Regional accelerator programs become key players in Bangladesh’s growing startup ecosystem
Several regional and global incubator and accelerator programs have come to play an important role in Bangladesh’s fast-growing startup ecosystem. Programs like Accelerating Asia, Iterative, and Surge have supported and funded a good number of Bangladeshi startups over the last several years. For now, it seems to be the most sure-fire path to meaningful funding opportunities for Bangladeshi startups.
Accelerators and incubator programs have played an important role in Dhaka’s startup scene from its early days. Founder Institute’s local chapter supported some of the early successes in the ecosystem such as HandyMama, and Styline, among others.
Programs like Grameenphone Accelerator, YGAP, YY Venture, BRAC UIC, and R-Ventures by Robi have helped create an initial pipeline of startups.
Over the last few years, regional accelerator programs have started to pay attention to Bangladesh. Bangladeshi founders have also grown aware and ambitious and have been seeking out opportunities across borders. This has proven to be very useful for startups and the overall ecosystem.
Startup accelerator programs support early-stage, fast-growing startups through education, mentorship, network, and funding. These programs usually are fixed-term, cohort-based, and end with a demo day or pitch event. Most accelerator programs are between 3 to 6 months in length and come with opportunities to raise investment.
It is commonly said that accelerator programs often try to help accelerate the growth of the participating company by putting together learning of a few years into a few months. Simply put, accelerator programs try to help startups find the escape velocity through rigorous training, networking, and early capital.
Since accelerator programs operate in batches, it serves the long tail theory of investing in startups. For participants, working in a batch allows the benefits of peer pressure to build something meaningful and a network to seek and find help.
Building a startup is a tremendously difficult job. “You can’t build a company all by yourself. It takes a village to build anything,” said Praava Health Founder and CEO Sylvana Quader Sinha in an interview with FS. “You have to use every resource available to you, whether it’s emotional support, or strategic or technical advice or an introduction or otherwise. Don’t shy away from reaching out to people. I’m relentless in following up with people who offer introductions or help.”
This is where an incubator or an accelerator program plays an important role. These programs provide initial support such as mentorship, connections, space, and much more to fledgling startups and make them ready for facing the world.
The number of active accelerator programs is often considered an important indicator of the maturity and growth of a startup ecosystem. Many experts suggest that the proliferation of incubator and accelerator programs correlates with the success of an ecosystem.
Some of the world’s most successful startup ecosystem is well-known for having a disproportionately large number of incubator and accelerator programs. Take, for instance, India. It has some 140 incubators and accelerators. China and the US have over 2,400 and 1,500 incubators and accelerators, respectively. Although Dhaka has seen several accelerator programs, compared to these countries Bangladesh is near nowhere.
Bangladeshi startups have become a common presence in regional accelerator programs such as Accelerating Asia and Iterative, both based in Singapore, over the last three-four years. Many of these programs have been actively seeking out Bangladeshi founders. Many of these programs view Bangladesh as the next Indonesia and see excellent opportunities in the country. As I mentioned earlier, Bangladeshi founders are also actively looking for opportunities outside its border.
Accelerating Asia General Partner Craig Bristol Dixon recently said, “In Bangladesh, the ecosystem is at a similar point to where Indonesia was 5-6 years ago and GDP growth is on track to be ~7% in 2022, making it one of the fastest growing economies regionally. We first started investing in Bangladesh in 2019 as one of the first international VCs, since then investor interest into our portfolio has increased. For example, Shuttle has successfully grown from starting as a safe transportation solution for women to expanding its serve to include B2B offerings for companies and more routes.”
It is no surprise that Accelerating Asia is one of the most active investors in Dhaka’s startup scene which has backed 17 Bangladeshi startups so far. In fact, one of the most important names in this space is Accelerating Asia.
Accelerating Asia started early in Bangladesh. The program had two companies from Bangladesh in its inaugural cohort in 2019. It has since doubled down and has funded some of the most promising startups in Dhaka’s tech scene. Many of its portfolio companies have gone on to raise multiple rounds of investments.
For startups, going to regional accelerator programs makes sense. Raising money remains a challenging affair in Bangladesh. As we have written recently, “Compared to the economic opportunities the country offers, Bangladesh’s startup scene suffers from a puzzling lack of attention from global investors. Despite the phenomenal economic growth, a young demographic, and a growing middle class, Bangladesh sits at the bottom rung when it comes to attracting global funding for its startup ecosystem. For instance, in the first quarter of 2022, some 12 Bangladeshi startups raised about $57 million in disclosed funding. That's utterly insignificant compared to the opportunity the country offers.”
To that end, attending regional programs has been beneficial for Bangladeshi startups. A majority of Bangladeshi startups that have raised international investments over the past several years have a root in a regional or global incubator/accelerator program.
Some of the big funding rounds in recent years have also their origin in accelerator programs. For instance, ShopUp’s, the highest-funded Bangladeshi startup so far, breakthrough round came through Sequoia India’s Surge program. The same is true for 10 Minute School, another company that raised $2 million from Surge recently. In travel, GoZayaan raised two rounds of investments after graduating from the Singapore-based accelerator program Iterative.
Chaldal, one of the early success stories in Dhaka’s tech scene, is a Y Combinator graduate.
Incubators and Accelerator programs have played an important role in Bangladesh’s startup scene from the early days of the ecosystem. Programs like Founder Institute, YGAP, GP Accelerator, and YY Venture, UIC have played a meaningful role. We have also seen new players in the space such as BYLC Ventures. Today, some of the portfolio companies of these programs are doing quite well.
Government-backed Startup Bangladesh Limited and ICT Division’s iDEA project have also supported a long list of early-stage companies through various initiatives. For instance, some of the companies that have received the ICT Division’s support include some of the big-name companies of today including ShopUp, iFarmer, Truck Lagbe, CookUps, and so on.
However, while local accelerator programs have done excellent work creating both awareness and supporting founders, these programs continue to struggle to produce high flying companies or help their founders to attract meaningful investments.
There are reasons for this. First, the overall ecosystem is in its early stage and it will take some more time to get to a point where people invest through these programs. Moreover, while some of the programs provide small seed funds, all of them need to work more on the funding side of things.
Almost none of the accelerator programs in Dhaka operate independently. The majority are part of a large business or non-profit organization that is not involved in any startup-related work. Grameenphone Accelerator is run by Grameenphone. R Ventures is by Robi. BYLC Ventures is run by BYLC. Many of these programs are supported by development agencies. As a result, many of them have misaligned incentive structures where the success of their portfolio companies is rarely tied with their own success.
If we look at some of the world’s most successful accelerator programs such as YC, 500 Startups, Surge, and TechStars, almost all of these programs are run by either former founders or by a VC fund as an effort to get to early-stage deals. In fact, the success of YC, which is easily the most successful accelerator program in the world, is often attributed to how the program came into being. Founders initially invested their own money into startups. It means they had skin in the game and had enough reason to go full in.
To that end, Bangladesh has a lot to learn. The first thing is Bangladesh needs more accelerator and incubator programs.
Second, Bangladeshi accelerator and incubator programs should pay attention to how successful programs across markets work and learn from them.
Some of the Bangladeshi accelerators have done excellent work, they can do even better by learning and evolving.
Large corporations such as Grameenphone can turn programs like GP Accelerator into independent entities with dedicated funds and management, which will also improve the long-term outcome of these programs.
The outsized role early-stage support plays in the success of startups offers an interesting insight into how to approach building a startup ecosystem. This is evident when you look at the number of such programs operating in some of the world’s top startup ecosystems. As I mentioned earlier, the most successful startup ecosystems in the world have the highest number of incubators and accelerator programs.
This article was originally published on 29 May 2022 and has been updated on 20 October 2022.
