In developing countries such as Bangladesh, establishing and sustaining a startup remains an arduous undertaking, with inadequate access to capital standing as one of the most formidable barriers facing early-stage entrepreneurs.
During the formative stages of operation, founders are frequently compelled to invest in their ventures independently, navigating an environment where funding is scarce and institutional support is inconsistent. When personal resources are exhausted, aspiring entrepreneurs typically turn to conventional lending mechanisms in pursuit of financial assistance. Traditional financial institutions, however, remain largely reluctant to extend credit to early-stage startups, owing principally to concerns over repayment uncertainty and the risk of such loans converting into Non-Performing Loans (NPLs). This institutional caution significantly narrows the fundraising landscape, leaving many promising ventures to struggle through their most vulnerable period.
What compounds the problem further is a systemic lack of open information about what size of funding actually exists, who controls access to it, and how founders are supposed to reach the right people and what investors are looking for. In many instances, investment networks in Bangladesh operate through closed circles, where personal connections often determine who gets a meeting with an investor and who does not. This gatekeeping, whether deliberate or structural, means that a great deal of entrepreneurial talent never reaches the stage where it can be properly evaluated.
Sadia Haque, co-founder and chief executive officer of Share Trip, articulates the challenge plainly: "Fundraising is often one of the most challenging aspects for any startup, for all stages under the existing global change in the investment climate. One of the primary difficulties founders face is building investor confidence. It can be based on multiple variables - focusing on the country or region targeted by foreign investors, the founder's approach and commitment towards the startup, insufficient traction or market fit readiness, and even proper documentation and internal audit policy might pose a challenge."
She further observes that access itself is a structural obstacle: "Another key challenge is connecting with the right investors and getting the opportunity to present the business. Even with a strong idea, reaching the appropriate network can be difficult. At the same time, investors expect a clear understanding of the market, a well-thought-out financial plan, and a realistic execution roadmap."
This points to a broader failure of the ecosystem. In many developed economies, information about funding mechanisms, investor expectations, application procedures, and legal requirements is publicly available, openly discussed, and widely circulated through universities, accelerators, and government bodies. In Bangladesh, such information frequently remains fragmented, inconsistently shared, and accessible primarily to those who already have the right contacts.
Apon Sazzid, founder and chief executive officer of Apidoxy, shares another dimension of the problem: "One of the biggest challenges is the lack of early-stage funding, as most investors prefer already validated or revenue-generating startups. To navigate the problem, founders should focus on building sustainable business models with early validation and real users, rather than relying only on external funding."
The global startup ecosystem has evolved considerably over the past decade, producing a range of financing opportunities particularly in developed economies, where venture capital firms, angel investor networks, accelerator programmes, incubation centres, and various government-backed schemes collectively support entrepreneurs at different stages of growth. Bangladesh has also moved in this direction, with government agencies, private institutions, and several international organisations increasingly extending grants, investments, and strategic assistance to local ventures. The scale and accessibility of these opportunities, however, remain significantly behind what counterparts in more developed markets offer.
Avelo Roy, managing director of Kolkata Ventures, draws a useful comparison from across the border: "Startups across the world face common challenges such as lack of proper entrepreneurial knowledge, legal complexities, and limited access to funding, where India is no exception. However, the Indian government has introduced several initiatives to help entrepreneurs run their startups more smoothly. Selective startups are eligible for tax exemptions for up to ten years, and entrepreneurs above the age of 18 can access business loans on favourable terms." He adds that sectors including information technology, green energy, robotics, biomedical sciences, solar energy, and financial technology receive special priority, enabling entrepreneurs in those fields to benefit from dedicated funding and government support.
The statistics make the dependency on foreign capital impossible to ignore. According to data from LightCastle Partners, approximately 92 per cent of investment into Bangladeshi startups originates from abroad. Over the past decade, nearly US$ 1.0 billion has been invested in Bangladeshi ventures, equivalent to more than Tk 12,000 crore, whilst domestic investment during the same period amounted to only Tk 9.87 billion (987 crore). These figures suggest that local investors remain largely disinclined to back startups at any meaningful scale, an attitude that must shift if the country's entrepreneurial landscape is to develop with any degree of self-sufficiency.
Nafis Alam, assistant vice president for Impact and Ecosystem at Startup Bangladesh Limited, frames the solution in terms of institutional readiness rather than mere funding pursuit: "Fundraising is a human endeavour that thrives on trust. To bridge the gap, we must shift our focus from simply 'getting funded' to 'becoming ready', to build startups that are operationally sound as well as socially impactful. When a founder's vision is backed by clear metrics and honest leadership, the entire community rises with them." He further emphasises the importance of maintaining thorough financial documentation and notes that active participation in Corporate Social Responsibility initiatives can draw the attention of government bodies and donor organisations towards deserving ventures.
Kazi Akib Annaf, manager for Growth and Development at the Centre for Entrepreneurship Development at BRAC University, identifies an institutional mismatch at the core of the problem: "Banks and other financial institutions are generally designed to serve established ventures, not startups at their initial stage. The compliance requirements for accessing funds from these institutions are often complex and burdensome, which significantly tightens the funding pathway for early-stage entrepreneurs in Bangladesh. Beyond financing, there is another structural challenge: universities here do not always bridge the gap between academic knowledge and practical entrepreneurial skills, which creates further barriers for students."
Mr Annaf proposes several remedies. Universities, he argues, should actively invest in student startups, ideally through returnable grant mechanisms that create a sustainable funding cycle rather than a one-off disbursement. He also highlights the underutilised potential of foreign embassies and international development organisations operating in Bangladesh, arguing that entrepreneurs should be far more proactive in seeking out and accessing these opportunities.
On the policy front, there is a strong case for Bangladesh Bank to introduce a dedicated refinancing scheme for startups, alongside subsidy-based operational assistance for emerging ventures. Simplifying the regulatory requirements around startup loans would remove one of the most frequently cited obstacles to entry. Private enterprises, for their part, could direct investment into startups as a component of their Corporate Social Responsibility commitments, producing broader social and economic value in the process.
The deeper issue, running beneath all of this, remains one of ecosystem transparency and openness. As long as funding information is poorly disseminated, investor networks remain closed to outsiders, and the criteria for accessing support are left deliberately vague, the barriers facing Bangladeshi startups will persist regardless of how many programmes are announced. A working startup ecosystem requires not only capital but also the open, accessible infrastructure of knowledge and networks that allows founders to find their footing without depending entirely on who they happen to know.
Excessive reliance on foreign support, however well-intentioned, carries its own long-term vulnerabilities. Diplomatic relationships and international development priorities are subject to change, and an entrepreneurial ecosystem built predominantly on external capital is inherently fragile. Bangladesh must, therefore, rework its economic and financial policies in ways that genuinely support startups during their most critical early period, ensuring that the next generation of entrepreneurs has a fair and transparent path forward.
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