To encourage youth-led entrepreneurship and turn innovative ideas into viable businesses, the Bangladesh Bank (BB) announced a Startup Funding Facility in July this year. The initiative targets startups founded and managed by one or more entrepreneurs, operating as technology-driven local or joint-venture companies with scalable business models and the potential to introduce innovative products or services.
Eligible firms must be registered with the Registrar of Joint Stock Companies (RJSC) and submit documents such as proof of business address and directors’ declarations. Notably, there is no mandatory paid-up capital requirement for startups, as registration fees are determined by the level of authorised capital.
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Under BB’s guidelines, a company qualifies as a startup if it has been in operation for no more than 12 years. Existing large companies are excluded from this category. However, inconsistencies remain between BB policies and those of the National Board of Revenue (NBR).
For example, the Startup Sandbox Policy under the Income Tax Act 2023 defines startups as companies with an annual turnover not exceeding Tk 100 crore, registered under the Companies Act, and engaged in developing innovative, technology-based products, processes or services supported by intellectual property rights. The law excludes firms resulting from mergers or demergers and imposes a minimum turnover tax of 0.1 percent annually.
In line with the Companies Act 1994, BB’s SME and Special Programmes Department is set to form a Venture Capital Company. A separate guideline will govern its formation, management, investment operations, advisory functions and dividend distribution. Two key funding mechanisms are planned: a Tk 500 crore revolving refinancing fund and banks’ own Startup Equity Investment Fund.
BB has also introduced new cross-border investment provisions, allowing startups to invest up to $10,000 abroad. They can now acquire shares in foreign companies through share or security swaps, following globally accepted valuation practices. This marks a notable liberalisation of foreign investment policy.
Bangladesh now hosts nearly 1,000 active startups, with around 200 new enterprises emerging each year. In 2023, venture capital firms accounted for roughly half of total startup investments, contributing about $36 million. Over the past decade, Bangladeshi startups have raised around $753 million across 171 deals from domestic and international investors.
The ecosystem is maturing, but early-stage seed funding remains a challenge. Many startups struggle to secure capital at the idea or prototype stage. Exit options such as IPOs or acquisitions are limited, discouraging investors from committing large sums. Greater policy consistency, regulatory predictability and macroeconomic stability are crucial to maintaining growth momentum in the sector.
In venture capital, multiples on invested capital (MOIC) and exit strategies determine investment success. For example, if an investor contributes $1 million and exits with $3 million, that represents a 3x return, generally considered the minimum benchmark for early-stage venture capital success, given the high-risk nature of startup investing. Typically, only a few successful ventures achieve 3x to 10x returns, compensating for losses elsewhere.
The government-owned Startup Bangladesh Limited (SBL) demonstrates a range of exit outcomes, with MOIC values from 1.46x to 7.83x. Its best-performing portfolio category represents 45.34 percent of investments, though most individual investments range between Tk 1 crore and Tk 5 crore — relatively small compared with the Tk 100 crore annual turnover threshold defined by NBR. Notable success stories include Pathao, ShareTrip, 10 Minute School and iFarmer, each showing strong growth potential.
However, many local enterprises still face challenges in regulatory compliance, audit readiness and strategic management, which hinder scalability and their ability to attract institutional capital. Despite growing interest in alternative financing such as debt and revenue-based funding, most startups remain unprepared due to weak financial reporting, informal bookkeeping and underdeveloped cost structures. Addressing these gaps through regulatory simplification, investor confidence-building, and capacity development will be vital to ignite the next generation of Bangladeshi entrepreneurs.
The writer is the CEO at Business Initiative Leading Development (BUILD)