Bangladesh Startup Investment Report 2022: A Year In Review [Readable Version]

LightCastle Analytics Wing
January 23, 2023
Bangladesh Startup Investment Report 2022: A Year In Review [Readable Version]

Insider Insights

“Some of the trends we’ve seen last year are a reversal of what we’ve seen in the last 10.  For example, 97% of funds into the startup sector has so far been from international sources. But last year, particularly in the second half, local funding from local institutions led the majority of investments. Startup Bangladesh [government backed VC fund] in particular has been quite active, but so has IDLC [largest NBFI]. I expect that to continue. 

I also see more companies adjusting themselves to the new normal, potentially swallowing flat, down and inside rounds to extend the runway.  Many companies raised rounds with massive multiples in 2021-early 2022, and that may no longer be possible, especially if price sensitive local investors are leading the rounds. Some scale-up stage companies may also look to venture debt to augment their capital stack.  Without a doubt, the cost of capital will rise in 2023 compared to the last few years. 

At the end of the day, there’s plenty of capital within the country to support the ecosystem. The issue is that a lot of it – via family offices, conglomerates’ and FIs’ balance sheets – are staying on the sidelines because they’ve yet to see a true “idea to IPO or M&A” exit.  They also struggle to get their heads around the valuations and large multiples. The moves the Dhaka Stock Exchange is taking to allow startups to list is a good step. A lot of conglomerate-backed brokerage firms and Asset Management Companies would like to get involved if there was a path to local IPOs, because they have plenty of experience in this.  More local participation, particularly from strategics, would give confidence to international investors as well to join rounds. They would feel confident that there are major institutions with the wherewithal and know-how to support and scale these companies.”

Nirjhor Rahman
Chief Executive Officer,
Bangladesh Angels Network

“We continue to believe in the technology sector of Bangladesh, and 2022 saw us doubling down on existing investments as well as deploying fresh capital. Growth in our types of markets still outpaces most other global markets, with enviable demographics being a driving force. Naturally, as venture capitalists, we take a bottom up approach in investing, and it has served us well. However, we still think being a professionally managed local venture capital fund provides not only strategic value to our portfolio companies, but also serves as a signal or confidence-booster to encourage global investors to look at Bangladesh as a whole.”

Samad Miraly

“Given recent global events and economic uncertainties, 2022 was a tumultuous year for startups around the world. Despite this, we have seen homegrown founders come up with some fascinating and impactful innovations. Startup Bangladesh is proud to support these entrepreneurs and contribute to the government of Bangladesh’s Smart Bangladesh vision, and we look forward to supporting homegrown startups financially & strategically to scale up through the Shotoborshe Shoto Asha campaign in 2023 as well.”

Sami Ahmed
Managing Director,
Startup Bangladesh Limited

“Bangladesh continues to be a vast, growing consumption powerhouse of 170 million people, including 35 million in the middle and rising middle class.  With valuations being regionally low, startups that solve for this market should have little problem attracting capital.  The key remains for founders to focus on institutional rounds so that capital for future growth is more visible.”

Rahat Ahmed
Founding Partner & CEO,
Anchorless Bangladesh

“Sturgeon Capital started looking at the Bangladesh startup ecosystem in 2022, bucking the trend of international investors who have shied away from these emerging markets over the course of the year. Countries like Bangladesh at the beginning of their digital transformation are our core focus, and we believe that Bangladesh is primed to develop significantly over the next 3-5 years. If we look at 2022 relative to the path that Bangladesh had been on up until 2020, accepting that 2021 was an anomaly driven by cheap money and distorted by two large deals in the country, then it is clear that the ecosystem is moving in the right direction still. The presence of international funds on Bangladeshi cap tables, even if they are not making new investments, will only help in raising the profile of the country. Now the onus is on those founders to successfully build their businesses so that international investors are encouraged to return and deploy more capital in the ecosystem. For everyone active in Bangladesh, it is vital to raise the profile of the country, because investors won’t invest in something they don’t know about.”

Robin Butler, CFA
Partner & Head of Impact,
Sturgeon Capital

“Innovations, potential and dreams of Bangladeshi entrepreneurs cannot continue to mostly depend on foreign investments.  We have plenty of local capital that can accelerate investments in local startups, neutralizing the instability and uncertainty of the current global financial crisis.  Startup Bangladesh had been the most active venture capital firm in Bangladesh in 2022.  But that’s not all.  We are actively engaged in promoting and facilitating opportunities of startup investments to the local angel and institutional investors to unleash local capital.  Regardless of the global economic condition, I feel the year 2023 holds a lot of promise for the startups and the whole startup ecosystem in Bangladesh contributing to the vision of Smart Bangladesh.”

Hasan A. Arif
Head of Portfolio Investment,
Startup Bangladesh Limited

“2022 was a difficult year globally. Bangladesh is yet a risky choice for investors for several reasons. Therefore, we need to follow our “Dhaka Valley” recipe – a blend of prioritizing cash flow management and envisioning a sustainable growth path as key success metrics.”

Adnan I. Halim
Chief Executive Officer,
Sheba Platform Limited

“ShareTrip, being the largest and leading OTA in the entire travel ecosystem, has done tremendously well despite all the economic and global turmoil. As a startup, it is important to be resilient and observant of the local and global variables that are taking place and also have a strong sense of the projected changes that might arise. 

In 2022, we have seen multiple fundraises for many existing and new startups, but a significant portion of these fundraising is skewed towards the early-staged startups. Companies that are in the growth stage are still facing challenges. In 2023, the challenges will significantly impact future fundraising and leads. Local investors, especially Startup Bangladesh Ltd and many others, are playing a major role in creating the right awareness for the startups in the local market while placing Bangladesh’s startup ecosystem on the global radar. All of these show positive contributing factors for future fund raises and we are hopeful that it will create a positive impact on the growth stage startups like ShareTrip. 

Being a startup, we cannot just admit to the fact that we are out of opportunities. The concept of a startup is to be innovative and proactive, which does not only apply to our own product and service development but also applies to our fund-raising strategies and approaches. 2023 is not going to be easy for anyone, but how we deal with and act on the changes are going to be the deciding factors for the startups, who are here like us leading sustainable companies aiming for long-term goals and results. “

Sadia Haque
Founder & CEO,

Find the full report here: link

Authors, Advisors, and Editors

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.

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