Bangladesh still lagging behind in start-ups

The report says Dhaka is among the top 150 cities in terms of start-up initiatives. Dhaka has been ranked 140th among the 1000 cities in the list. Although the Indian cities dominate the list in the south Asian region, Dhaka ranked eighth among them. Besides, Dhaka is in the eighth place in the list of cities with the most agriculture based start-apps.

There are some 159 startup economies in the 19 countries of Asia Pacific. Bangladesh is the 18th in the list. Bangladesh is only ahead of Kyrgyzstan. Software and data based startups are ruling the sector this year followed by startups based on ecommerce and retail, health, finance and education respectively.

The report cited pathao, ShopUp, Shohoz, Arogga and the 10 Minutes School as the top startups in Bangladesh.

The report said, “Bangladesh is a country with a vast population in South Asia that borders India and Myanmar. The population size provides an innate advantage, giving the country a large internal consumer market. The country also boasts a young tech-savvy population, and ICT technology in areas such as digital commerce, education, and healthcare. Bangladesh’s national startup ecosystem is a potential digital treasure in Asia that requires systematic country-level branding to attract more foreign investments and generate exposure."

“However, the ecosystem is not without its challenges. Access to high-speed internet outside of major cities, limited access to funding, complex regulations, and limited global exposure are blockages to the ecosystem achieving its full potential… The country has strong economic potential, which will require more support from the government to materialize. The government should work on improving internet infrastructure, arranging corporate venture capital, establishing startup-friendly policies and regulations, and improving industry-academia collaboration to support the growth of startups,” the report added.

Regarding the StartupBlink report, Venture Capital and Private Equity Association of Bangladesh (VCPEAB) and eGeneration managing director Shameem Ahsan told Prothom Alo standards and investment are big issues for startups. Most investment in South Asia goes to India, and Pakistan enjoys Middle East-based investments while Bangladesh enjoys no privileges of these region-based forums, and in that case, more local investment assistance is necessary.

About falling behind in the rank, he said that perhaps updated information from Bangladesh might not reach that organisation properly and there are also weaknesses in startups based in Bangladesh to present themselves with proper data before the world.

Startup slump continues

LightCastle Partners, a local constancy firm, releases reviews and reports regularly on the startup sector of Bangladesh. They published a report on the startup investment in the first quarter of 2024. It said startups in Bangladesh received about $7 million in investment in the first quarter of this year – a 70 per cent drop from the fourth quarter of last year, while 75 per cent of the funding in 2024 was raised from foreign countries.

Quarterly investments were below $10 million in Bangladesh in 2023 except for the last quarter (October-December).

According to StartupBlink, global startup funding experienced its second-lowest level since early 2018 in the first quarter of 2024 because of the economic downturn and inflation.

Global startup funding has continued to decline since 2021, Investment levels hit a five-year low in 2023, and this downward trend showed no signs of reversing in Q1 of 2024.

“With the worsening economic parameters, global decline in startup funding and the rise of AI, we saw an increased trend of layoffs in IT and startup sectors,” StartupBlink said.

More than 75,000 people were laid off in the IT sector in the first 4.5 months of 2024. In addition to a tough economic environment, global tech giants such as Google, Meta, and Microsoft continue their workforce reductions by integrating AI into their work processes.

“Despite the negative trend in tech-related jobs, a silver lining can be found in this situation. With tens of thousands of technology workers losing their jobs at tech giants, it can be expected that some of them, having an entrepreneurial spirit, will establish new startups. This can lead to a wave of highly successful tech startups arising in these troubled times. It shouldn’t be forgotten, after all, that many high-profile tech companies were born during the Great Recession, such as AirBnB, Uber or Instagram,” the report said.