Promoting startup ecosystem
The Bangladeshi startup ecosystem has seen remarkable growth in the past few years with approximately 1,200 active startups across sectors, including fintech, logistics, healthcare, tourism, agriculture and education. In fact, startups like ShopUp, bKash, Pathao, Chaldal, Maya, Shajgoj, and iFarmer have innovated new products and processes to transform the market and have attracted millions of dollars in foreign investments for Bangladesh along with creating thousands of new jobs.
Therefore, the growth of the startup ecosystem is imperative to enhance its role in accelerating the socio-economic development of Bangladesh and facilitating the move towards a new era of coalescence of business and technology.
Through policies encouraging investments, as well as Startup Bangladesh Limited, the government has displayed an increasing interest in building a more enabling environment for startups. It appears that the government is genuinely interested in promoting the growth of a start-up culture in the country.
However, there are still quite a few factors that are creating impediments to the growth of the startup ecosystem.
Out of the approximately 200 new startups that are born every year, only a handful remain with 80-90 per cent failing to survive due to a weak capital absorption capacity, lack of product-market fit, inadequacy in team expertise, lack of initial funding, etc.
Even the startups that do survive often struggle to grow further due to the absence of a proper strategy to scale the business and the inadequacy of access to investors which can lead to later rounds of investment.
With the ongoing funding winter due to global turbulences, the investment in Bangladeshi startups has plummeted from $68.3 million in the second quarter of 2022 to $4.99 million in the third quarter, a drop of 92 per cent.
While increasing digitalisation and enhanced public and private initiatives are major enablers for the ecosystem, inconsistencies in policies and regulatory frameworks, finite supply of skilled labour and limited access to financial markets are continuing to pose as obstacles for startups.
It is essential for the government and development partners to ensure the development of resilient startups that can attract investments during funding undercurrents, enable the availability of funding through creating new startup-focused local funds, and increase access to international investors.
The way forward lies in partnering with seasoned advisory organisations that can: (1) expedite collaboration of national and international innovation hubs, accelerators, and incubators to strengthen the startups so that they can formulate and modify strategies to coast through obstacles; (2) establish linkage of startups with global investor networks and venture capital firms; and (3) provide support for the development of local funds to boost the availability of capital for the Bangladeshi startups.
Bangladesh's development partners may also play a prominent role in this regard by guiding, aiding, educating, financing, and promoting Bangladeshi start-ups in the global arena. Furthermore, the startup ecosystem needs to be nurtured through industry-academia collaborations to encourage innovation and talent development at the school and university levels.
Finally, continued support from the authorities, which includes onboarding additional governmental agencies beyond the ICT ministry, and removing existing bureaucratic resistance and obstacles would pave the way for the success of the startup ecosystem. In fact, the lesser the degree of bureaucratic interference the better the chances for more Bangladeshi start-ups to flourish.Author
Mamun Rashid, Economic AnalystSource