Public company coming up for start-up funding

An equity-backed public limited company comes up shortly with a Tk 20-billion authorised capital for startup financing to facilitate promising economic ventures in the country, sources say.
With eight shareholders, the company is being initially formed with the contribution from 52 commercial banks to support the startup sector which is believed largely unexplored here due mainly to unavailability of funds, officials and bankers have said.
To ensure access to credits for the least-focused business area, the central bank is facilitating the company-formation process with assistance of the commercial banks who will become a shareholder of the startup venture with their equity investment.
Equity investment is the act of purchasing shares or stocks in a company to become a shareholder. By owning shares, investors gain a stake in the company's assets and profits.
Sources at Bangladesh Bank (BB) said the proposed company will have paid-up capital worth Tk 6.50 billion and the authorised capital has been fixed at Tk 20 billion.
The structure of the proposed venture capital has already been formed with eight shareholders.
Of the shareholders, most-contributing are four banks -- Standard Chartered Bank, City Bank, Sonali Bank and Pubali Bank. The remaining four will be independent directors and the names of the independent directors will be finalised in the first board meeting of the company, according to the sources.
Seeking anonymity, a BB official said they had submitted a proposed name of the public limited company -- 'Bangladesh Startup Investment Company PLC' -- to the Registrar of Joint Stock Companies and Firms for name-clearance purposes.
The official said they made drafts of memorandum of association and article of association that have been shared with the Association of Bankers, Bangladesh (ABB) -- the apex body of the country's top bank executives -- for their approval.
"Once we get their (ABB members) feedback, we will go for formation of the company after taking consent of the BB governor," he told The Financial Express.
The central banker holds hope for a smooth sailing of the entrepreneurship-grooming entity, aimed at economic expansion in the country.
"We're hopeful of launching the company within the coming November and the regulator will completely discharge the responsibility to the board of the company once it is ready to start."
Chairman of the ABB Masrur Arefin said they had sent the drafts to a reputed law firm for its observation and they were expecting to send it back to the BB by Sunday.
Terming the initiative a timely one in the macroeconomic context of the country, he said they planned to bring in foreign consultant having experience in the field in the investment committee to ensure proper usage of the equity investment.
"I am very optimistic about the company. If we can help establish some platforms like bKash, Pathao and Chaldal, it will be a great achievement," said Mr Arefin, also Managing Director & CEO of City Bank.
Hailing the move, the founder and CEO of Shikho, a startup, Shahir Chowdhury, offers some operational dos for the company.
He says the initiative will be unfruitful if the banks operate the funds because the commercial banks don't have the capacity or skill-set to deal with the startup ventures.
Sharing an investment model, he says there are two types of partners -- limited partners and general partners -- in the FOF (fund of fund). In this model, the limited partners, for a lack of enough experience, hand over the operational responsibilities to the general partners who are well-equipped and have the expertise.
"I expect the banks will not take the operational risk in this case because they are profit-making entity. But in startups, returns on investment will come after few years. It's not something that bankers normally do," he says.
The participant commercial banks contributed the equity fund with 1.0 per cent of their net profit. The startup operators, aged between 21 years and 45 years, will be eligible to get the fund from Tk 20 million to Tk 80 million, according to the BB sources.

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