Rounds
  • 3.1% – Series-B+ Rounds

Biggest Deals:

  • USD 5.00 Mn – Praava Health
  • USD 1.70 Mn – Sheba.xyz
  • USD 1.50 Mn – Pickaboo

Corporate Investors

Corporate investors invested at an average ticket size of over USD 3.50 Mn across 28 deals, since 2013. The majority of these deals were in the series-A and seed stages of companies. These include investments from global sources such as Ecom Express, Go-Jek, and SEEK. Notable local investors include BRAC, ACI, and Robi. Key Highlights: Sectors of Investment:

  • 71.5% – Logistics & Mobility
  • 13.0% – Consumer Services
  • 8.1% – Fintech

Rounds of Investment:

  • 68.0% – Series-A Rounds
  • 20.9% – Seed Rounds
  • 10.1% – Series-C Rounds

Biggest Deals:

  • USD 23.00 Mn – Pathao
  • USD 11.80 Mn – Paperfly/Ecom Express
  • USD 10.00 Mn – Chaldal/Taavet Hinrikus

International Accelerators & Incubators

Investments from accelerators and incubators averaged more than USD 500 K, with 20 deals in the past ten years. All of these investments were in the seed stages of companies, with around 5 percent of total investments in the pre-seed rounds. Notable global investors include Surge, Accelerating Asia, and ODX Flexport. Key Highlights: Sectors of Investment:

  • 40.7% – Ecommerce & Retail
  • 29.9% – Fintech
  • 20.4% – Education

Rounds of Investment:

  • 94.7% – Seed Rounds
  • 5.3% – Pre-Seed Rounds

Biggest Deals:

  • USD 2.50 Mn – Shajgoj/Surge
  • USD 2.50 Mn – ShopUp/Surge
  • USD 2.00 Mn – 10 Minute School/Surge

Venture Funds

With an average ticket size of around USD 5.58 Mn (excluding the bKash-Softbank deal of USD 250 Mn in 2021), venture fund deals made up 74 of 231 deals since 2013. The majority of these deals were in Series-A and Series-B+ rounds. Notable investors include Anchorless Bangladesh, SBK Tech  Ventures, Softbank, Valar Ventures, and Wavemaker Partners. Key Highlights: Sectors of Investment:

  • 84.5% – Fintech
  • 4.4% – Ecommerce & Retail
  • 3.9% – Logistics & Mobility

Rounds of Investment:

  • 42.5% – Series-B+ Rounds
  • 37.7% – Venture Rounds
  • 11.0% – Series-A Rounds

Biggest Deals:

  • USD 250.00 Mn – bKash/SoftBank
  • USD 75.00  Mn – ShopUp/Valar Ventures
  • USD 5.60 Mn – Praava Health/SBK Tech Ventures

The Way Forward for Startups Calls for a More Supportive and Inclusive Environment

Factors Fuelling the Growth of the Bangladesh Startup Ecosystem: Government Commitment to Entrepreneurship, Digitization, and Public and Private Support

  • Government commitment to developing entrepreneurship and tech-based skills promoting “Coding for Kids”:

Policy frameworks demonstrate a strong commitment from the government to support startups through ICT sector development strategies and policies, as well as government-led facilities for investments and accelerator and incubator programs. The government is also planning to incorporate coding for kids in the national curriculum to educate the next generation  with coding knowledge to meet the job market demand

  • Increasing traction towards entrepreneurship and freelancing:

Cultural perceptions of youth entrepreneurship and freelancing are increasingly positive, with entrepreneurial and technology-based skills being integrated into educational curricula to boost interest. This is driving more and more youth into online freelancing jobs and entrepreneurial activities.

  • The rise of local mobile manufacturing hubs and affordable internet costs fuel digital penetration across the country:

Phone manufacturing has grown into a massive industry in only five years, prior to which the market was entirely import-dependent. Bangladesh has also met the affordability target on internet prices set by the United Nations Broadband Commission for Sustainable Development in 2021.

  • Public and private initiatives creating an encouraging environment for startups:

Public sector initiatives such as Startup Bangladesh Limited as well as accelerator programs by private entities are enabling more effective access to financial resources for startups. Ecosystem builders and programs contribute to developing the budding startup ecosystem in Bangladesh and encourage collaborative efforts to boost access to resources and networks.

  • Increasingly digitized markets and public and private initiatives enhance market access:

Social media platforms and B2B and B2C platforms provide more opportunities for entrepreneurs. NGO and government-led initiatives also ensure that market access is extended to rural and marginalized communities. Trends in digitization were catalyzed by the impacts of the COVID-19 pandemic and boosted the affordability of smartphones. This, combined with government efforts towards digitization under the banner of “Digital Bangladesh”, promoted greater access to technology which creates greater opportunities for startups to harness

Bangladesh’s Startup Ecosystem Is Heating Up but Still Facing Challenges: Limitations in Policies, Access to Skills Development, and Financial Markets

  • Inconsistencies in regulatory frameworks and limitations in policies for startups:

Varying policies and regulations across ministries, combined with lengthy bureaucratic processes, hinder the ease of doing business for startups. Legal legislations and startup policies are still absent in Bangladesh, furthering difficulties for entrepreneurs.

  • Limited human capital, technology, and skilled labor resources:

Opportunities and support to develop entrepreneurship skills are still limited for young people, especially in rural and marginalized communities. A gap in the skills demanded in the market compared to the skills and training taught leads to a scarcity of competent labor. Weak infrastructure, especially for rural communities, and limited digital literacy limit businesses’ abilities to effectively harness technology to initiate startups.

  • Limited access to finance and support for business links and networks:

Due to the risky nature of startups, banks and other financial institutions are usually reluctant to provide loans or offer loans at unfeasibly high costs. This is amplified by the insufficient number of angel investors available in the market. Furthermore, female entrepreneurs face a greater burden of this inaccessibility due to institutional and cultural constraints. While the overall scale and availability of support for businesses is inadequate, there is also a disparity in the support available in Dhaka compared to the rest of the country.

  • Obstacles in accessing domestic and international markets:

Complex supply chains and value chains pose challenges for entrepreneurs, particularly in rural and marginalized areas. The absence of a single platform for business-related formalities as well as inadequate national statistical data stands as challenges for young entrepreneurs. Low FDI compared to peer countries as well as a low Ease of Doing Business rank holds the country back from being more business-friendly.

Recommendations to Propel the Startup Ecosystem Forward: Boosted Promotion of Startups, Supportive Policies for Investment & Stronger Capacity Building

  • Startup Policy: With the Digital Bangladesh agenda at Government’s core, it is eminent to form a startup policy to offer 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. An enabling policy will promote the growth of startups and the ecosystem attracting foreign investment in the ecosystem, and benefiting the country’s growth and employment rate.
  • Fund of Funds: Startup Bangladesh and ICT Ministry can form a fund of funds through public-private collaboration to invest in Startups. The fund of funds makes downstream investments in venture capital and alternative investment funds that in turn invest in startups.
  • Startup Sandbox Scheme: The government can offer a “startup sandbox” for new entrepreneurs to help them come into more prominence using their full potential in a smooth process with reduced tax rates, allowance to carry forward losses, amnesty to penalties for tax rules, and compliance processes to explore new innovation and business models.
  • Investor Benefits: The government needs to ensure an investment-friendly environment in Bangladesh. Recommendations would be to update Foreign Exchange Regulation Act 1947, reduce entry barriers, introduce TAX benefits and ease the repatriation of profits of foreign investors to attract foreign investments.
  • Ease of Doing Business:  Business processes, policies, and regulations have to be streamlined and more comfortable to start and operate startups/SMEs. A way forward could be to use technology and fintech platforms to make tax payments seamless, transparent, and secure.
  • Industry-Academia Collaboration: Industry-academia is mandatory to set up the right kind of infrastructure to nurture innovation and talents at the school/university level as well as leverage knowledge remittances from NRBs all over the world through incentivized initiatives.
  • Corporate Venture Capital: Corporates investing in Startups would provide viable exits for early-stage investors and founders as well as accelerate capital from both local and international markets. Also, this portrays confidence in the ecosystem to the international audience.
  • Continued GoB Support: The ICT ministry has championed startup growth be it in a setting by the flagship venture capital fund Startup Bangladesh Limited or supporting ecosystem-building initiatives across the country. It continues to advocate infrastructure, policies, and regulations and brings in other ministries onboard in the process.
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