Call for venture capital boost to power startup growth

Bangladesh's startup scene is brimming with ideas but starved of patient capital, industry leaders and financial experts said on Sunday.

They stressed that the country must now move beyond its dependence on high-interest bank loans and embrace venture capital to unlock the next wave of innovation and entrepreneurship.

The traditional banking model, built on short-term deposits, cannot support the long-term financing needs of startups and emerging industries, they argued.

Venture capital, they said, offers not just funding but also mentorship, risk-sharing, and eventual exit opportunities through the capital market.

Their call came at a discussion titled "Venture Capital in Bangladesh and Its Future Journey," organised by BD Venture Limited at a city hotel.

Officials from Bangladesh Bank, commercial banks, financial institutions, mobile financial service providers and successful entrepreneurs shared their experiences and ideas for building a more dynamic startup ecosystem in the country.

In his welcome remarks, Mamun Rashid, Chairman of BD Venture, said Bangladesh's banking system has long been oriented towards debt capital, which has hindered understanding and adoption of venture capital financing.

He noted that BD Venture has learned from the success of startups such as bKash, ShopUp, Chaldal.com, Pathao, and Esho Shikhi.

Mr Rashid said the company now plans to expand its capital base with support from the Bangladesh Securities and Exchange Commission (BSEC) and aims to enter the capital market soon.

"If we ourselves do not believe in the capital market, how can we offer exit opportunities to others?" he asked.

He added that the firm would appoint two independent directors with entrepreneurship experience and has sought BSEC approval to establish a new venture fund.

With 70 per cent institutional ownership, BD Venture was designed to build public trust in venture capital financing in Bangladesh, he said.

Husne Ara Shikha, Executive Director of Bangladesh Bank, said the central bank has already revised its startup policy and is forming a venture company in collaboration with 52 commercial banks.

"The name has already been finalised. We want this company to serve as a bridge connecting entrepreneurs and bankers," she said, adding that Bangladesh Bank aims to play a meaningful role in supporting startups and will provide all necessary assistance.

"We do not want to take any step that could harm the bank's reputation," she noted.

She further said there is immense potential to unlock, and with government backing, the central bank is committed to strengthening its role in the entrepreneurial ecosystem and bringing about positive change.

Mashrur Arefin, Managing Director of City Bank and Chairman of the Association of Bankers, Bangladesh (ABB), said: "We are working closely with the government to launch a venture capital company, whose name has already been finalised."

Around 1.0 per cent of the profits of banks over the past three to four years, totalling approximately Tk 6.50 billion, has been set aside as the company's capital, he said. "Now is the right time to move forward."

He added: "We seek guidance from international institutions such as ADB and IFC so that we can learn and progress correctly. Our experience in startup investment is limited. From recent experience, most funds provided by banks were equity investments, but returns were minimal."

Mr Arefin emphasised that the new company's governance, management, and compliance must be handled professionally, noting that past investments often lacked proper oversight. "Even if only 10 out of 100 investments succeed, it would still be a success-the failure of the remaining 90 would be acceptable," he said.

Shafique Ul Azam, Managing Director of BD Venture, said the company has supported 13 startups across various sectors since its inception.

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