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[Presentation] Startup Ecosystem: Bangladesh — Coming of Age

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[Presentation] Startup Ecosystem: Bangladesh — Coming of Age

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Bangladesh’s startup ecosystem has picked up rapidly since 2013 – driven by participation from angels; rise of eco-system enablers like co-working space, community events, local and global incubators; and a growing active interest from government/development partners. However, major deals and growth have started happening since the end of 2017. While a number of international/local funds have present operations along with incubator/accelerator programs for pipeline development in the economy, Series A funding is yet to properly kick off. The embedded presentation gives a high level overview of the current status, the story of evolution and growth, the promising and thriving sectors, the potential bottlenecks and the role of ecosystem enablers. The conclusion is clear: Bangladesh’s startup ecosystem is slowly, but surely, coming of age.

Bangladesh’s startup ecosystem has picked up rapidly since 2013 – driven by participation from angels; rise of eco-system enablers like co-working space, community events, local and global incubators; and a growing active interest from government/development partners. However, major deals and growth have started happening since the end of 2017. While a number of international/local funds have present operations along with incubator/accelerator programs for pipeline development in the economy, Series A funding is yet to properly kick off. The embedded presentation gives a high level overview of the current status, the story of evolution and growth, the promising and thriving sectors, the potential bottlenecks and the role of ecosystem enablers. The conclusion is clear: Bangladesh’s startup ecosystem is slowly, but surely, coming of age.

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[Presentation] Startup Ecosystem: Bangladesh — Coming of Age

  1. 1. Prepared ByPrepared For STARTUP ECOSYSTEM Bangladesh: Coming of Age
  2. 2. Prepared ByPrepared For Table of Contents • Executive Summary • Growing opportunity for Startups to capitalize on venture capital asset class • Bangladesh’s outlook looks vibrant in numbers • Startup ecosystem is gaming forward following on to bigger headlines • Local entrepreneurs are the drivers of the ecosystem • With Fintech leading the way, the overall confidence of the ecosystem looks positive • 67% of the investors are optimistic about the future • Recent deal dynamics is signaling a promising future • Accelerators and Incubators within the system • Investors within the system • Key Takeaways
  3. 3. 3 • Startup Ecosystem has picked up rapidly since 2013 with participation from angels, starting up of eco-system enablers like co-working space, community events, local and global incubators, and active interest from government/development partners. However, major deals and growth have started happening since end of 2017. • As of now there are a number of international/local funds operating such as Fenox, BD Ventures, IDLC Venture Fund along with incubator/accelerator programs for pipeline development. However, Series A funding is yet to properly kick off. • In the recent years, ride-sharing and logistics solutions have gained traction in the market. Other popular startup categories include FinTech, Software, Web and Mobile Apps, Health Tech, and Digital Marketing. 83% of the founders have previous work experience with 57% previously founding a Startup. Top 3 reasons for starting a business are – passion, opportunity, and independence. • 43% of the tech startups have raised seed funding compared to 8% for non-tech. Top 3 reasons for raising funds are Opex/Capex for growth (42%), Product/Prototype Development (34%), and Customer Acquisition (17%). Preferred investor choices are Angels followed by VCs and Friends/Family. Financial Institutions (especially debt capital) ranks last. Key success factors startups perceive to be critical – Right Team, Access to Funding, and Right Connections. • Top 3 choices for investors right now are e-commerce, Fintech, and impact businesses. Preferred investment sectors are Asset Sharing and Logistics (85%), FinTech (83%), Health Tech (67%), Education Tech (67%), and C2C Commerce (50%). Critical success factors according to investors – Team (83%), Market Potential (67%), and Scalable Idea (50%). Additional verticals that will get a lot of attention in the coming days are Fintech (Digital Banking), Impact (Agriculture, Climate, Education, Health), and Robotics/Low-cost Hardware.
  4. 4. 4 WHY BANGLADESH?
  5. 5. 5 172 million people (2021 Projection by BBS) 8th largest in the world 5th most densely populated 63% under 35 years 45% under 25 years 90% Muslim, highly homogenous 5,000+ IT graduates enter the market annually 2nd largest supplier of online labor 97% population subscribed to mobile services 161 million mobile phone users 94 million mobile internet users 99 million internet subscribers 98% 2G penetration across country 41% 3G penetration across country Sources: BTRC, World Bank, UNCTAD, Ministry Briefings, BBS, WB Strategic Location at the Heart of Asia Beneficial location at the crux of “Chindia”
  6. 6. 6 299.1 BILLION USD GDP FY 2018-19 8.15% GDP Growth Rate FY 2018-19 32.69 BILLION USD FOREX Reserve (Dec 2019) 41.32 BILLION USD Total Exports FY 2018-19 34 BILLION USD RMG Exports FY 2018-19 800 MILLION USD ICT Exports FY 2017-18 2.15 BILLION USD FDI Jan-Sep 2019 160.8 MILLION Mobile Subscribers (Dec 2019) 99.43 MILLION Internet Subscribers Dec 2019 93.68 MILLION Mobile Internet Users Dec 2019 Source: BTRC, World Bank, UNCTAD, Ministry Briefings, BBS, EPB, BB
  7. 7. 7 Digital World Connecting Startups GP Accelerator Entrance of Local and International VCs Founder’s Institute Corporates Tech SBUs IDEA Project – GOB Spark $2M for Pathao $5M for Zero Gravity Robi R-Ventures $1.7M for SOLshare JTI – Akij Acquisition Banglalink IT Incubator Disclaimer: This list is indicative only and non-exhaustive CHILD ADOLESCENCE BDT 100 crore for Seed investment by Startup Bangladesh Evercare – Apollo Acquisition TEEN ADULT 2 $1M for Direct Fresh $1.3M for AjkerDeal.com $2M for CloudWell $7M for SureCash Rise of Series A Startups + International VC Funding $1.6M for ShopUp Startup Bangladesh Axiata–Airtel Merger Acquisition $10M For Pathao $56M for bKash $5.5M for Chaldal $3.8M for Bdjobs $15M for Shohoz $2M for Deligram $4.2M for Sindabad Bangladesh Angels Startup Documentary 2 by Startup Dhaka JERA – Summit Partial Acquisition $1.5M For ShopUp $1M for Sheba INFANT Startup Weekend EMK Center Google Facebook Microsoft $5M for Bdjobs Startup Documentary by Startup Dhaka Startup Bash Investment Gov. initiative Event Ecosystem builder Corporate M&A Co-working Space The Wave Innovation Xtreme $1M for Priyo.com $10M for GPIT Hub Dhaka 1 3
  8. 8. 8 STARTUP LANDSCAPE AND SECTORS IN FOCUS
  9. 9. 9 Business Model Top reasons for incubation: Networking with potential investors/clients & Access to mentors 67%33% TECH vs NONTECH STARTUPS 55% Hybrid 46% B2B Business Model 24%15% Incubation/ Accelerators attended 43%8% Seed Finance Taken Background of Entrepreneurs 83% Had previous work experience 80% Local Entrepreneur 57% Previously founded at least 1 startup 45% Came from Entrepreneurial background Future Drivers for Success 93% Greater access to funds 45% Ease of doing business 33% Better technology infrastructure Success Factors 93% Building a talented team 45% Access to funding 33% Right industry connections Biggest Challenges 100% Finding/retaining the right team 76% Finding the right co-founder 4% Government Support Passion for the cause Opportunity Identification Independence 1 2 3 TOP REASONS FOR FORMING STARTUPS VC 2 FnF 3 Financial Institutions4 Angel Investors 1 PREFERRED INVESTORS 17% 34% 42% OPEX/CAPEX & Initial Growth IT Infrastructure & MVP/ Product Development Customer Acquisition KEY INVESTMENTS Source: Data compiled by LightCastle Partners across survey of 100 Startups
  10. 10. 10 65 62 60 57 50 48 45 45 42 37 35 33 27 19 (24) 40 Fintech OnlineServiceMarketplace Content/Media Edutech Ride-sharing Logistics Agritech LifestyleSolutions IoT,AI,Analytics,DeepTech E-Commerce Tourism Healthtech TechnologySolutions Foodtech DigitalMarketing Startup Ecosystem Confidence Index Sector-specific Confidence Overall Confidence Source: Data compiled by LightCastle Partners across survey of 100 Startups during 2019
  11. 11. 11 INVESTMENT LANDSCAPE
  12. 12. 12 Preferred Investment Sector 85% Asset-sharing and Logistics 83% FinTech 67% Healthtech 67% EducationTech 50% C2C Commerce Biggest Challenges 83% Finding the right team 50% Scalability of an idea Expertise 67% Deal generation/Marketing 67% Operations 33% Strategy Success Factors 83% Good team 67% Market potential 50% Scalable idea 83%17% INVESTOR DEMOGRAPHICS 67%33% VC INTERNATIONAL LOCAL ANGEL Source: Data compiled by LightCastle Partners across survey of 15 Investors Future Drivers for Success 67% Political stability 50% Better technology infrastructure 50% Greater foreign investment Investor Portfolio Tech; ECommerce; Impact
  13. 13. 13 Technology Corporate Logistics E-Commerce $1.6M Seed Round From Omidyar Network $1.5M Seed Round From Sequoia Capital $56M Corporate Round From Ant Financial $15M Series A From Golden Gate Ventures $4.2M Series A From Aavishkar Venture Capital $2M Series A From Skycatcher $1M Series A From Epyllion Group $2M Series A From Gojek $3.8M Venture Round From Seek $5M Series A From The Frontier Fund $5.5M Series A From IFC $1.5B Acquisition Of Akij Group By Japan Tobacco $10M Venture Round From Gojek $1.7M Series A From IIX Growth Fund $330M Partial Acquisition Of Summit By JERA $118M Acquisition Of Apollo Dhaka By Evercare Group M&A Of Robi Axiata And Airtel
  14. 14. 14 NOTABLE ECOSYSTEM BUILDERS AND INVESTORS
  15. 15. 15 LOCAL GLOBAL Startup Media Universities Competitions Development Partners Telecom Gov. Initiative COMMERCIALIMPACT
  16. 16. 16 THE ANGELS NETWORK Angel Syndicate CorporateFoundation Corporates CorporatesGov.Initiative LOCAL GLOBAL COMMERCIALIMPACT Multilateral Development Agency InvestmentCos.
  17. 17. 17 KEY TAKEAWAYS
  18. 18. 18 • Foreign Investors and startups are attracted by the consistent GDP growth, demographic bulge, density dividend, and technology adaptable young population. • Sectors such as ride-sharing and logistics have already captured the attention of VCs and Angel Investors. Rising private sector consumption will keep driving both online and offline retail instigating the growth of logistics industry even further. Growing financial inclusion has created significant potential for Fintech companies in Bangladesh. Online service marketplace, Edutech and Agritech among other sectors have been marked as the next forces to drive startup revolution. • Government has started to revise policies such as declaring investment funds as a pass-through vehicle, allowing Banks/NBFIs to invest in venture funds and special financing for SMEs and Startups. However, policies regarding VATs and licensing requirements need to be further streamlined to cater to the needs of tech-companies. • Alongside factors such as accelerators and incubation programs, mentorship and training, and availability of funds in the market, the entire business environment in the country needs to transform in a way that facilitates the growth of startups.
  19. 19. 19 THANK YOU Bijon Islam Chief Executive Officer bijon.islam@lightcastlebd.com Silvia Rozario Business Consultant silvia.rozario@lightcastlebd.com Md. Risalat Huda Trainee Consultant risalat.lcp@gmail.com AUTHORS & ANALYSTS Mehad ul Haque Senior Business Consultant mehad.haque@lightcastlebd.com
  20. 20. 20 • View Latest Deals in the Market. • https://databd.co/deals

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