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Bangladesh Startup Investment Report Q’1 2023: Embracing The Uncertainty [Readable Version]

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LightCastle Analytics Wing
April 13, 2023
Bangladesh Startup Investment Report Q’1 2023: Embracing The Uncertainty [Readable Version]

Executive Summary

  • Global inflationary pressures, macroeconomic disruptions, and increased geoeconomic fragmentation are causing shockwaves for economies across the world. Covid-19 and the Russia-Ukraine war have exposed the fragility of economic interdependence affecting supply chains, commodity markets, and the flow of capital. Furthermore, the failure of three of the biggest banks to tech startups in the U.S., Silvergate Bank, Signature Bank, and Silicon Valley Bank, further cast shadows on global funding to startups. As a result, global startup funding declined by 50% from USD 63 Bn in January 2022 to USD 31 Bn in January 2023. 
  • Against this backdrop, Bangladesh has secured USD 36.55 Mn through 20 deals in Q’1 2023, primarily spurred by small ticket funding from local investors. As global investors grow risk-averse and gravitate towards portfolio diversification, opportunities are emerging for Asian startups. This is evident from ShopUp’s recent striking investment raise of USD 30.00 Mn, with the global lender, Lendable, and the local financial institution, the City Bank.
  • While global investors contributed the lion’s share of investments in Q1 2023, amounting to USD 23.7 Mn, local investors have also amplified their contributions to the funding landscape. Local investors invested USD 11.8 Mn – a staggering 8x increase from the previous quarter. Among the 20 deals, 11 of them were led locally, in small-ticket funding rounds, averaging at USD 166 K.
  • Significant early-stage funding was observed in this quarter, with venture capital firms accounting for 73% of the total deal count. From a sectoral lens, the top three leading industries were financial services, sports & entertainment, and education. This serves as a testament to the growing technology adoption and sophistication of the local startup ecosystem.
  • In light of recent economic headwinds, Bangladeshi startups must learn to be agile with their objectives and activities, strengthen their financial discipline and practice thorough risk assessments.  As local investors continue to contribute towards the funding gap, such ongoing contributions can alleviate the gaps in global funding facing Bangladesh’s startup ecosystem.
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WRITTEN BY: LightCastle Analytics Wing

At LightCastle, we take a systemic and data-driven approach to create opportunities for growth and impact. We are an international management consulting firm which creates systemic and data-driven opportunities for growth and impact in emerging markets. By collaborating with development partners and leveraging the power of the private sector, we strive to boost economies, inspire businesses, and change lives at scale.

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