Local startups shine attracting more foreign investment

Over three dozen Bangladeshi startups have attracted around $120 million in investment so far this year, which is three times higher compared to the entire 2020. 

Business-to-business e-commerce ShopUp made nearly two-thirds of the year-to-date figure with its recent round of over $74 million funding from a group of international venture capital investors. With the money the firm is planning to expand its supply network among retail shops across the country. 

Still, the remaining $45 million of the investments into the other recipient startups, is already higher than the previous year’s figure and there are three more months in hand to see the figure go further up. 

Experts believe this is a good beginning from a comparatively very low base.  

Most of the funding is by foreign investors and it demonstrates the strength and potentials of the Bangladeshi young tech-based firms which have ideas and ways to solve broader social and economic problems through scaling up their business, according to Shawkat Hossain, general secretary of the Venture Capital and Private Equity Association of Bangladesh. 

“Bangladeshi startups are now better positioned in the international investors’ mind with their potential on top of the growth story of our economy,” said Muallem A Choudhury, principal advisor at Brummer and Partners Asset Management – manager of two Bangladesh-focused foreign private equity funds. 

Shawkat Hossain said alongside the growth story of the Bangladesh economy, some Bangladeshi startups have turned out to be the success stories of venture capital investors. 

Chaldal, the top online grocery platform and also the second largest grocery seller in the country, has secured a fresh funding of $10 million recently to nearly double their delivery network soon to continue with its outstanding growth record. 

Medicare startup Praava Health raised $10.6 million last March from a group of international investors to increase the access to quality healthcare. The firm served over 1.5 lakh patients and conducted 75,000 Covid-19 tests last year as its telemedicine and in-house services gained much popularity among the urban smartphone users. 

In January this year, tech-based courier service provider Paperfly announced its fundraising of TK100 crore, equivalent to nearly $11.8 million. 

In February, fortified snacks producer Frontier Nutrition BD raised $6 million from New York-based Adjuvant Capital, backed by the Bill & Melinda Gates Foundation and others. The company is addressing malnutrition problems among mothers and children in Bangladesh through their nutrient-enriched tasty products.

Truck Lagbe, a startup intended at ending the traditional middlemen’s dominance in hiring transports, has been backed by the International Finance Corporation (IFC), local IDLC Venture Fund, and a US firm Millville Opportunities Management with $4 million this year. 

Data Bird, the startup behind travel solution platform ShareTrip and smartphone’s Bengali typing app Ridmik Keyboard, bagged $3 million from global Internet and software investor Skycatcher. 

Maya, a startup based in Bangladesh and incorporated in Singapore, is working to take care of women’s reproductive and mental health. It received $2.2 million in early stage funding from Bangladesh-focused US fund Anchorless Bangladesh and The Osiris Group, a private equity firm focused on impact investing in Asian markets. Maya is also expanding its services in the regional markets. 

Shikho, an online education technology startup, was backed by Anchorless Bangladesh and other investors with $1.3 million in seed funding. 

Jatri, a public transport ticketing to vehicle renting platform, is planning to expand its network across Bangladesh and foreign venture capital firms backed it with $1.2 million in fresh funding this year. 

The global and regional trend 

Bangladesh is in line with the global and regional trend to see startup funding rising this year, said Asif Khan, a partner of Edge Research and Consulting. 

Neighbouring countries like Pakistan and India too observed the startup investment figures in the first half of 2021 to have widely crossed that over the entire year of 2020. 

Since the beginning of the pandemic, technology based businesses came into the investment spotlight as technology adoption got a boost and is supposed to grow further. On the other hand, in line with the money printing trend, the world’s fund managers now have more cash to invest in. 

“The two factors together accelerated the startup funding trend worldwide,” said Asif who is a chartered financial analyst. 

Since the South and Southeast Asia, with their large population base and rapid technology adoption trend, contain the real growth markets, global investment attention is there now and over the 2019-20 period there the technology startups alone raised over $50 billion, said technology entrepreneur AKM Fahim Mashroor, a former president of Bangladesh Association of Software and Information Services. 

Global startup funding was around $300 billion in 2020, up from $281 billion in 2019, according to the global compilation reports which track the deal announcements.  

In the first half of 2021, global fundraising was 2.3 times up year-on-year. 

Bangladesh still scratching the surface 

“The percentage growth in Bangladesh may look very impressive, but we have to remember that our startup funding base is still kissing the ground, if compared to our peer economies,” said Muallem A Chowdhury of Brummer and Partners. 

In 2020, Indian startups received over $11 billion, which is set for a big jump this year as the year-to-date figure was at nearly $17 billion in mid-August, according to international data analytics firm Global Data. 

India, entering into the startup culture way ahead of its regional peers, now also has a large startup investor base who are looking for opportunities in regional markets too. 

Pakistan, up to August, registered around $200 million fundraising by its startups this year, against $66 million in the last year, according to complied reports. 

Vietnam, Bangladesh’s rival in the apparel export markets, has already emerged as a startup fundraising hub in a short period and it is competing with the regional giants such as Singapore, especially in the technology arena. 

In 2020, Vietnamese startups’ fundraising nearly halved to $451 million owing to the pandemic and it is recovering well this year. 

Investment size in various stages of the startups’ growth path is also comparatively small here in Bangladesh, except the case of ShopUp. 

“Maybe, we began startup a decade ago and had success stories such as mobile financial services giant bKash, ride-sharing to food delivery platforms such as Pathao, grocery e-commerce Chaldal, but the right startup culture and a supportive ecosystem are yet to flourish here,” said Shawkat Hossain, one of the founders of the country’s first venture capital firm BD Ventures Ltd.  

“We need three things – good startups, talent of founders and the investors – for a healthy fundraising environment,” said Asif Khan. 

For the needed boom in fundraising, the ecosystem should be improved and must offer win-win solutions to all the parties concerned. 


Rahat Ahmed, Founding Partner & CEO of New York-based Bangladesh-focused venture investment fund Anchorless Bangladesh, observes there are not too many fundable startups because their quality is not up to par.

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He feels local corporates need to invest in startups to benefit both themselves and the potential startups.

Most big fundraisers in Bangladesh are virtually forced to receive foreign investments through their foreign holding companies since global investors are comfortable to deal within the jurisdictions of regional financial hubs, such as Singapore, said industry people. 

And that is depriving Bangladesh of appearing stronger in the global deal fact sheets, even though the investors know that their money to be utilised in Bangladesh.  

Alongside communicating the potentials of the local market and startup talents, Bangladesh also needs to ensure that the legal and regulatory system supports international venture capital investors’ comfort, said Shawkat Hossain of the VCPEAB.  

Unlike portfolio investments or simple acquisition deals observed in Bangladesh, startup investment involves some complex clauses in deals and local regulations and majority professionals are in need to catch up, said a local manager of a foreign venture capital firm. 

Just like the entries, Bangladesh needs to smartly treat investors’ exits too as the investors care about their exit routes a lot, he said referring to disputes with the central bank regarding valuation of non-listed companies during foreign investors’ exit. 

Bangladesh Association of Software and Information Services President Syed Almas Kabir said the aggregate of over $300 million investment in Bangladeshi startups is not a high amount, but things are going in the right direction as talents are emerging and also the investors are paying attention to Bangladeshi startups.

The government also created a venture capital fund to support startups and he stressed finding the right startup to invest from the state fund.

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