Strengthening startup ecosystem

With the establishment of the country's first mobile financial service styled bkash in the 2010s, the startup revolution actually began in Bangladesh. Gradually more startups emerged with their various services in the sectors including fintech, retail, logistics, software, edtech, traveltech, e-commerce, you name it and created their space in the national economy. Within a short time, the startup ecosystem took a notable turn and by now it has proved itself to be a potent player in the economy through job creation, innovation and providing homegrown solutions to a host of local issues. Some of the startups have been able to create partnership with global players in their respective service areas and draw significant foreign investment in the economy. Even so, when it comes to a country's investments in the startup sector proportional to its GDP, Bangladesh's record is the lowest vis-à-vis those of other regional economies including India, China, Singapore and Pakistan.
This and other investment-related issues, both domestic and foreign, in Bangladesh's startup sector, came up in a report presented by a local consultancy named Light Castle Partners in November last year. In fact, between 2013 and 2024, Bangladesh's startup sector saw a comfortable level of investment amounting to overTk118.68 billion. Interestingly, 92 per cent of those investments came from abroad.
During 2021 and 2022, the investments reached a peak, perhaps as one of the fallouts of the pandemic when startups had their heyday. At that time, the public's dependence on online services grew phenomenally, both locally and globally. Notably, the greatest beneficiary of those external investments in Bangladesh was a single startup house, which, as noted in the foregoing, was actually the trendsetter in the startup sector of the country. A tech-focused Japan-based multinational investment company, Soft Bank Group Corp., for instance, made the investment in the local startup house in question. The same house in the fintech sector could also draw substantial investment from another global financial service company, Ant Financial, in 2018 and thus turn itself into the country's first unicorn (a startup worth over US$1.0 billion). No doubt, the development has been refreshing seeing that global investors in the tech-sector are showing interest in Bangladesh's emerging startup ecosystem. In that case, exceptional performance of a handful of startup companies in is no doubt appreciable. But, at the same time, it also points to the fact that the growth of the entire sector has hardly been even. So, it would be far more reassuring had a good number of other operators in the sector could bring international investors of similar standing.
In 2021, the entire startup sector, except the mentioned house, received a total investment worth US$434.8 million. In that case, to develop a sound startup ecosystem, a facilitating role needs to be played by the government so that the successes could also be emulated by other operators in the field. Also, the fact that the startup business flourished in a special kind of environment (such as during the coronavirus-affected years) is also not quite inspiring. In the following years, the trend could not be sustained at the same level. Whatever the reason, the sector has seen a decline in investment since 2023. In 2024, the sector reportedly fetched investments worth US$34.7 million.
The factors contributing to the fall in foreign investment, according to sector insiders, include USD getting costlier than BDT, wars including the Russo-Ukraine war, political instability and so on. Also, issues like taxation, bureaucratic barriers, infrastructural inadequacies, taxation, etc., must improve to facilitate enhanced inflow of external investment in the startup sector. Finally, the startup sector should be given a policy framework to operate, flourish and deliver better.