Page 81 - IBT Sept 2021 (1)

Startup Industry REACHING
FOR THE STARS
As humankind advances, we are seeing new
avenues being opened up. Coupled with THE BANGLADESHI STARTUP ECOSYSTEM
next-generation technologies, we are now The startup ecosystem in Bangladesh initially grew on the
witnessing several industries being back of two large metropolitans – Dhaka and Chattogram
transformed from the ground-up. People no around the early days of 2010. The sectors were also quite
longer stand in line to get takeaway food, well-defined, mostly hovering around IT, e-commerce and
rather get food delivered directly to their digital marketing. Over time, as new players entered the
doorstep with the click of a button. Roads are market and as industries started to take shape globally,
now being filled with on-demand cars and Bangladesh witnessed the inception of ride-sharing and online
bikes, the riders of which get customers with food delivery startups. And there have been quite a few
the help of a smartphone app. Such radical significant global investments in our local startups over the
changes and disruptive innovation can mostly years. Some of the notable ones were – Pathao (US$12 Mn
be credited to startups – high-growth from Go-jek), Shohoz (US$ 15 Mn from Golden Gate Ventures),
companies who place technology at the center Deligram (US$ 2 Mn from Skycatcher.
to ensure exponential growth. While the The startup ecosystem in Bangladesh has seen fabulous
European and American markets have growth in the last decade. It has not only been about the
witnessed the meteoric rise of startups like emergence of new startups, but also the increase of
Uber, Airbnb and Shopify – innovation of involvement of the other key stakeholders of the ecosystem.
similar scale has also taken place in this part The ecosystem now comprises around 1000 startups, with 200
of the world as well. Bangladesh has now new ones being formed every year. The 1000 active startups
introduced some of the most revolutionary have given employment opportunities to around 1.5 million
products and services; that too made right here people. Investments have also skyrocketed as well, with US$
at the heart of the country. Startups like 200 Mn injected into the economy
Pathao, Chaldal and Sheba.xyz are some of the in the last decade. Accelerators
many that are carrying the flag of innovation It is obvious that and incubators have also started
forward. The country is now generating more to emerge in order to nurture and
than 5000 IT graduates per year, and such a tech-enabled, assist the growth of these startups.
trends are expected to rise, considering almost high-growth Grameenphone Accelerator has
half of the total population is under 35 years business will be long been the forerunner of startup
and a rapidly growing middle class expected to accelerators in Bangladesh,
reach 34 million by 2025. But how are in need of leading to the initial funding for
Bangladeshi startups performing as a whole? constant companies like Sheba.xyz (online
What are the bottlenecks that are hindering service marketplace), CMED Health
growth? Let’s take a look. funding in order (AI enabled healthtech platform),
to grow rapidly. Repto (Online learning platform)
A POPULATION FILLED WITH and many others. Over the course
POSSIBILITIES of the next few years, many other
Bangladesh as a whole is one of the well-suited accelerator programs also started to take shape. Some of the
places to launch and grow a startup. Why? most notable ones are – Banglalink Incubator, R-ventures (by
Because the massive population can ensure Robi), NSU Startups Next etc.
scalability if the product-market fit is well and
technology adoption throughout the country is INVESTORS OF THIS GROWING ECOSYSTEM
increasing exponentially. Being the 8th largest It is obvious that a tech-enabled, high-growth business will be
population of the entire world comprising 164 in need of constant funding in order to grow rapidly. The
million people, 98% of them are under the Bangladeshi startup ecosystem has also seen a number of
coverage of a mobile phone connection, 62% of local and global investors injecting capital, both monetarily
them have internet connectivity and around 94 and intellectually, in order to take the industry forward. The
million people are expected to use the wonders angel market has witnessed the presence of veteran angel
of mobile internet. That has led to the massive investor consortiums like Bangladesh Angels, SBK Tech
rise of app-based startups like Pathao, Ventures, Pegasus Tech Ventures, Bangladesh Venture Capital
HungryNaki, iFarmer, Sheba.xyz etc. While the and many more. Tech companies like Ant Financial and GoJek
urban-rural divide is still an addressable issue, have also invested into the Bangladeshi startup ecosystem.
startups are growing fast enough in order to Corporate foundations like Omidyar Network and Bill &
ensure the rural residents can also get access Melinda Gates Foundation are also an integral part of the
to these new products and services. industry.
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The Government of Bangladesh is also playing a THE CHALLENGES OF THE ECOSYSTEM
massive role in bolstering the ecosystem. The Despite all the tales of possibilities, there are many avenues
Government of Bangladesh has launched its that are yet to be addressed head-on. The first and one of the
flagship venture capital fund in March, 2020. most evident problems is the absence of mentorships and the
Named as Startup Bangladesh Limited, the availability of funds. While there are plenty of incubators and
venture capital fund has an allocated share of accelerator programs, many of them are poorly structured,
500 crore taka. In 2021, the state-owned venture barely provide the entrepreneurs with proper resources and
capital firm announced to invest 100 crore taka eventually do not lead to much impact.
in 50 startups in 2021. In accordance with the Also, market malpractices often lead to increasing expenses
plan, the company has put in 15 crore taka in that eventually lead to winding down a startup at a very early
some of the leading startups of the country, phase. The other crucial challenge is a cultural one – the
namely Eduhive, Chaldal, Moner Bondhu, Dhaka perception that the elder generation has towards
Cast, Pathao, Intelligent Machines and Sheba.xyz. entrepreneurship. This deprives the ecosystem of many young,
talented founders as young minds flock towards getting a
stable job rather than trying things out and experimenting
with new ideas. Educators must be made aware of the benefits
of their students working for startups, which include, but are
not limited to, working in a challenging and ever-changing
environment, being flexible and adaptable, taking charge and
leadership when and where necessary, and so on. These
abilities will help graduates advance in their respective fields
in the future. One interesting method for companies to take is
to approach instructors and cooperate with them on courses.
Students in the classes may be given assignments based on
challenges that startups encounter, and they will be expected
to solve these problems using the skills they have learned in
class. This will not only make the students aware of the
startup activities, but it will also provide them with valuable
real-world experience. Also, the lack of
innovation is also very evident. While many
startups in Bangladesh are direct replications of
proven models in South Asia, there are many
problems deep-rooted in our country that can be
solved in unique ways. Innovation should be
fostered, so that problems can be solved in our
own unique style.
LESSONS FROM THE NEIGHBORING INDIA
While Bangladesh is growing steadily, our
neighboring country India has also been making
remarkable progress. The Indian startup
ecosystem, which defied odds during a
pandemic-hit year to create record 12 unicorns,
has the potential to be the engine of growth in
the medium to long run, according to the
Economic Survey 2020-21. Currently, India is
home to 38 unicorns - startups with valuation of
over USD 1 billion - as per the Nasscom Tech
Start up Report 2021. The US and China have better,
As stated by Nirjhor Rahman, the CEO of Bangladesh Angels,
243 and 227 unicorns, respectively.
To facilitate the growth of startups, the Indian “2021 represents a key harbinger for the ecosystem in
Bangladesh. We have already surpassed the entire investment
government had announced the 'Startup India,
Stand-up India' initiative. As on December 23, total of last year by Q3 of this year. We have had the biggest
edtech investment deal in the ecosystems' history in Shikho.
2020, the Indian government has recognized a
total of 41,061 startups and 0.47 million jobs The announcement of Startup Bangladesh's inaugural fund
made incredible waves around the region. So things are
have been reported by more than 39,000 startups.
319 startups have been granted income tax exciting. But even as more foreign, smart capital looks at the
market, we are hidebound by regulation. We still have
exemptions till November last year.
Bangladeshi entrepreneurs raised roughly US$27 ambiguity in our processes and policies when it comes to
recognizing inbound capital, outbound repatriation, as well
million in 2018, whereas Indian startups
garnered US$4.2 billion. The disparity between cross-shareholding between Bangladesh and jurisdictions like
Singapore and US, where international investors would prefer
two economies with identical digital ecosystems to invest.”
demonstrates the lack of a supportive The value of the global startup economy is roughly USD 3
environment. Accelerator and incubator trillion. Through innovation, job creation, regulatory
programs, mentorship and training, and the breakthroughs, the growth of new industries, and cultural
availability of financing in the market will not be revolution, the startup ecosystem assists the larger economy
sufficient to close the gap. The entire business and society. Innovation increases operational productivity and
climate needs to change to make it easier for competitiveness, resulting in the creation of jobs that are not
startups to thrive. Our startup ecosystem has only high-quality but also well-paying. Innovation increases
come a long way since its foundation, but it still operational productivity and competitiveness, resulting in the
has a long way to go before it matures. creation of jobs that are not only high-quality but also
WHAT DOES THE FUTURE HOLD? well-paying. Bangladesh is well positioned to achieve
Bangladesh, the 39th largest economy and one of sustainable development goals through using disruptive
technologies and innovative solutions, with an emphasis on
the fastest growing countries, showed an financial inclusion, social fairness, and equal access to
impressive annual GDP growth rate of ~6.5%
technology. A methodical strategy to developing Bangladesh's
over the last decade. The country’s annual GDP startup ecosystem is an opportunity to accelerate the country's
growth rate officially surpassed that of India’s in
progress with young people at the lead. This is a must-do in
2016 and has been higher than that of its order to nurture both the companies and leaders of tomorrow.
neighbor since then. So all hope is not lost, and
Doing so will eventually lead us to the very promise of our
with the entire world slowly adjusting itself with nation’s independence – a self-reliant, tech-enabled nation,
the new normal, the startup ecosystem in
brimmed to the full with infinite possibilities.
Bangladesh is set to come back stronger and