The startup landscape in Bangladesh is undergoing rapid transformation, spurred by significant inflows of international investments and the innovative prowess of local entrepreneurs. This growth is evident across various sectors, with mobile financial services and tech-based startups leading the charge. With a strategic mix of global funding and local entrepreneurial flair, Bangladesh is carving a niche as an emerging hub for innovation in South Asia.
The impact of remittances and foreign investments
In 2023, remittances to Bangladesh exceeded $21 billion, a substantial part of the national GDP and a critical funding source for many startups. These funds are not just lifelines for families; they are also becoming seed capital for burgeoning businesses. Simultaneously, foreign direct investment (FDI) in the country has escalated, with a notable 12.6% increase last year, bringing the total to about $3.61 billion. These investments are channelled through various sectors, with a considerable portion earmarked for technology and innovation.
The interplay between local entrepreneurial spirit and foreign financial support has been pivotal. For instance, bKash, a mobile financial service provider that revolutionised digital payments in Bangladesh, emerged from this ecosystem. Starting with seed capital from BRAC Bank and international backers like the Gates Foundation and Ant Financial, bKash has scaled to a valuation close to $2 billion, highlighting the potential for local startups to achieve substantial growth.
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Beyond its own success, financial technology startups like bKash are playing a crucial role in the startup ecosystem by facilitating seamless transactions between investors and startup founders, thus enhancing the flow of capital within the sector. This capability has been instrumental in accelerating growth and allowing startups to rapidly scale and innovate.
In a similar vein, services like Taptap Send are enhancing this financial landscape by enabling the Bangladeshi diaspora to send remittances home efficiently and with lower fees. This ease of transferring funds is increasingly important as it supports the liquidity and operational capabilities of startups, further enriching the startup ecosystem in Bangladesh.
Case studies of innovation and success
Pathao is another illustrative example, evolving from a ride-sharing service to a multifaceted platform offering delivery and logistic services, demonstrating the scalability of startups in addressing diverse consumer needs. This growth was supported by strategic investments from international venture capitalists, including Indonesian ride-sharing giant Go-Jek, showcasing the confidence of global investors in Bangladeshi startups.
Moreover, the tech startup scene in Dhaka is becoming a hub for software and mobile application development, attracting attention from multinational corporations seeking to tap into the local talent pool. These startups are not only contributing to economic diversification but are also fostering job creation and technological advancement.
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Economic implications and policy landscape
The burgeoning startup ecosystem is significantly influencing Bangladesh’s economic indicators, with the ICT sector alone set to increase its GDP contribution to 5% by 2025, up from the current 2.3%. This shift towards a knowledge-based economy necessitates robust policy support from the government. Effective strategies could include enhancing digital infrastructure, simplifying business regulations, and providing tax incentives to nurture the startup culture further.
To ensure the sustainability of this growth, there is also a pressing need for educational reforms that emphasise skills relevant to the digital economy, such as coding, digital marketing, and data analysis. Establishing more tech incubators and accelerators, particularly in partnership with universities and international investors, could serve to catalyse innovation and entrepreneurial activity across the country.
The startup ecosystem in Bangladesh is on an impressive growth trajectory, powered by a blend of international investments and local innovations. As this sector expands, it will play a crucial role in shaping the country’s economic future, making it imperative for policies to align with the evolving needs of this dynamic sector. With continued support and investment, Bangladesh is poised to become a significant player in the global digital economy.
Imaad Ahmed helped launch Taptap Send for the Bangladeshi diaspora in 2022. It’s now one of the largest app-based FinTech companies for remittances into his home country.