Bangladesh Startup Investment Report Q’1 2023: Embracing The Uncertainty [Readable Version]

Locally Sourced Investments Made Up 33% of Investment Volume Leading 12 Out of 17 Deals in the Quarter

• Q’1 saw a substantial deal of USD 30 Mn secured by ShopUp – USD 20 Mn of which came internationally from Lendable, and the remaining USD 10 Mn came locally from the City Bank.
• Excluding the ShopUp deal, investments from domestic sources made up 73% of the total investment volume.
• Through 11 deals led by local investors, locally raised investments averaged USD 166 K.

“As we move into 2023, the startup landscape in Bangladesh faces several challenges due to the ongoing global crisis, which has significantly impacted investment. This has caused Series A and subsequent funding rounds to move slowly, with few private venture capitalists (VCs) stepping up to fuel the growth of promising startups.

Despite the challenging investment climate, there are angel investors eager to back fresh ideas. Startup Bangladesh Limited, a government-funded VC, has played a crucial role in supporting the growth of the local startup ecosystem. Its active contributions have filled the gap left by the lack of private VCs in the region and positively influenced startups like Sheba Platform Limited.

At Sheba Platform Limited, we have faced similar challenges in our journey. Last year, we experienced considerable turbulence, from which we are now recovering.  We have substantially improved our business projections by cutting costs by 50% and doubling our revenues. The key to our success lies in our “Dhaka Valley” recipe: prioritizing cash flow management and envisioning a sustainable growth path as essential success metrics.

As a result of our strong performance, Sheba has been attracting significant interest from potential investors. This experience offers a valuable lesson for other startups navigating the investment dry spell in Bangladesh: resilience, adaptability, and prudent financial management can help overcome the challenges posed by the current investment climate.

In conclusion, Bangladesh’s startup ecosystem can thrive even amidst a challenging investment landscape by focusing on cash flow management, sustainable growth, and leveraging the support of active VCs like Startup Bangladesh Limited. The country’s startups can weather the storm and emerge stronger than ever, using the lessons learned during this dry season of investment as a foundation for long-term success and growth.”

Adnan Imtiaz Halim
Founder and CEO,
Sheba Platform Limited

Local Venture Capital Firms Led Majority of Deals in This Quarter but Financial Institutions Invested the Highest Volume

• Lendable, a U.K.-based financial institution, and the City Bank in Bangladesh provided debt financing worth USD 30 Mn to ShopUp.
• Excluding the sizeable ShopUp deal, venture capital firms funded a total of USD 3.9 Mn.
• Venture capital firms led 12 startup deals, making up 73% of total deals in this quarter.

“Q’1 2023 has begun with plenty more optimism than the entirety of 2022. The last few years have been a juggle of crisis management where we saw positive impacts on our companies, such as Covid, as well as negative impacts such as inflation, the side effects of the Ukraine war, and receding liquidity in the Bangladeshi ecosystem. After so many ups and downs such experiences can only serve as to strengthen the resolve and fortitude of our portfolio companies. Having been an investor in Bangladesh since 2016, we are glad to see a change in dynamic from local investors taking initiative and leading transactions. Going forward we believe that further collaboration between local investors and international investors will enable the liftoff of the Bangladeshi startup ecosystem.”

Oussama Glilah
Director,
Razor Capital

“Bangladeshi entrepreneurs have the potential to position themselves in a unique way by favoring survival over growth in the middle of a funding slowdown in 2023. Startup Bangladesh Limited is proud to provide local support for homegrown startups navigating global funding difficulties. It is important to remember that Bangladesh has a thriving local investment scene that is often underestimated, and reaching out to this investor group can be a great way for entrepreneurs to get funding. Bangladeshi companies can weather the current funding downturn by being strategic and nimble, and they will come out stronger in the long run.”

Sami Ahmed
Managing Director,
Startup Bangladesh Limited