Bangladeshi Startup Ecosystem Had the Best Fundraising Year Ever in 2021, So What's Next?
January news roundup from the Bangladesh ecosystem and global Bangladeshi tech community
2021 was a banner year for the startup sector in Bangladesh, driven in part by bkash’s U$250M fundraise from Softbank and ShopUp’s U$109M Series B raise from Valar Ventures, Tiger Global and others. Bkash’s fundraise officially makes it the first unicorn from Bangladesh. The total raised in 2021 and January 2022 by these two companies and others, almost U$420M, represents close to 60% of the aggregate funds raised in the last decade by the startup ecosystem in Bangladesh, according to the Bangladesh Startup Dashboard from Anchorless and Lightcastle Partners.
98% of that funding has come from foreign investors, often through international holding companies of local startups. How do we increase the share of domestic capital? According to Tina Jabeen, former CEO at Startup Bangladesh and a Governing Board member of Bangladesh Angels, “Bangladesh's ecosystem is less than a decade old and compared to neighbouring ecosystems it is still quite small. India alone had 85+ unicorns in 2021 [compared to Bangladesh’s 1]. When a startup's founders make large exits…they recycle the money in more startups and that is how the ecosystem grows…” Recently, the Bangladesh Securities and Exchange Commission (BSEC) has made moves to allow loss-making growth companies to list, opening an opportunity for future domestic liquidity for startups and their founders, employees and early investors. At the same time, the country has local conglomerates, who are still making relatively small sized investments compared to their multi-billion dollar balance sheets. Comparatively speaking, neighboring markets such as India and Pakistan have strong industries for domestic venture capital, particularly in the early stages within the fundraising value chain, often affiliated with local corporates and family offices.
Global themes in startup investing, such as gender lens and climate change, will also drive the investment narrative for Bangladesh going forward. According to Ms. Jabeen, “A lot of the investors are looking into Bangladesh as a place for impact investments – in areas such as gender lens investment, SME [enablement] and climate change….By 2050, one in every seven people in Bangladesh will be displaced by climate change. Almost 18 million people may have to move because of the rising sea level. Investments need to be made to mitigate these risks and startups can provide tech-based solutions…”
But the ecosystem needs “patient capital and strong private-public partnership[s]... eventually, we hope to see a number of unicorns and possible exits in the next few years. It takes time but it will happen.”
News from the Bangladesh Ecosystem
The Bangladesh Securities and Exchange Commission (BSEC) is working on amending its rules to allow the possibility of allowing loss-making startups to list on the local exchanges, opening up a possible route for local exits for startup founders and early investors in the future.
Sequoia Capital’s Surge accelerator program for South and Southeast Asia announced their sixth cohort, with two Bangladeshi companies, Shajgoj, an online beauty store similar to Nykaa in India, and 10 Minute School, an education content platform similar to Byju’s, in the batch. Shajgoj, founded by the husband-and-wife team of Nazmul Sheik and Sinthia Islam, originally started as a content portal for Bangladeshi beauty bloggers to share beauty tips with their fans, evolving into an ecommerce platform after building a strong brand following with a focus on authentic and affordable products including private label. 10 Minute School’s fundraising comes on the back of Shikho’s raise last year, showing VC interest in the growing edtech market in Bangladesh.
Sami Ahmed becomes Managing Director of Startup Bangladesh, the government-backed VC fund. Startup Bangladesh has made seven investments so far into companies such as Chaldal, Pathao, Sheba and Intelligent Machines with an allocated capital of 500 crore BDT (U$60M) to invest into technology-enabled companies and entrepreneurs in Bangladesh.
Welcome, formerly Newscred, a US-Bangladeshi content marketing platform, has been acquired by Optimizely
Companies and People You Should Know
Hypescout is enabling brands to recruit influencers and manage their campaigns, with almost 1,000+ brands already on the platform from Bangladesh and India.
airwrk aims to connect tech teams from around the world with tech talent from Bangladesh.
Nuport is helping logistics companies and conglomerates with logistics wings to automate their route planning and has recently been accepted into ODX’s Logistics Accelerator powered by Flexport.
Bangladeshi-American Raad Ahmed has raised U$6M for Lawtrades, connecting mid-market and enterprise companies with freelance legal professionals.
Nabeel Alamgir, another Bangladeshi-American, has raised U$50M for Lunchbox to build a digital tech stack for enterprise restaurant chains and ghost kitchens.
Bangladeshi-Canadians Mohammed Rizwan and Nayeem Zen’s company Pluto has come out of stealth and announced U$6M fundraise to build a Brex-type platform for corporate spend management for the MENA market.
Tarik Adnan Moon is building Alpine Defi with engineering talent from Bangladesh.
News & Insights from the Bangladesh Angels Community
Maxime Cheng previews the Swiss Government-backed Biniyog Bridhi program to support impact enterprises from Bangladesh.
Congrats to Onnow (ghost kitchen) and Handymama (services marketplace) for becoming the top ten enterprises at Impact Collective and raising funds from The Ventures.
Welcome to GreenBridge Capital, a UK-based angel syndicate and investment advisory firm that aims to create a platform to connect British-Bangladeshi investors to the Bangladesh market.
Selise Capital, the venture arm of Selise, a Swiss software company with major operations in Bangladesh, and University of St. Gallen, one of the top business schools in the German-speaking world, are partnering on Simcubator to support early stage healthcare founders in Bangladesh.
Lightcastle Partners has launched Invest Bangladesh to connect ecosystem partners with international investors.
EDGE AMC has launched the High Quality Fixed Income Fund, open-ended mutual fund that allows investors to access an index of high quality fixed income streams from the private and public sector in Bangladesh.
Aavishkaar and KfW, the German development bank, has launched the U$250M ESG First Fund to support export oriented SMEs from Africa and South Asia.
Many thanks to Bijon Islam and Tina Jabeen for their insights for this post.