Bangladesh’s startup ecosystem in 2022
Despite the global venture capital (VC) cutting down the flow of investments, local startups in Bangladesh raised around $5 million over 16 deals in 2022.
However, insiders said that 2023 will be a crucial year as the global recession nears and support from all stakeholders will be crucial to sustaining the growth of the sector.
Bangladesh’s startup ecosystem experienced its fair share of highs and lows in 2022.
In the first half of 2022, Bangladeshi startups raised over $90 million, including the largest-ever pre-seed funding in the country’s history.
The largest business-to-business (B2B) e-commerce platform in the country raised $65 million in June, while the largest B2C e-commerce platform in the country, 10 Minute School, earned $2 million in early funding from Surge, Sequoia Capital India’s rapid scale-up program, in January.
10 Minute School became the first Bangladeshi EdTech startup to get funding from Surge as a result of this investment.
LightCastle BD reports that startup funding declined by 34% in Q3 of 2022 compared to the previous quarter. The global economic downturn, post-pandemic recovery, the Russia-Ukraine war, harvesting and production challenges, and supply-chain disruptions have all contributed to this slowdown in investment.
Despite the cutbacks from VCs, local startups were still able to raise around $5 million over 16 deals. This shows that even in difficult times, there is still some funding available for innovative and determined startup companies.
Agroshift, a Dhaka-based agritech startup that helps farmers sell their produce to businesses and consumers by providing a tech-enabled supply chain, has raised $1.8 million in seed funding during Q3 of 2022.
This is the country’s largest-ever pre-seed round in the startup ecosystem and it’s a huge accomplishment for the startup sector, especially considering it was raised during the current global economic downturn where VCs have been cutting down on investment since the beginning of Q2 2022.
Local startups will be seeing an increase in investments from 2022 and onwards, due to the government’s proposed draft of regulations from last year. These regulations are created to streamline the process of starting and operating a startup, as well as to encourage investments towards startups through better incentives for investors.
Sources say that policymakers are considering a 10-year duration for the startup initiative. In addition, Hasan A Arif of Startup Bangladesh says that the government has already taken several steps to increase investment in the startup sector. The Bangladesh Securities and Exchange Commission (BSEC) is drafting rules that would allow loss-making good startups to list on the country’s stock exchanges and offer IPO.
The government proposed a reduction in turnover tax for startups to 0.1% from 0.6% in the national budget for the financial year 2022-23. This would exempt startup businesses from the bindings of all other types of reporting except submitting income tax returns. Additionally, it would allow startup companies to set off and carry forward losses over a period of nine years.
Government officials announced that nearly all of the startups the government has invested in through its Startup Bangladesh initiative have successfully started operating on the Dhaka Stock Exchange, with some startups preparing to get registered last year.
In regards to local investment in startups, Bangladesh’s startup ecosystem also saw a rise in 2022, with brands like Robi, Huawei, GP and Banglalink hosting programs that incubate and help startups develop.
Almost all of the firms that the government has financed in through its Startup Bangladesh initiative have successfully begun trading on the Dhaka Stock Exchange, according to government officials, with several startups planning to register last year.
Bangladesh’s startup ecosystem experienced an increase in domestic investment in 2022 as a result of companies like Robi, Huawei, GP, and Banglalink hosting initiatives that foster the growth of startups.
