How has Bangladesh transformed in the past ten years?

Instinctively, the macroeconomic numbers come to mind. Bangladesh has indeed grown incredibly in the past decade, graduating from its Least Developed Country status, with a GDP growth rate of over 5 percent in the past 5 years. The economy has sustained a stable inflation rate of around 6 percent per year and maintained a low debt-to-GDP ratio. Even through the global pandemic, the country experienced a remarkable bounce-back, ranking first in South Asia in the Nikkei Covid-19 Recovery Index.

Yet, a fuller picture of the country's transformation is painted through everyday life in today's Dhaka, where one rarely walks without passing a bKash agent's stall, taking an instant Pathao ride to the next destination, or placing a Chaldal order for daily groceries. A strong cultural shift can be felt even in marginalized communities, as prominent startup names like bKash and Pathao have become part of everyday language as verbs. These indicate a larger phenomenon: the Bangladeshi experience today, for both city-dwellers and remote communities, relies heavily on the budding startup ecosystem.

Soaring Investments in Local Startups

The statistics of startup investments reflect an optimistic picture. In the past decade, over USD 800 Mn was invested in Bangladeshi startups through 232 deals. More than half of that amount, USD 415 Mn, was raised in the past year alone, with a year-on-year growth of nearly 10 times. Global attention also increased, with USD 412 Mn, or 98 percent, of the total raised coming from international investors.

The impact of these investments on the overall Bangladeshi economy is immense. Directly and indirectly, more than 1,200 startups in Bangladesh generate over 1.5 million employment opportunities across the country, creating new avenues of employment. This includes support for existing forms of employment, such as farmers supported by iFarmer or technical ervice providers finding hires through Sheba.xyz. Emerging startups also make it more convenient to find new types of employment, such as ride-sharing or food and grocery delivery.

Driven By Inclusivity

Although fintech remains the frontrunner, sectors such as logistics and mobility, e-commerce and retail, healthcare, and education are also gaining prominence. What strengthens the impact of startups in these sectors is their commitment to inclusive growth.

Fintechs such as bKash and ShopUp, for example, have reached 57 million customers and 4.5 million small businesses, supporting rural households' income and providing access to finance for the unbanked and underbanked. Healthcare startups like Maya and Praava Health serve a combined total of 15 million patients, focusing on women's reproductive and mental health. Shikho and 10 Minutes School are reaching nearly 3.5 million learners, leveraging technology to enable self-paced learning for all students across the country. The core of these initiatives is the drive to make innovative products and services accessible to all.

The Future for Startups Relies on Evolving Support

As the startup ecosystem in Bangladesh matures, the need to ensure a supportive and inclusive environment for them to thrive becomes even more eminent. A few key initiatives needed in the way forward for startups include:

• Startup sandbox scheme: Implementing regulatory sandbox opportunities for startups would enable them to experiment with new technologies in a controlled environment, through relaxed policies and safeguarding measures in place. This allows startups to test out the market before launching new products and services while also making way for regulators to make better informed legal and regulatory decisions.
• Investment-friendly environment: Creating an investment-friendly environment in Bangladesh requires reducing entry barriers, introducing tax cut incentives, and easing repatriation of profits of foreign investors to attract foreign investments. In addition, investments can also be encouraged by creating a fund of funds through a public private collaboration to invest in startups, or by mobilizing local and international markets through corporate venture capital.
• Startup-friendly environment: Streamlining the legal definitions and business processes for startups is essential in the path to raising the standards for ease of doing business to encourage startup initiatives. These initiatives can also be supported through industry-academia collaborations, by nurturing innovations at a school or university level and equipping students with the skill sets in demand for startups.
• Policy and Government Support: An enabling policy environment for startups includes implementation of policies such as ease of access to debt finance, reducing the cost of doing business, ease of doing business, and fiscal policy support. Further government support can compound on the impacts of encouraging policies, through infrastructural and ministry-level changes.

Yet, a fuller picture of the country's transformation is painted through an everyday life in today’s Dhaka, with rarely a walk without passing a bKash agent’s stall, an instant Pathao ride to the next destination, or a Chaldal order for the daily groceries. A strong cultural shift can be felt even in the communities at the margins, as prominent startup names such as bKash and Pathao permeate everyday language as verbs. These indicate a much larger phenomenon: the  Bangladeshi experience today for both its city-dwellers and its remote communities relies heavily on its budding startup ecosystem.