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This report, commissioned by Japan International Cooperation Agency (JICA) and conducted by Dream Incubator (DI), with further contributions from LightCastle Partners provides a comprehensive survey of Bangladesh’s social impact ecosystem. It delves into various aspects, including sector-wise funding by the government, the role of foreign donors, challenges, opportunities, and recommendations for stakeholders.
The report sheds light on the remarkable growth of Bangladesh’s startup landscape, highlighting key sectors, funding trends, and the evolving role of impact investing in driving social change. It aims to provide insights to stakeholders interested in fostering sustainable development and innovation within the country’s entrepreneurial ecosystem.
The Government of Bangladesh (GoB) has allocated substantial budgets to key sectors, aiming to drive economic development and social welfare. Key sectors like transportation, education, healthcare, and agriculture have received significant funding for social impact
For instance, the government allocated USD 7.0 Bn to transportation and communication, USD 4.3 Bn to education and technology, and USD 3.9 Bn to local government and rural development, among others. These investments signify the government’s commitment to fostering growth and innovation in strategic sectors.
Bangladesh’s startup ecosystem has demonstrated remarkable resilience and growth, with startups raising nearly USD 950 Mn since 2013. The ecosystem comprises over 2,500 unique startups, creating over 1.5 Mn jobs directly and indirectly.
Foreign investments have played a crucial role, with USD 875 Mn sourced from global investors, accounting for 92% of total funds. Startups in sectors like financial services, logistics, agriculture, and healthcare have attracted large sums of investments, highlighting the ecosystem’s potential for social impact and innovation.
Despite the progress, Bangladesh’s startup ecosystem faces several challenges. The “Valley of Death” phase poses a significant hurdle for startups, where they struggle to secure financing. Additionally, inconsistencies in regulatory frameworks, limited financial literacy, and an underdeveloped infrastructure impede the ecosystem’s growth.
However, opportunities abound, especially in impact investing, where there is a growing focus on sustainability and social impact. With the right support and interventions, these challenges can be overcome, unlocking the full potential of Bangladesh’s startup ecosystem.
Foreign donors play a pivotal role in driving systemic change and fostering the growth of impact investing and social entrepreneurship in Bangladesh. Organizations like Build Bangladesh, Oxfam, and the Asian Development Bank have been actively engaged in combining impact investing with grants, facilitating knowledge transfer, and supporting social impact ventures.
By providing targeted support and financial instruments, foreign donors contribute to creating a conducive environment for impact-driven initiatives and sustainable development.
To further support the growth of social impact investing and social entrepreneurship, stakeholders must take concerted actions. Introducing investor-friendly policies, strengthening financing frameworks, formalizing definitions of impact investment, and promoting collaboration among ecosystem stakeholders are essential.
Capacity development programs, improved transparency in project development cycles, and enhanced ease of doing business for foreign investors are also recommended. By implementing these recommendations, Bangladesh can continue its journey towards fostering a thriving and impactful startup ecosystem.
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If you are interested to learn more about the latest Impact Ecosystem trends
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Mustafa Hamid, Former Business Consultant, and Ameera Fairooz, Business Consultant at LightCastle Partners have prepared this report. For further queries, contact [email protected].
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