The StartUp Equation

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Nirjhor Rahman, CEO of the first angel investing platform of the country, Bangladesh Angels, talks about the promise of the startup scene in Bangladesh, the policy required to support the stupendous growth and the future of the platform.

Tell us about the inception of Bangladesh Angels. Were there any initial challenges?
I began working with government organisations like Chattogram City Corporation and Dhaka WASA for example. I worked on a few different projects, out of which some worked and others didn’t. I thoroughly enjoyed the process of building a team, working with stakeholders, etc. After that I worked with Impress Group. They have a social business wing called Build Bangladesh and at the time they were partnering with an Australian Non-Profit called YGap, which was essentially trying to train social entrepreneurs throughout the country. I became the country director of that program and it was a great experience. I learnt a lot from the company itself – the way they approached their various projects; the ethos with which they run it. I also gained more knowledge about Bangladesh by travelling across the country, meeting lots of different entrepreneurs, etc. However, it’s one thing to train entrepreneurs but it’s a whole another thing to fund them. While a lot of entrepreneurs I spoke to appreciate the advice and support, what they really needed was a risk capital; to not only start, but also grow their ventures. Sometimes entrepreneurs require a large fund at the early stages of their journey, so the question was – how do you make it easy for them to take that capital and how do you also make it easy for investors to find and invest in them as well? If you look at the US, Europe, Singapore or any ecosystem where startups are big and their funding ecosystem is very strong, you will find local angels at the beginning of that value chain.
I was very lucky to find mentors who thought similarly, such as Tina Jabeen, who is well known in the ICT sector; Sajjad Rahman, one of the most famous angel investors from Bangladesh with 900+ angel investments around the world; Samad Miraly, co-founder of Startup Dhaka which has an incubation acceleration program for going on 10 years and India-based Abishkar, who have been investing in Bangladesh since 2015-16. They all came together and had the same idea – let’s create the first angel network in the country. That was in 2018 and I got very lucky as they were looking for a CEO to help run it. They became my board and soon we launched Bangladesh Angels at the end of 2018.

Nirjhor Rahman
CEO of the first angel investing platform of the country

Has the startup scene been flourishing in Bangladesh – do you think it’s commendable growth or should we have grown at a faster pace? What’s your take on social businesses?
We can be faster but I think it requires contextualization. I think this year we raised a record amount of money for the startup sector in Bangladesh – $120 million in the last count and that’s the highest it’s ever been. In aggregate it has been close to $450 million for investment startups in Bangladesh over 8-9 years, so I think that is a huge improvement because about 25% of that actually came in one year. Despite the challenges of COVID-19 in the year before, 2021 has been really good and we also raised $14 million. Nevertheless, startups in India, our neighbor, have raised $6.5 billion in 2021. Obviously we are minnows, even if you just compare our GDP with theirs, however it does bear to keep in mind a few things. One is that the Indian ecosystem is at least 20 years old while ours is essentially 8 or 9 years old right so we are literally 10 years behind India when it comes to the startup scene. The second is that we never quite had the Wipros, the Infosys of the world to be able to create a generation of tech entrepreneurs in the 90s, like India where some of that capital has then been recycled into investing in startups of the next generation. The third is the role diaspora has played in the Indian ecosystem. They’ve had engineers, software developers who migrated to places like the U.S. in the 80s and 90s who became wealthy during the dot com boom and then reinvested that capital and expertise back into India. Unfortunately our diaspora is a bit younger as people here started immigrating in the 90s, and it is actually in the last 20 years that we have witnessed a lot more movement. So from that perspective, it’s going to take time but I think we should be happy with what’s happening. We can always accelerate that process and think about more ways to do it, but we should all be pleased so far with the progress and we should keep working hard to further it.


This year we raised a record amount of money for the startup sector in Bangladesh – $120 million in the last count and that’s the highest it’s ever been. In aggregate it has been close to $450 million for investment startups in Bangladesh over 8-9 years


What are the factors Bangladesh Angels looks at in selecting startups? What kind of startups are you going to promote or fund?
In a nutshell, the typical profile of companies we are looking for are those which are in the pre-seed to seed stage. In the context of Bangladesh, that’s typically 1 to 2 years of operations, some kind of product or service in the market underpinned by a digital technology or platform. Ideally we look for full time or multiple founders, and those ventures generating revenues, both of which are increasing in number. At the very least, we look for startups which have some users where we can measure the user data as a means to see the efficacy or the effectiveness of whatever solution they are bringing.
Those are the top characteristics we seek to promote or fund, but otherwise, we are quite sector agnostic and are quite open to select a company for its own merits. When it comes to investing at the angel stage, I would say 90% of the consideration is made based on the founder – their story, how much they know about the problem, how much they’ve worked with it, what have they achieved so far and most importantly, the vision they have and whether or not they can back that with their execution and their knowledge of the market. It very much comes down to the quality of the founder/s or their reputation, which matters a lot. We have made about 22 investments so far and most of the companies came through referrals from people we like in the ecosystem; people we really respect, or admire from within our pool. We look at financials, pitch decks, data ropes – all those things are part of the process of looking at a potential venture and then you have to negotiate valuations, terms, and look at the instruments. All of these are part of the process, but at the end of the day, 90% of it comes down to the founder.

Ever since you started in 2018, what has the journey been like so far? What was the response and what were the hurdles you overcame given the concept of angel investing was pretty new?
We’ve got about 260 members and they pay to be a part of us – 50% in Bangladesh, 50% overseas, some foreigners but mostly NRBs from places like UK, Europe, Australia, US. I found that quite interesting. We’ve actually grown our membership by 5 times in the last 15 months, so you can see that there’s a lot more interest now in what we are doing especially from the diaspora so that’s good. In terms of DOs, we’ve got 22 DOs that have raised a little bit under about $2.5 million in the last 2 years – 75% of those DOs have happened in the last 12 months, we’ve been very busy. Back in 2019 or 2020 we were doing one deal a month or two, nowadays we are doing 4 to 5 in any given moment in time.In terms of the challenges – if you really want to unlock and build on the ecosystem, there are some policy issues that need to be solved, not just in Bangladesh but for all stakeholders. Firstly, we need to think about the instruments. Around the world, in the early stages, people invest in share capital but in Bangladesh it is done through shares. One of the biggest challenges is valuing the company – how do you do that beyond a pitch deck or an app, or a platform and some numbers? It’s difficult to be scientific as founders and investors usually want separate things. One way to get around that is using safe notes or convertible notes, and this is legally protected and allows time to make conversions when valuation is determined. It doesn’t exist in Bangladesh, at least not formally. There are different ways to figure out those things, but it will be better if the government devises a policy on such instruments.
Another challenge is that founders want big tickets – they want $50,000 at a time, but not everybody has the appetite for risk. Ideally, you create pools where you can have legal entities, pass through companies where many different investors can put in a few thousand dollars at a time but in aggregate that becomes a big pot of money that could be invested in startups. You might call them funds but they are specifically called ‘special purpose vehicles’. Once again, in the US, I could do that in two hours online, but I cannot do that in Bangladesh legally, and if I did it would not be particularly efficient from a tax and compliance standpoint. Yet another challenge is convincing foreign investors. Regardless of how much you tell them that we’ve improved our business environment, there are still apprehensions around governance structure, reputation of the country. Inevitably companies in Bangladesh have to go abroad to places like Singapore or the U.S. but that becomes a huge challenge when you have investors abroad and locally as well. What governs how you respect the rights of local investors when you have challenges on the foreign side? How do you respect the rights of foreign investors if the company is involved locally as well? That needs to be recognized and harmonized. Local investors should be able to own shares abroad if anything, only if these founders are trying to raise money in Singapore to bring it back to Bangladesh, and not trying to take money out. These are the three challenges that I face often, but yes, we definitely have a lot to do if we’re really going to make the country startup friendly and startup investment friendly.
From the portfolios of companies you have supported, can you mention one or two that are promising and you are hopeful about? What makes investing in these companies a good decision and why?
I’m very happy about Reverse Recourses – our first European company. It’s a company based in Estonia but their main base of operations is in Bangladesh. What they do is they connect with garment producers like H&M or Bestseller who generate a lot of textile waste. They go into factories within their supply chain and onboard companies onto their platforms, then connect textile producers with potential buyers of textile waste. That’s one value addition – they are connecting their associate market place, or their B2B marketplace and that allows the textile producers of Bangladesh to earn extra money, some incremental income, from their operations, by selling this extra waste into the open market.
The second thing they are doing is that they are selling/providing a data service to companies like H&M that need it as part of its global sustainability targets – another part where they are hoping these companies can sort of meet their targets and that also adds value to investing in and taking textiles from Bangladesh. It’s our first climate-tech venture and we are quite happy about it. We found them at a conference and were able to reach them through our platform and got Bangladeshi and American Bangladeshi investors on board where they only had European investors before. It’s a female led venture, that’s exciting as well, and the fact that we’re creating connections between Europe and Bangladesh makes it exciting too.


We look at financials, pitch decks, data ropes – all those things are part of the process of looking at a potential venture and then you have to negotiate valuations, terms, and look at the instruments. All of these are part of the process, but at the end of the day, 90% of it comes down to the founder.

Another company that we are very happy about is Shuttle. They are offering an app-based shuttle service, primarily for young women and young professionals. Not everybody can afford an Uber ride or feel comfortable on a motorcycle. Shuttle picks and drops users from common point; they have tens of thousands of users, primarily university going and young women. What I really liked about the founder is that when COVID-19 pandemic hit, universities stopped classes which posed a challenge. However, he pivoted and Shuttle started working with banks like HSBC, with large conglomerates, BPOs, etc. to offer safe rides to their employees. These companies offer carpool services but they typically outsource it. Shuttle offers timely, reliable transport with access to data. They are doing quite well in terms of revenue which has grown substantially. They raised money through us, and raised more money through investors in Singapore. We’ve had close to 30% appreciation in the last 6 months since we invested. We are looking at another 50% or more growth in the valuation, so we are quite happy.

Where do you see Bangladesh Angels 5 years down the line?
One is, I want to automate more of our work and build our own platforms through which an investor can log in, look up deals, and choose where to invest – all on their phones or computers. These platforms exist all over the world, no reason why we can’t do the same for Bangladesh. We are looking to do it sooner rather than later as this will also make it easier for entrepreneurs as well.
Secondly, we want to have chapters or hubs of Bangladesh Angels around the world wherever Bangladeshis are congregating. The Indians do a great job of connecting their diaspora back to their country, creating avenues for investment, etc. We can do the same with Bangladesh Angels present in Europe, in the US, in Australia, etc. – organizing and teaching the local communities about investing and angel investing, showing them the opportunities in Bangladesh, and also potential opportunities in their resident countries, especially if they happen to be led by Bangladeshis.
And last but not least, we want to have our own funds. We are at the point where we have invested $2.5 million, so we can start consolidating that a little bit, giving our members an option to either continue to invest directly into ventures or to pool it together as a communal fund. In 5 years’ time, ideally, we will launch and grow it, and hopefully bring in international investments along the way. These are my main priorities for, let’s say, the next 12 to 18 months and hopefully, in the next 5 years we will see them bear fruit.


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