Startup investment firm set to launch with Tk 600cr from 39 banks

Bangladesh’s first large-scale venture capital firm, an investment management company supported by 39 banks, will begin operations next month to address the long-standing funding gap for local startups.

Named Bangladesh Startup Investment Company (BSIC), the firm has raised nearly Tk 600 crore in initial capital. It plans to begin operations on April 30 and invest in at least three startups by June 30.

Guided by the Bangladesh Bank (BB), the BSIC will provide equity financing, strategic support, and opportunities for international co-investment to help promising startups scale, officials said.

“BSIC will serve as a full-service institution for young entrepreneurs,” BSIC Chairman Mashrur Arefin, and managing director of City Bank Plc, told The Daily Star.

“It will provide not only funding but also ongoing monitoring and strategic guidance to help businesses grow. We know 90-95 percent of startups fail, but if even a few succeed and one or two reach global markets, that will be a significant achievement. Such successful firms will also generate many new jobs,” he added.

The country’s startup growth, strong a decade ago, has slowed over the past two to three years due to tighter global venture capital flows and cautious investors.

Early successes like Pathao and Chaldal attracted foreign funding, but limited profitable exits, regulatory hurdles, low internet penetration, shifting capital to AI, weak local AI startups, macroeconomic pressures, and political uncertainty have all dampened investor confidence.

BSIC will invest only after a startup demonstrates market demand, has a basic operational setup, and shows growth potential, rather than funding ideas at the concept stage.

Officials said the company will initially focus on ventures in health, agriculture, education, transport, retail, and logistics, offering funding in exchange for equity stakes.

If the selected startups perform well, BSIC will also bring in foreign venture capital to co-invest, helping local entrepreneurs scale and access global technology and expertise.

Between 2027 and 2028, BSIC plans to invest in 8 to 12 startups, and from 2029 onward, it aims to exit successful ventures through stock market listings or direct stake sales.

Arefin, also chairman of the Association of Bankers, Bangladesh, said that although the process began under the interim government, new BB Governor Md Mostaqur Rahman has actively overseen its progress. “The governor asked us to focus on developing the rural economy. We will give that high priority,” he added.

The long-term goal, Arefin said, is to build globally competitive startups in Bangladesh that could one day rival Uber, Instagram, Facebook, Spotify, or Airbnb, creating large-scale employment.

Local startups such as 10 Minute School and Shikho have already demonstrated how technology can expand access to education, while digital health ventures could similarly benefit rural communities, he added.

EQUITY-BASED SUPPORT AND BANK CONTRIBUTIONS

Arefin highlighted that the fund will grow each year as participating banks contribute from annual profits. “Unlike loans, the support will be equity-based, meaning BSIC will take ownership stakes in startups instead of charging interest,” he said.

Under a BB directive, participating banks are contributing 1 percent of their profits earned between 2020 and 2024 to build the fund.

Bankers said this reflects an understanding that startups need risk capital rather than traditional loans, which commercial banks are not designed to provide.

According to BSIC sources, BRAC Bank holds the largest share at 7.71 percent, followed by City Bank at 6.74 percent, Dutch-Bangla Bank at 6.67 percent, Pubali Bank at 6.5 percent, Sonali Bank at 5.73 percent, Eastern Bank at 5.58 percent, and Prime Bank at 4.98 percent.

Going forward, banks will contribute around Tk 200 crore annually from new profits, allowing the fund to expand and support more startups.

BSIC’s nine-member board includes managing directors from City Bank, Prime Bank, Mutual Trust Bank, Sonali Bank, and Pubali Bank, along with four independent directors, with Light Castle Partners as strategic consultant.

Nazeem A Choudhury, additional managing director of Prime Bank, is interim chief executive officer (CEO) while BSIC searches for a professional with multinational startup investment experience to appoint a permanent CEO and head of investment by May.

BSIC was registered with the Registrar of Joint Stock Companies and Firms on December 7 last year.