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When the Bangladeshi startup ecosystem took its first notable step in 2014, the global startup world was much smaller and nearly synonymous with Silicon Valley. Ten years have passed since. The world has lived through major technological revolutions and a global pandemic, both of which have catalyzed startups to push the limits of innovation. At the same time, hot spots for startup growth have sprouted all over the globe, with Asia and Africa, in particular, crawling into the spotlight. With these shifts, Bangladesh has become a thriving ecosystem for startups in the past decade.
Today, the country boasts more than 1,200 active startups, including one unicorn, and has increasingly gained the attention of international investors and a surge of investors at home. Startup investments have grown nearly ten times between 2020 and 2021, making up 0.10% of the total GDP in 2021.
Digitization, changing population demographics, and supportive policies have been critical drivers of the rising startup ecosystem of Bangladesh:
Over the last decade, the Bangladesh startup ecosystem witnessed investments worth 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, a fintech company enabling mobile money across 57 Mn customers. As the ecosystem has matured, investors at home have also grown increasingly active in the ecosystem. As a result, 25% of all investments raised in 2022 came from local sources, with Startup Bangladesh Limited leading the way with nine deals in Quarter 3.
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 dynamic might slow down the race. Amidst the looming threat of an economic slump, startups globally face a reset in capital flows and valuations.
Global attention to Bangladeshi startups is decelerating as uncertainty rises around the post-pandemic world. The Bangladeshi startup ecosystem relies heavily on global sources of investment, making up around 94% of all investments on average in the past decade. As investments decrease globally, homegrown startups are predicted to experience the following:
Despite these trends, investors and founders remain cautiously optimistic about the future. Through the challenges, homegrown startups already see the light at the end of the tunnel, with several local investors supporting the ecosystem heavily.
“It’s an exhilarating time for the startup ecosystem in Bangladesh as we see a lot of innovations coming to us for funding. We’re working to implement the government’s vision of Smart Bangladesh by supporting the ecosystem to develop at least five unicorns in Bangladesh by 2025,” opines Sami Ahmed, Managing Director at Startup Bangladesh Limited.
Raidah Morshed, Business Analyst at LightCastle Partners, authored this article. For further clarifications, contact here: [email protected]
Featured Photo: Laura Elizabeth Pohl/Bread for the World
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