Bangladesh’s Thriving Economy Is the Next Asian Tiger

Startup Growth Has Been Taking off All Over the World With Asian Startups Increasingly Gaining Global Traction

Hot spots for startup growth have spread beyond Silicon Valley, from China to India:

• Venture funding worldwide soared by 95 percent from USD 148 Bn in 2020 to USD 288 Bn in the first half of 2021
• As of June 2022, there are over 1,100+ Unicorns (valuation over $1Bn), 50 Decacorns (valuation over $10Bn) and 3 Hectacorns (valuation over $100Bn) with a cumulative value of USD 3.8 Tn
• The composition of top performers in the startup ecosystem is slowly moving away from North America to Asia and the Middle East & North Africa (MENA)

While the last decade has been favorable for startups amidst a bull run and record highs, the current crippling implications of the pandemic and market slowdown might bring this run to a halt. Amidst the looming threat of an economic slump, startups may face a reset in capital flows and valuations.

Startup Investment in Bangladesh Grew Almost 10 Times Despite Low Investments to GDP Ratio

Compared to its peers, Bangladesh’s startup investment is still a relatively smaller portion of its GDP, at only 0.10 percent of the current GDP. Despite this, between 2020 and 2021, Bangladesh experienced the largest increase in startup investments among comparable countries, with a nearly ten-fold increase.

Bangladesh Is the 37th Largest Economy in the World With a Booming Business Sector and a Tech-Savvy Population

Despite the COVID-19 pandemic, Bangladesh has been able to sustain a GDP growth rate of around 6.80 percent in 2021. The country has had strong vitals in exports, with a total export of USD 52 Bn and a USD 2.90 Bn FDI Inflow in 2021, indicating a strong competitive business sector, With more than half of its population under the age of 35 and growing numbers of mobile and internet connections across the country, a digitally-savvy population heads the future of Bangladesh.

A Stable and Resilient Economy Makes an Ideal Time for Startups Despite Challenges in Business Environment

Doing business in Bangladesh remains challenging for a number of reasons. Lengthy bureaucratic processes, limited access to finance and markets, as well as weak infrastructure, hinder entrepreneurship in the country. However, the country has also seen an immense amount of progress in these areas:

• Facilities in equity investments, funding and grants, accelerator and incubator programs, and innovation labs through initiatives such as the iDEA and Startup Bangladesh Limited demonstrate an increasingly supportive policy framework.
• Microfinance Institutions (MFI), Mobile Financial Services (MFS), improved digital infrastructure, and increased funds through public and private initiatives are transforming access to finance.
• The country had a 35 percent women’s participation rate in the economy in 2021, which was one of the highest in South Asia, compared to 19 percent in India and 21 percent in Pakistan.

In the past 50 years, Bangladesh has pulled itself out of its underdeveloped and impoverished status, graduating from its LDC status to become a middle-income economy.

• The country has maintained a consistent GDP growth rate of over 5 percent for 15 consecutive years.
• The economy has maintained a stable inflation rate of around 6 percent per year as well as a stable and low debt-to-GDP ratio and government deficit.
• The country has made long strides in human development, with one of the highest life expectancy rates in South Asia, a growing urban population, with a remittance flow of USD 21.03Bn in FY 2021-22 compared to USD 24.77 Bn in FY 2020-21.
• According to Nikkei Covid-19 Recovery Index, Bangladesh ranked 1st in South Asia and 5th out of 121 countries in combating Covid-19 as of May 2022.

Three Levers Unlocking the Startup Ecosystem in Bangladesh: Digitization, Changing Population Demographics, and Supportive Policies

As the Bangladeshi population moves towards increased adoption of digitalization and new technologies and a growing MAC population, paired with a younger digitally-savvy population, drives consumption, Bangladesh is at an ideal point for startups to seize opportunities. This is supported by encouraging policies incentivizing foreign investments and facilitating the startup ecosystem.

Government Initiatives and Private Sector Participation Is the Winning Formula for Bangladeshi Startups Right Now

Since the conception of the startup ecosystem in Bangladesh in 2014, the country has come a long way in developing its startups. Almost a decade later, the country boasts its first unicorn, bKash, with increasing numbers of startup enablers in the ecosystem, including Startup Bangladesh Limited, the flagship venture capital sponsored by the Government of Bangladesh.

Increasing Number Of Ecosystem Builders Are Acting as Enablers in the Ecosystem

Between various types of investors, development partners, accelerators and incubators, private sector partners, academic institutions, competitions, and government support initiatives, Bangladeshi startups now have a robust range of supportive enablers in the ecosystem.

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