The Emergence of Bangladesh as a Thriving Startup Hub

Exploring the factors driving Bangladesh’s startup growth and its potential for investment opportunities. Why Investors Should Take Notice.

Bangladesh, a country with a population of 165 million, is often overlooked in terms of its startup ecosystem and investment opportunities, however, it has been making remarkable progress in the field in recent times, attracting global attention and investment. Despite the global venture capital (VC) cutting down investment flow, local startups raised around $5 million over 16 deals in 2022, amid the fund crunch, proving the potential and resilience of the country’s startup sector. In the first half of 2022, Bangladeshi startups raised over $90 million, with the largest B2B e-commerce platform in the country raising $65 million and the largest B2C e-commerce platform in the country, 10 Minute School, earning $2 million in early funding.

The country is one of the fastest-growing economies in Asia, with a GDP per capita higher than India, and is on track to become a middle-income country in the near future. Bangladesh’s position as a maturing startup hotspot has also caught international attention, with over 1,200 active startups creating a significant impact in the lives of Bangladeshi people. The country has attracted a total investment of $505 million in 2021 and 2022, with a significant contribution from global investors. In 2021, bKash, the largest mobile financial services in Bangladesh, raised $250 million from Softbank, which raised its valuation to around $2 billion and made it the country’s first unicorn.

One of the main reasons for investing in Bangladesh’s startup ecosystem is the country’s continuously rapid economic growth. Bangladesh has demonstrated impressive resilience, even during the COVID-19 pandemic, and is poised for further growth in the future. Its strategic location, bordering India, China, and Southeast Asia, makes it a gateway to a large market of over 2 billion consumers. The country also has a young and skilled workforce, with a median age of just 27 years, and a growing population, making it a fertile ground for the development of the startup sector.

Another reason to invest in Bangladesh’s startup ecosystem is the openness to foreign investment. The government has been actively promoting foreign investment and has implemented several measures to make the process easier and more attractive, including tax incentives and streamlined regulations. This, along with the increasing number of internet users and the availability of tech expertise, has created a favorable environment for startups to flourish.

The startup sector in Bangladesh is diverse, ranging from e-commerce, edtech, fintech, and healthcare, to name a few. The e-commerce sector, in particular, has seen rapid growth, with the largest B2B e-commerce platform raising $65 million in June 2022 and the largest B2C e-commerce platform, 10 Minute School, raising $2 million in early funding from Surge, Sequoia Capital India’s rapid scale-up program, in January 2022. The edtech sector has also been performing well, with Shikho, a local edtech startup, raising $4 million in seed funding, bringing its total round to $5.3 million, the largest seed funding a Bangladeshi startup has raised to date.

Fintech is another area where Bangladesh is making significant progress, with bKash, the largest mobile financial services in the country, leading the way. bKash raised $250 million from Softbank in 2021, making it the country’s first unicorn and attracting further investment into the fintech sector. This is just one example of the growing potential of the fintech sector in Bangladesh, which is expected to continue to grow in the coming years.

Healthcare is another promising sector in Bangladesh’s startup ecosystem, with several startups focusing on addressing the country’s healthcare challenges, including a shortage of doctors and limited access to medical services.

Investing in Bangladeshi startups is a great opportunity for those looking to tap into the potential of one of the world’s fastest-growing economies. With over US$800 million raised over the last decade, and over US$90 million raised in the first half of 2022 alone, Bangladeshi startups are clearly making waves in the investment world. Here are just a few reasons why you should consider investing in Bangladeshi startups:

A Growing Economy: Bangladesh is the 37th largest economy in the world and has been growing at an average rate of 7% over the last decade. With a stable political environment, a large domestic market, and a growing middle class, Bangladesh presents a unique investment opportunity for those looking to tap into its growth potential.

Tech-Savvy Population: Bangladesh has a young and tech-savvy population, with a median age of just 27.9 years. This has created a large pool of individuals with the necessary skill sets to start a business, and with over 5,000 IT graduates produced each year, the talent pool is only growing.

Strong Entrepreneurial Spirit: The creation of the startup ecosystem in Bangladesh was greatly influenced by the National ICT Policy of 2009 and the Digital Bangladesh Agenda by 2021, which has fostered a strong wave of entrepreneurship aimed at solving pressing issues, such as those arising from the pandemic.

Growing Middle Class: Bangladesh is witnessing a fast-growing middle class, which is projected to reach 34 million by 2025. This group is the target market for many startups, as they have the purchasing power and consumption habits to drive growth.

Supportive Business Environment: The government of Bangladesh has been actively supporting the growth of startups by providing various incentives and creating a supportive business environment. This includes tax benefits, access to funding, and mentorship programs to help startups grow and succeed.

Low Investments to GDP Ratio: Despite the rapid growth of the startup ecosystem, the investments to GDP ratio in Bangladesh remains low at just 0.1%, providing plenty of room for growth. This presents a unique opportunity for investors looking to tap into an undervalued market.

Resolving Pressing Issues: Many startups in Bangladesh are focused on resolving pressing issues such as healthcare, financial services, education, and more. These startups are not only creating economic value but also positively impacting the lives of the citizens of Bangladesh.

Investing in Bangladeshi startups can be a great opportunity for those looking to tap into the potential of one of the world’s fastest-growing economies. With a growing economy, a tech-savvy population, and a supportive business environment, the future looks bright for startups in Bangladesh. Whether you’re looking to invest in a company that’s solving pressing issues or one that’s tapping into the growth potential of the country’s middle class, Bangladesh presents a wealth of opportunities for investors. So why not consider investing in a Bangladeshi startup today?