Summary of Bangladesh Startup Ecosystem: The Untapped Digital Goldmine of Asia

LightCastle Analytics Wing
September 1, 2020
Summary of Bangladesh Startup Ecosystem: The Untapped Digital Goldmine of Asia

Executive Summary

Bangladesh startup ecosystem is coming of age riding on key drivers:

Strong Economy Vitals for Startups: Tech adaptable young population 62%+ under 35 years, 164 million people (8th largest in the world) with high density (1200 people/Sq Km). Middle class growing at 10% per annum to reach 34 million by 202598% mobile phone connection, 62% internet penetration, 102 million+ people on the internet with 94 million mobile internet penetration. The pandemic has also accelerated the use of ICT technology, including digital commerce, education, healthcare, agriculture.

Demographic Bulge with the Right Skill-sets: The country generates 5,000+ IT graduates each year is creating a strong group of entrepreneurial waves focused on solving critical problems, including those during the pandemic. The country’s median age of 27.9 years means more young people are willing to take risks and explore innovations in the economy. With limited opportunities from STEM graduates (due to the absence of large scale industrialization except for RMG/Textile, which is still more labor-intensive than automation) – they are looking into forming ICT enabled companies and Startups. NRBs (Non-Resident Bangladeshis) are also returning, bringing in both investment capital and knowledge remittance.

Bangladesh Startup Ecosystem at an Inflection Point: The Bangladesh Entrepreneurship Ecosystem is at an inflection point with an excess of U$ 200 million in international investments from big-name corporate investors and venture capitals, investing in industries like FinTech, Logistics, and Mobility over the last four years. The emergence of active Angel Investment Networks, Impact Investing, host of local and international operating accelerators/ incubators propelled 1,000+ active Startups, generating 1.5 million+ employment – embracing products and services of Startups as part of the country’s everyday life. Additionally, B-SEC (Bangladesh Securities and Exchange Commission) has also approved small-cap stock exchange guidelines, which is a big step towards providing investors with Startup exits.

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Government Support: The Government of Bangladesh deployed the National ICT Policy in 2009 to become Digital Bangladesh by 2021. Government policies and projects from the ICT Ministry, such as IDEA Project and Startup Bangladesh Limited with 100 crore BDT  (U$ 11.5 Million) funds, are taken to improve the local startup ecosystem. Additionally, GoB is setting up 28+ Hi-Tech Parks, including infrastructure support like data centers, to support technology companies.

COVID-19 Impact: Since March 2020, the country and all its businesses and startups have been affected drastically by the COVID-19 disruption. 24% of companies reported to have stopped operations, with 56% of startups seen at least a 50% drop on revenue generation. 60% of Startups have runway less than three months threatening 1.5 million employment and an annual loss of over U$ 53 Million in 2020. The disruption, however, is also propelling accelerated adoption of digital services with Digital Financial Services, Logistics, and Grocery on-demand, EdTech, HealthTech seeing steep growth.

Chapter 1 | Bangladesh: The Untapped Economy in Chindia

Bangladesh, the 39th largest economy and one of the fastest-growing countries, showed an impressive annual GDP growth rate of ~6.5% over the last decade. The country’s annual GDP growth rate officially surpassed that of India’s in 2016 and has been higher than that of its neighbor since then.

GDP per capita has been growing at rates over 5% since 2015 peaking at U$ 1,855 (as of 2019), which is almost equal to China in 2005. The final consumption expenditure, which accounts for private consumption and general government consumption, has been growing positively for the last 10 years.

The economy is on track in graduating from the LDC status in 2024 and has made impressive strides in human development. PwC, a global consultancy, also predicts Bangladesh to become the 28th largest economy in the world by 2030.

It dominates the global RMG market in 3rd position, right after China and Vietnam, earning U$ 34Bn (83% of total export earnings) as of 2019. Its ICT sector is booming, exporting U$ 800Mn worth of service across the globe.

The country has a population of 164 Mn and has reached 37% urbanization. Connectivity has reached its peak, with 98% mobile phone connection (161Mn) and 62% internet penetration (102Mn) and 57% mobile internet penetration (94Mn). 

Fig: Economic indicators of the past decade suggest growth for the country
Source: BTRC, World Bank, UNCTAD, Ministry Briefings, BBS, EPB & Bangladesh Bank

Bangladesh recorded an impressive annual GDP growth rate of 8.1% in 2019; the highest in the country’s history and in South Asia for 2019. The strong performance is attributable to a number of factors that have contributed to inclusive economic growth

According to The Bangladesh Bureau of Statistics (BBS), the country has a young population with a median age of ~28 years and 62% of the population below the age of 35.

The country also benefits from ‘density dividend’, as 164 Million population is nestled in a country with a land size similar to that of Michigan, USA.

Fig: Annual GDP Growth of Bangladesh
Source: BCG, World Bank & LightCastle Analysis

Bangladesh’s rapidly growing economy has spawned an economic class of urbanites, who are upwardly mobile with a growing appetite for consumer spending. This Middle and Affluent Class (MAC) population is young, tech-savvy, and optimistic about their future, leading them to spend on living standard enhancing goods and services.

According to a study by The Boston Consulting Group (BCG) on Bangladesh’s surging MAC population, the projected MAC population stands at 19 Million as of 2020 and is projected to grow at 10% per annum to reach 34 Million by 2025.

Fig: MAC population to double to 34Mn in 5 years increasing consumer appetite 
Source: BCG, World Bank & LightCastle Analysis

Markers of digital penetration are increasing, boosting startup activity

  • MFS is growing steadily at a 20% CAGR over the last 5 years
    • Every one out of two persons (85Mn) has a MFS account in Bangladesh
    • 5.3Mn people conducts 7.6Mn transactions of U$ 151Mn+ everyday
    • 7Mn new MFS accounts registered during pandemic surge (Mar-May’20)
  • eCommerce market is expected to grow to U$ 3Bn by 2023
    • 2,000 e-commerce sites and 50,000 Facebook-based outlets which deliver around 30,000 products everyday
    • 80% of online sales are concentrated in Dhaka, Chattogram and Gazipur
    • Bangladesh eCommerce market stands at U$ 1.6Bn, ranking 46th in the global ranking
  • ICT sector has grown by 40% annually since 2010
    • Over 1,500+ IT companies thrive in the country capturing a significant share in the international markets worldwide is expected to produce 1% of the country’s total GDP in the next five years
    • Bangladesh is the second-largest supplier of online labor with over 650,000 registered freelancers generating U$ 100Mn+ annually
  • Government boosting Startup activity through ICT wing
    • The government initiated its own public startup support wing, Startup Bangladesh with 100 crore BDT (U$ 11.5Mn) fund to catalyze investments
    • Multiple competitions conducted to boost student entrepreneurship —  100+ startups received cumulative seed fund over U$ 1.5Mn+
    • National ICT Budget for the fiscal year 2020-21 stands at U$ 0.53Bn
Source: Bangladesh Bank, World Bank, e-CAB, Statista, UNCTAD, BASIS, ICT Ministry & LightCastle Analysis

Investment in the country has grown ~4X over the last decade

Alongside steady economic growth, the investment to GDP ratio of Bangladesh has grown to 32% (U$ 96Bn) in FY 2018-19 from 26% (U$ 26Bn) in 2009-10. Despite the excellent progress, the country’s Foreign Direct Investment (FDI) in CY 2019 stood at a mere 3% (U$ 2.87Bn) of the country’s total investment. With policymakers devising policies to attract FDIs, investments are expected to increase in the new decade.

Source: Bangladesh Bank, World Bank & LightCastle Analysis

Right time to attract foreign investors as the startup epicenter of the world shifts towards Asia

  • The emergence of Asia a startup hotspot
    • Asia now has 42% (262 out of 615) of all the total unicorns
    • The market valuation of unicorns from Asia stands at U$ 960 Bn
  • Boom in global startup funding
    • 2018-19 saw record investment of total U$ 21.5Bn for mature stage companies
    • 30% increase in funding in Asia Pacific countries in the last 5 years
  • Aspiring ecosystem activates in Bangladesh
    • Educational institutions are creating focused curriculum for integration of technology, producing 5,000+ IT professionals annually
    • 28 High tech parks are launched to support startups and innovations
    • Ecosystem enablers such as, co-working spaces, competitions, accelerators and incubators have come up in the last 5 years boosting the ecosystem
  • Government of Bangladesh focusing on ease of doing business
    • GoB is on the mission to improve ‘Doing Business’ ranking from 168 to top 100
    • GoB imposing new policies and pushing special economic zones in accordance to Bangladesh’s formal graduation to middle income status in 2024
    • Multiple incentives for foreign investment:
      • Tax exemption for up to 15 years for foreign investors
      • No import duties for export-oriented sectors
      • Retained earnings treated as new investments;
      • Foreign ownership companies can also secure working capital/long term financing from local financial institutions

Chapter 2 | Bangladesh Startup Ecosystem is Coming of Age

The Bangladesh Entrepreneurship Ecosystem is at an inflection point with an excess of U$ 200 million in international investments from big-name corporate investors and venture capitals, investing in industries like FinTech, Logistics, and Mobility over the last four years. The emergence of active Angel Investment Networks, Impact Investing, host of local and international operating accelerators/ incubators propelled 1,000+ active Startups, generating 1.5 million+ employment – embracing products and services of Startups as part of the country’s everyday life. Additionally, B-SEC (Bangladesh Securities and Exchange Commission) has also approved small-cap stock exchange guidelines, which is a big step towards providing investors with Startup exits.

Fig: Bangladesh Startup Ecosystem: A glance of growth in numbers
Source: BSEC, Bangladesh Startup Survival Guide Group, LightCastle Startup Index & LightCastle Analysis

Public, Private and Development Initiatives boosting the Startup Ecosystem towards “Coming of Age”

Source: LightCastle Analysis
*List is indicative and not exhaustive

With Fintech leading the ecosystem, the overall confidence of the ecosystem was positive in 2019-20

A survey source from 100+ startup founders and investors rated Fintech and Ride-sharing and Logistics as the most promising sectors.

Online-enabled service marketplace platforms have captured the urban market significantly over the last 5 years. Players like, Smanager, Jantrik and Hellotask are formalizing the unstructured SME market and informal workers boosting financial inclusion.

eCommerce & fCommerce sector garners high confidence from investors. Startup players like ShopUp, Chaldal, eValy, Daraz and Sindabad

Meanwhile, digital marketing showed a drop in confidence, due to market saturation and thinning profit margin coupled with the latest TAX issuance.

Source: LightCastle Startup Confidence Index 2019

Bangladesh Startup Ecosystem is diverse and operating in multiple sectors

*List is non-exhaustive

Growth Sectors: Sectors with large funded startup base with the highest adoption of deep-tech coupled with local & global investor attraction

Emerging Sectors: Sectors with medium funded startup base with relatively low-to-high adoption of technology and medium investor interest

Nascent Sectors: Sectors with small startup base with relatively low investor activity

Increasing number of accelerators and incubators  are acting as enablers in the ecosystem

Source: LightCastle Analysis
*List is non-exhaustive

Bangladeshi Startups are attracting global and local investors

Source: LightCastle Analysis
*List is non-exhaustive

Homegrown Startups have raised U$ 200Mn+ of foreign investment over the last decade

Source:, Crunchbase & LightCastle Analysis
*List is non-exhaustive

Chapter 3 | Low Funding & COVID-19 Pandemic Inflict a Critical Blow

Bangladesh Startup Ecosystem ranks far behind in comparison to the Global Startup Ecosystem

Bangladesh in comparison to the global ecosystem ranks at 98, while its neighbor rushes quickly to the top spot, currently at 23. 

Fig: Global Startup Ecosystem Comparison
Source: Global Innovation Index 2019, Startup Blink, [5]Crunchbase, Angellist, Xinhuanet, Swiss Global Enterprise & LightCastle Analysis

Finding the Right Talents & Access to Financing still remains the top problems for emerging startups

An internal survey on 100+ Startup company founders was carried out to understand what are the severe bottlenecks they are facing in operating a business in Bangladesh. The findings show the top three problems for the startup founders were related to either finding the right talent (co-founder and team- top 2 challenge each with a score of 4/5) and access to funding (3.6/5)  followed by cash flow management (3.6/5), government support (3.3/5), and legal/regulatory affairs (3.2/5).

Source: LightCastle Startup Index 2019

Funding in Bangladesh as a percentage of GDP is significantly low 

The already low Startup Funding State of Bangladesh (GDP 10x lower than India), (GDP 50x lower than China) – is at stake due to COVID-19

Source: IMF, Crunchbase, Statista, and LightCastle Analysis

Pandemic Recession has slowed down startup investments worldwide 

Due to pandemic recession kindled by COVID-19, number of startup investment deals worldwide per month have dropped by half (55%) since pre-COVID era (November 2019)

Source: Startup Genome

COVID-19 Disruption in Bangladesh leaves 60% of Startups with less than three months of runway 

Source: Bangladesh Startup Survival Guide Group & LightCastle Analysis

While all sectors are in peril, 3 Essential sectors have seen revenue growth in Bangladesh

Grocery, Logistics, Digital Financial Services are the essential sectors that have seen a positive impact in business

Source: Bangladesh Startup Survival Guide Group & LightCastle Analysis

Chapter 4 | Recommendations

  1. Startup Policy: With the Digital Bangladesh agenda in Government’s core, it is eminent to form a startup policy to offer multiple benefits for the startup and ecosystem players such as ease of access to debt finance, reducing the cost of doing business, ease of doing business, fiscal policy support – VAT/tax exemptions and rebates. An enabling policy will promote the growth of startups and the ecosystem attracting foreign investment in the ecosystem, benefiting the country’s growth and employment rate.
  1. Fund of Funds: Startup Bangladesh and ICT Ministry can form a fund of funds through public-private collaboration to invest in Startups. The fund of funds makes downstream investments in venture capital and alternative investment funds that in turn invest in startups.
  1. Investor Benefits: The government needs to ensure an investment-friendly environment in Bangladesh. Recommendations would be to update the Foreign Exchange Regulation Act 1947, reduce entry barriers, introduce TAX benefits and ease repatriation of profits of foreign investors to attract foreign investments.
  1. Ease of Doing Business: Business processes, policies, and regulations have to be streamlined and more comfortable to start and operate startups/SMEs. A way forward could be to use technology and fintech platforms to make tax payments seamless, transparent, and secure.
  1. Industry-Academia Collaboration: Industry-academia is mandatory to set up the right kind of infrastructure to nurture innovation and talents at school/university level as well as leverage knowledge remittances from NRBs all over the world through incentivized initiatives.
  1. COV-19 Startup Support Fund: The ICT ministry can establish a BDT 150 crore startup support fund program in the form of grant/ quasi-equity/ matching fund nature to support the 150 startups for a runway of 12+ months. Based on multiple criteria i.e. employment, market potential, and post-pandemic adjusted valuation, startups can be categorized as- small, medium, and large. 

To learn more insights, check out the slides here:


LightCastle Partners acknowledges the valuable contribution of the following notable personnel and organizations from the Bangladesh Startup Ecosystem to prepare this report.

  • Tina Jabeen, Managing Director, Startup Bangladesh
  • Rahat Ahmed, Founding Partner & CEO, Anchorless Bangladesh
  • Asif Iqbal, Country Director, Entrepreneurship World Cup, GEN Bangladesh


  1. Mehad ul Haque, Project Manager & Sr. Business Consultant, LightCastle Partners
  2. Ishtiak Mourshed, Business Analyst, LightCastle Partners
  3. Risalat Huda, Business Analyst, LightCastle Partners
  4. Bijon Islam, Chief Executive Officer, LightCastle Partners
  5. Silvia Rozario, Project Manager & Sr. Business Consultant, LightCastle Partners
  6. K. M. Saqiful Alam, Senior Expert, LightCastle Partners

WRITTEN BY: LightCastle Analytics Wing

At LightCastle, we take a data-driven approach to create opportunities for growth and impact. We consult and collaborate with development partners, the public sector, and private organizations to promote inclusive economic growth that positively changes the lives of people at scale. Being a data-driven and transparent organization, we believe in democratizing knowledge and information among the stakeholders of the economy to drive inclusive growth.

For further clarifications, contact here: [email protected]

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