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Global venture funding has seen a sharp slowdown post-COVID-19, as rising interest rates and geopolitical tensions continue to impact investor confidence across markets. With total global funding dropping from a peak of USD 681 Bn in 2021 to USD 141 Bn in 2023, the landscape has undeniably become more challenging. However, certain sectors such as fintech and AI remain resilient, especially in Southeast Asia, where rapid digitization and technological adoption have helped sustain growth.
Bangladesh: A Resilient Economy with Growing Potential
Against this backdrop, Bangladesh stands out as an emerging powerhouse in South Asia, recently surpassing the South Asian average in GDP per capita and positioning itself to become a trillion-dollar economy by 2030. With over 1,200 startups emerging annually across various stages, the ecosystem has raised USD 989 Mn since 2013. Over 298 global and local investors have participated in funding these ventures. Early-stage investments have averaged USD 543,000 per deal, while late-stage deals have brought larger sums with an average ticket size of USD 9.5 Mn. This steady flow of capital has allowed Bangladeshi startups to make their mark in a range of industries, with financial services pooling in the highest investments till date.
The Role of Venture Capital in Driving Growth
Venture capital (VC) firms remain the main driver of startup funding in Bangladesh, with USD 753 Mn invested across 171 deals since 2013. International investors have played a pivotal role, contributing to 92% of total funds, while domestic capital has shown promising growth, with USD 23 Mn invested.
Pathways For Future Growth And Resilience
The recent political shift has led to the formation of an interim government focusing on stabilizing the economy and implementing reforms aimed at promoting fair market practices and addressing structural governance issues. As the country approaches its next election cycle, public sentiment remains optimistic, with expectations for sustained growth and impactful reforms across economic and political spheres. Amidst these changes, there is a growing belief that Bangladesh’s startup ecosystem will continue to thrive. The combination of proactive government policies, a strong foundation in venture funding, and growing interest from the private sector presents Bangladesh with a unique opportunity to build a resilient startup landscape. Future reforms are anticipated to address market practices and streamline regulatory requirements, helping the ecosystem overcome current challenges and meet the expectations of both domestic and international investors.
One area that holds promise is the development of diverse funding channels. Beyond traditional VC investment, the introduction of angel investors, government-backed funds, and blended finance models could provide the ecosystem with more stability.
As Bangladesh stabilizes, the public outlook on its long-term potential remains positive. The anticipated reforms, alongside continued governmental support, will serve as cornerstones for sustainable growth and resilience. With an adaptive approach, Bangladesh is well-positioned to build a startup ecosystem that not only withstands global uncertainties but also thrives in the evolving landscape of Southeast Asia.
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