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These Sectors are Poised for Disruption in Bangladesh

Syed Javed Noor, Deputy Managing Director of IDLC Finance Limited, who leads the NBFI’s venture capital initiative IDLC Venture Capital Fund, says that ed-tech, transportation and logistics, health-tech, and travel will see phenomenal growth in Bangladesh in the coming days. 

He argues that the socio-economic reality of the country offers an excellent foundation for the growth of these verticals. IDLC Venture Capital Fund has recently invested in logistics startup Truck Lagbe

Bangladesh has seen phenomenal growth in smartphone and internet penetration over the last decade. Per BTRC, the total internet penetration of the country stands at 72.92%, of which fixed broadband penetration is 5.84% and mobile Internet penetration is 67.08%. These are staggering numbers. With an annual 10% plus growth, penetration is expected to go off the chart in a few years. 

There are disagreements over these numbers. Some sources suggest the real internet penetration is much lower than the official BTRC data. The quality of penetration comes under question as well. 

Poor quality and expensive nature of mobile data often get blamed for slow penetration of various digital services in the country. 

Everyone, however, agrees that internet penetration has seen excellent growth in Bangladesh over the past years. 

The changing market 

These changes have lasting impact on the market. Growing internet penetration coupled with smartphone penetration are changing the consumer behavior across verticals. 

The coronavirus pandemic has added new fuel to that fire of acceleration. Digital commerce has seen phenomenal growth. Services like digital healthcare, online education, and digital financial services have received mainstream attention. 

As smartphone prices fall, mobile data gets cheaper and digital literacy grows, the adoption of digital services will only skyrocket in the coming years. 

Mr. Noor says that he expects digital services such as online education, healthcare, travel and transportation to go mainstream in Bangladesh in the next few years. IDLC VC Fund aims to explore these verticals as it accelerates its investment. 

Syed Javed Noor
Syed Javed Noor, DMD, IDLC

“We were sector agnostic in the early days”, says Mr. Noor. “Our idea was that anything sellable, scalable with a similar business model somewhere in the globe, we are in. Being the first VC Fund, we cannot be sector-specific. Two years after launch, we now believe that B2C is the hot spot.” 

While the fund remains open to potential ideas across verticals, it is willing to go specific when necessary. For example, while Mr. Noor and his team think B2C is where big opportunities are, he also thinks that some verticals in B2C are more potent for growth than others. 

“Within B2C there are a few areas such as e-commerce that have established models across the globe and scale up pretty quickly,” says Mr. Noor. “EdTech, transportation and logistics, and HealthTech are some of the verticals we believe have huge upsides. Tourism took a hit due to COVID, but it will make a comeback soon. These are the five areas where we think we can make a couple of investments and we can make good money for our investors and develop some insights over the period in these particular sectors.” 

He then goes on to explain why healthtech and travel hold such potential in Bangladesh. 

“The healthcare system is not democratic as of now,” explains Mr. Noor. “You can't access a Dhaka-based doctor when you are sitting in Barisal. Healthcare data is also a huge challenge. Our healthcare system does not have a system for patient data preservation. Hospitals are facilities for diagnostic, surgery, and post-operative facilities, but the diagnosis and everything are done by the doctors. Where they sit does not matter, all that the doctor needs is access to patients’ records, speak to the patient, and then advice.” 

Mr. Noor says tech has the capacity to democratize the healthcare system. People need to visit Dhaka for everything from seeing a doctor to getting a diagnosis. It is expensive and inconvenient. Tech can help change this. Since advanced diagnostic centers are available across the country, if a doctor can primarily assess a patient, get his test reports online, and access history, he can advise the patient whether she should travel to Dhaka or somewhere else. 

Mr. Noor argues the Internet could be a huge game-changer for healthcare in countries like Bangladesh. Moreover, since the internet allows aggregation and healthcare is an integrated system, companies can gradually expand to multiple verticals.  

Finally, Mr. Noor sees huge potential for travel as the global coronavirus pandemic comes to an end. Travel is one of the badly hit industries due to COVID-19. But the relevance of travel has never been this high. While international travel remains limited, local travel has already reached the pre-pandemic level in many parts of the world. Given the socio-economic reality of Bangladesh, Mr. Noor says travel will see meaningful growth in Bangladesh. 

“Hospitality is something I think will be huge because our middle class is predicted to be 50 million by 2030 and people these days travel a lot as well”, he tells FS in an interview. 

The new economy 

All of these verticals have experienced meaningful growth and attracted notable investments. Some of the largest deals of this year took place in edtech, healthcare, ecommerce, logistics, and travel. 

The pandemic has helped produce several leading players in online education. There is now a general awareness about online education in the country. The vertical has also received meaningful attention from investors. Companies like Shikho, Ostad, Sohopathi, Eduhive have raised millions of dollars in funding.  

In logistics, companies like Truck Lagbe and Paperfly have raised millions in investment. 

Healthcare scene has been equally busy in 2021. Several companies including Maya, Amarlab, Praava Health, DoctorKoi have received attention from both customers and investors.  

And while travel recovery remains under questions, travel-tech startup Go Zayaan raised a hefty seed round last week and a few other players have also raised money in 2021. 

We are heading towards a digital economy. The past two years have made that part clear. As we move along, edtech, traveltech, healthtech, and logistics are likely to produce some of the largest players in the new economy. 

Read our interview with Syed Javed Noor here

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