Local Funding Is Key To A Thriving Startup Ecosystem In Bangladesh: Sami Ahmed

Talking about SBL, he said that the company strives to create an enabling environment for startups to grow and thrive in Bangladesh. 

“We invest in startups and provide services such as equity investments in impactful and promising startups and guidance for them,” he said. He said SBL plays many key roles, including acting as a bridge between startups and different government agencies, providing special guidance to companies that get government contracts, and connecting these organizations with possible future investors. 

“We also work as policymakers to help startups grow in the market. SBL has recently launched a ‘fund of funds’ to attract more local private-sector investors into the startup ecosystem”, he added.  

Sami also reflected on the requirements for building a thriving startup ecosystem in Bangladesh. He opined that Bangladesh could have avoided the recent decline of foreign investment in the country only if there was enough local funding available in the market. 

He deems mobilizing funds, especially those raised locally, can attract more global funding into the ecosystem. “We are also working on a national startup policy to introduce some incentives for local investors into the ecosystem,” he also said. 

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Pointing to the contributions of startups in creating local employment and helping in the growth of the economy, Mr. Sami said, “The more these innovative enterprises come into Bangladesh, the more the economy will grow.”

Sami welcomed the government’s decision for a higher allotment in digitalization in fiscal year 2023-2024. He opined that the digitalization of services, especially those at government offices, will help businesses save time and run more efficiently. 

The SBL top boss discussed how the ‘fund of funds’ can multiply the number of investments in local startups significantly. In addition, the venture capital company leaders will also be on board with the startups to guide and advise the budding entrepreneurs, he added. 

The fund of funds, as Sami said, will be made available to companies based on some criteria. “Every startup we are investing in must have a social impact,” he said. In addition, the ‘fund of funds’ will also prioritize female entrepreneurs and those enterprises focusing on climate change. However, the government also has a mandate to prioritize some technological areas, such as cyber security, artificial intelligence, robotics, etc.

Pointing out that the startup ecosystem is a relatively new concept in Bangladesh, Sami opined that introducing incentives for local investors in the National Startup Policy will encourage more and more local investments in startups of Bangladesh. 

Mr. Sami said that the growth of the venture capital ecosystem is at the core of the development of the startup ecosystem in Bangladesh. “Instead of sanctioning loans to startups, the central bank should find a way to invest the money into venture capital companies that invest in startups,” he said. 

He explained that startups do not take loans like traditional businesses because they are high-risk business ventures. However, he also added that the investment return on startups is also high, as startups scale up quickly and involve greater risks. “Startup returns are almost 20 to 40 times higher than what people usually invest,” he remarked.  

“In many countries, 90 percent of the startups fail. However, the 10 percent of startups that succeed make way more money than the failed 90 percent,” he said, adding that it is all about investing in a portfolio and not one or two startups. For this reason, as Sami said, investment in venture capital companies should be increased so that these companies can invest in startups.

Sami said that the government and the central bank should find ways to change the regulations so that these investors can invest more in these venture capital companies and AIF. 

Talking about female entrepreneurship, Sami said that in the past two years, SBL has invested in 25 startups, of which seven had female co-founders. As startups are usually founded by two or three founders, nowadays many startups have at least one female co-founder, he said, adding that female entrepreneurship is increasing slowly. 

“The government has put a lot of emphasis on women in the last six or seven years by introducing many funds, programs, and training for women and trying to change the mindset,” he said.

Sami also pointed out that the lack of a proper mindset acts as a barrier for women to become entrepreneurs. However, he said, nowadays more women are becoming entrepreneurs following various initiatives to inspire them into entrepreneurship. 

He further denotes that women must come forward because there are a lot of opportunities for startups with at least one female founder. “Some changes have taken place, but we still need to continue these skilled programs at the university level and encourage females to come forward for STEM education…,” he said, adding that the government has somewhat succeeded in establishing a framework to support women entrepreneurs. 

Talking about the post-Covid-19 situation of startups, Sami said that digitalization and startups helped people survive the Covid lockdowns. “After COVID-19, I did not see these digital startups going down that much because people’s confidence in digitalization has increased,” he said. 

Although some startups did not do well, others did very well, and the number of digital startups has increased in Bangladesh after the pandemic, Sami also said. “The numbers these digital startups are putting up every quarter are increasing,” he said. 

He also said that SBL is investing in startups that are trying to reduce carbon emissions or striving to contribute to climate change. “In the next six months, we are planning to launch a new program that will work on the climate and power sectors,” he said, adding that SBL is going to organize a competition for university students and the youth and take business ideas from them to reduce climate change. The winning idea will be nurtured and supported by SBL through an incubator program, and if it is a very good idea, it will be funded by SBL and rolled out into the market. 

Mr. Ahmed indicates that creating a strong venture capital ecosystem is at the core of the future of startups in Bangladesh. He also said that accelerator programs and incubator programs at both the rural and urban levels are also necessary in this regard. “It is not necessary that every startup has to be a billion-dollar project; it can be an idea that benefits the community at the district or upazila level,” he said, adding that SBL must find a mechanism to help the community startups as well. 

Talking about the Bangladesh Startup Summit, Sami said one reason for this event was to connect local startups with global investors. More than 26 global investors attended the event, he said. The event also invited current and potential local investors to mingle with global investors. “These events will increase Bangladesh’s exposure to the global business world, communicate the country’s brand value to the outside world, and connect Bangladeshi startups with global and local investors,” he concludes.