It has been quite a journey for Bangladesh over the past few years as an emerging hub for start-ups. Even though vicissitudes are expected in any business landscape, the overall scenario has been rather downhill, raising notable concerns among stakeholders.
Back in 2018, Bangladesh-based start-ups managed to raise $119 million, marking the golden start of a new era. However, that era was lost even before it could fully take off when COVID-19 hit in 2020, and investments plummeted to $51 million. Yet, in 2021, Japan's SoftBank single-handedly invested $250 million, bringing the total investment for the year to $435 million.
Nevertheless, investments again took a nosedive, and by 2024, they had dropped to just $35 million. According to many sources, there are several prominent reasons why investors are no longer interested in Bangladeshi start-ups: poor accountability, unclear business models, unbalanced teams, and weak leadership. High tax rates, restrictive business boundaries, and a volatile economy also contribute to the lack of investor confidence.
Compared to last year (2024), Bangladesh has climbed four places and currently ranks 79th in the Global Startup Ecosystem Index, while India remains in the top 20.
India enjoys a vast consumer base, cheap internet access, and relatively strong digital infrastructure. The city of Bengaluru is now called the second Silicon Valley of the world, hosting all the tech giants. It attracts prominent investors and nurtures a significant number of entrepreneurs. By contrast, Bangladesh lags behind in such infrastructure, which limits its ability to attract foreign investment.
Although the number of start-ups in Bangladesh is nearly 1,500, most are unprofitable or far from securing funding. Operating in a limited market and serving only specific segments, it is challenging for these businesses to scale. Bangladesh's economy presents numerous challenges that make it less attractive to foreign investors. Political instability, inefficient bureaucracy, and frequent policy changes create an unfavourable business environment. Many companies also face hurdles in repatriating profits due to exchange rate issues. These factors collectively make Bangladesh appear as a risky business environment, resulting in investor hesitation to commit to local ventures.
Md. Saki Redoan Hamid
saki.hamid.241@northsouth.edu
