startup ecosystem bangladesh: coming of age · gp accelerator entrance of local and international...
TRANSCRIPT
Prepared ByPrepared For
STARTUP ECOSYSTEMBangladesh: Coming of Age
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
• Startup Ecosystem has picked up rapidly since 2013 with participation from angels, starting up of eco-system enablers like co-workingspace, community events, local and global incubators, and active interest from government/development partners. However, majordeals 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 withincubator/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 includeFinTech, Software, Web and Mobile Apps, Health Tech, and Digital Marketing. 83% of the founders have previous work experience with57% 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 forgrowth (42%), Product/Prototype Development (34%), and Customer Acquisition (17%). Preferred investor choices are Angels followedby 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 AssetSharing and Logistics (85%), FinTech (83%), Health Tech (67%), Education Tech (67%), and C2C Commerce (50%). Critical successfactors according to investors – Team (83%), Market Potential (67%), and Scalable Idea (50%). Additional verticals that will get a lot ofattention in the coming days are Fintech (Digital Banking), Impact (Agriculture, Climate, Education, Health), and Robotics/Low-costHardware.
4
WHY BANGLADESH?
5
172 million people (2021 Projection by BBS)8th largest in the world5th most densely populated
63% under 35 years45% under 25 years90% Muslim, highly homogenous
5,000+ IT graduates enter the market annually2nd largest supplier of online labor97% population subscribed to mobile services
161 million mobile phone users94 million mobile internet users99 million internet subscribers98% 2G penetration across country41% 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
299.1BILLION USD
GDPFY 2018-19
8.15%GDP Growth Rate
FY 2018-19
32.69BILLION USD
FOREX Reserve (Dec 2019)
41.32BILLION USD
Total ExportsFY 2018-19
34BILLION USD
RMG ExportsFY 2018-19
800MILLION USD
ICT ExportsFY 2017-18
2.15BILLION USD
FDIJan-Sep 2019
160.8MILLION
Mobile Subscribers (Dec 2019)
99.43MILLION
Internet Subscribers
Dec 2019
93.68MILLION
Mobile Internet Users
Dec 2019
Source: BTRC, World Bank, UNCTAD, Ministry Briefings, BBS, EPB, BB
7
DigitalWorld
Connecting Startups
GPAccelerator
Entrance ofLocal and
International VCs
Founder’sInstitute
Corporates Tech SBUs
IDEA Project – GOB
Spark
$2M forPathao
$5M for Zero Gravity
RobiR-Ventures
$1.7M for SOLshare
JTI – Akij Acquisition
BanglalinkIT Incubator
Disclaimer: This list is indicative only and non-exhaustive
CHILD
ADOLESCENCE
BDT 100 crore forSeed investment by Startup Bangladesh
Evercare – ApolloAcquisition
TEEN ADULT
2
$1M forDirect Fresh
$1.3M forAjkerDeal.com
$2M forCloudWell
$7M forSureCash
Rise of Series A Startups + International
VC Funding
$1.6M for ShopUp
Startup Bangladesh
Axiata–AirtelMerger Acquisition
$10M For Pathao
$56M for bKash
$5.5M for Chaldal
$3.8M for Bdjobs
$15M forShohoz
$2M forDeligram
$4.2M forSindabad
BangladeshAngels
Startup Documentary 2by Startup Dhaka
JERA – SummitPartial Acquisition
$1.5MFor ShopUp
$1M for Sheba
INFANT
StartupWeekend
EMKCenter
GoogleFacebookMicrosoft
$5M forBdjobs
Startup Documentary by Startup Dhaka
StartupBash
InvestmentGov. initiativeEventEcosystem builderCorporate M&ACo-working Space
The Wave
Innovation Xtreme
$1M forPriyo.com
$10M forGPIT
Hub Dhaka
1
3
8
STARTUP LANDSCAPE AND SECTORS IN FOCUS
9
Business Model
Top reasons for incubation: Networking with potential investors/clients & Access to mentors
67%33%
TECHvs
NONTECHSTARTUPS
55%Hybrid
46%B2B
Business Model
24%15%Incubation/
Accelerators attended
43%8% Seed Finance Taken
Background of Entrepreneurs
83% Had previous work experience80% Local Entrepreneur57% Previously founded at least 1 startup45% Came from Entrepreneurial background
Future Drivers for Success
93% Greater access to funds45% Ease of doing business33% Better technology infrastructure
Success Factors
93% Building a talented team45% Access to funding33% Right industry connections
Biggest Challenges
100% Finding/retaining the right team76% Finding the right co-founder4% Government Support
Passion for the cause
OpportunityIdentification
Independence
1
2 3
TOP REASONS FOR FORMING STARTUPS
VC
2
FnF 3Financial
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
65 62 60 57
50 48 45 45
42 37 35 33
27
19
(24)
40
Fin
tech
On
line
Serv
ice
Mar
ketp
lace
Co
nte
nt/
Med
ia
Edu
tech
Rid
e-sh
arin
g
Logi
stic
s
Agr
itec
h
Life
styl
e So
luti
on
s
IoT,
AI,
An
alyt
ics,
De
ep
Te
ch
E-C
om
me
rce
Tou
rism
Hea
lth
tech
Tech
no
logy
So
luti
on
s
Foo
dte
ch
Dig
ital
Mar
keti
ng
Startup Ecosystem Confidence Index
Sector-specific Confidence Overall Confidence
Source: Data compiled by LightCastle Partners across survey of 100 Startups during 2019
11
INVESTMENT LANDSCAPE
12
Preferred Investment Sector
85% Asset-sharing and Logistics83% FinTech67% Healthtech67% EducationTech50% C2C Commerce
Biggest Challenges
83% Finding the right team50% Scalability of an idea
Expertise
67% Deal generation/Marketing67% Operations33% Strategy
Success Factors
83% Good team67% Market potential50% 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 stability50% Better technology infrastructure50% Greater foreign investment
Investor Portfolio
Tech; ECommerce; Impact
13
Technology
Corporate
Logistics
E-Commerce
$1.6MSeed RoundFromOmidyar Network
$1.5MSeed RoundFromSequoia Capital
$56MCorporate RoundFromAnt Financial
$15MSeries AFromGolden Gate Ventures
$4.2MSeries AFromAavishkar Venture Capital
$2MSeries AFromSkycatcher
$1MSeries AFromEpyllion Group
$2MSeries AFromGojek
$3.8MVenture RoundFromSeek
$5MSeries AFromThe Frontier Fund
$5.5MSeries AFromIFC
$1.5BAcquisitionOf Akij GroupBy Japan Tobacco
$10MVenture RoundFromGojek
$1.7MSeries AFromIIX Growth Fund
$330MPartial AcquisitionOf SummitBy JERA
$118MAcquisitionOf Apollo DhakaBy Evercare Group
M&AOf Robi AxiataAnd Airtel
14
NOTABLE ECOSYSTEM BUILDERS AND INVESTORS
15
LOCAL
GLOBAL
Startup Media
Un
ive
rsit
ies
Competitions
Development Partners
Telecom
Gov. Initiative
COMMERCIALIMPACT
16
THE ANGELSNETWORK
Angel Syndicate
Co
rpo
rate
Fo
un
da
tio
n
Corporates
Co
rpo
rate
sG
ov
. Initia
tive
LOCAL
GLOBAL
COMMERCIALIMPACT
Multilateral Development Agency
Inv
est
me
nt
Co
s.
17
KEY TAKEAWAYS
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. Risingprivate sector consumption will keep driving both online and offline retail instigating the growth of logistics industryeven 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 todrive startup revolution.
• Government has started to revise policies such as declaring investment funds as a pass-through vehicle, allowingBanks/NBFIs to invest in venture funds and special financing for SMEs and Startups. However, policies regardingVATs 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 fundsin the market, the entire business environment in the country needs to transform in a way that facilitates the growthof startups.
19
THANK YOU
Bijon IslamChief Executive Officer
Silvia RozarioBusiness Consultant
Md. Risalat HudaTrainee Consultant
AUTHORS& ANALYSTS Mehad ul Haque
Senior Business Consultant
