Startups get Tk 425cr capital boost
Bangladesh’s startup ecosystem received a major funding boost yesterday as a Tk 425 crore venture fund backed by Bangladesh Bank and 39 commercial banks was formally launched to support local entrepreneurs struggling with a prolonged shortage of capital.
The Bangladesh Startup Investment Company PLC (BSIC) inaugurated its first fund, titled “Onkur Bangladesh Fund 1”, at an event held at the Radisson Blu Water Garden Hotel in Dhaka.
For all latest news, follow The Daily Star's Google News channel. Guided by the central bank, BSIC will provide equity financing, strategic support and international co-investment opportunities for promising startups, officials said.
Under the structure, participating banks will contribute one percent of their annual net profits to the fund, making it a continuous financing mechanism rather than a one-time initiative. The fund will invest in seed, late-seed and Series-A stage startups.
The initiative follows Bangladesh Bank’s recent policy decision allowing commercial banks to invest one percent of their cumulative net profits from the past five years into the fund and establishing the necessary policy framework for BSIC operations.
Young entrepreneurs in Bangladesh face two key challenges -- limited access to funding and lack of collateral. This initiative removes both barriers.
Finance and Planning Minister Amir Khosru Mahmud Chowdhury attended the event as the chief guest, while Bangladesh Bank Governor Md Mostaqur Rahman was present as the special guest.
Since 2010, Bangladesh’s startup ecosystem has attracted over $1.126 billion through more than 460 investment deals, with over $1 billion coming from foreign investors and only around $76 million from local sources, according to LightCastle Partners.
Funding peaked in 2021, when startups raised over $434 million across 94 deals, including bKash’s landmark $250 million investment from SoftBank.
However, funding fell sharply amid global economic uncertainty, inflation, currency depreciation and political instability. By 2024, annual funding dropped to $42 million, while local investor participation plunged 95 percent year-on-year.
Speaking at the event, the finance minister said the financial sector was going through a “painful” period because of past problems in the banking sector and stock market.
“We are working to overcome those challenges,” he said.
The minister said there would be no political interference in the financial sector or related industries.
He said young entrepreneurs in Bangladesh face two key challenges -- limited access to funding and lack of collateral.
“This initiative removes both barriers. The investment decision-making process will be transparent, efficient and professional,” he said.
Chowdhury added that the initiative aligns with the government’s political manifesto and its goal of creating employment for one crore people by leveraging the demographic dividend.
“In particular, through the creative economy, both rural and urban youth will be brought into the economic mainstream,” he said.
Bangladesh Bank governor said the next phase of financial-sector development requires institutions capable of supporting innovation while ensuring discipline, transparency and accountability.
“BSIC is an important step in channelling domestic capital into productive and technology-driven entrepreneurial sectors. Through this, employment, productivity and financial inclusion will become stronger,” he said.
Mashrur Arefin, chairman of BSIC and managing director of City Bank PLC, said BSIC would serve as an institutional platform connecting Bangladeshi entrepreneurs with professional and structured capital.
“With the support of 39 commercial banks, we are creating a bridge between local confidence and global venture standards,” he said.
BSIC can invest in Bangladeshi companies that change the lives of millions of people, said Rahat Ahmed, founder and managing partner at venture capital firm Anchorless Bangladesh.
“This is capital for the next generation,” said Ahmed, who is also a consultant to BSIC.
BSIC said it plans to complete its first three investments before the end of 2026. Before that, it will appoint a managing director, chief investment officer and full investment committee within the third quarter.
Representatives from VentureSouq, Wavemaker Partners, 500 Global, Plug and Play, ADB Ventures, GFR Fund, Sturgeon Capital, Conjunction Capital, Orbit Startups, Tech in Asia and FWD Start attended the event.
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