In Bangladesh's fast evolving startup landscape, few organizations have been as consistently present as Bangladesh Venture Capital Limited (BVCL). Since its inception in 2013 as an investment arm of Daffodil Group, BVCL has been an active player in Dhaka’s early-stage investment scene, backing all types of companies.
At the helm of BVCL today is Shawkat Hossain, a former banker turned venture capitalist who brings years of experience navigating Bangladesh's complex regulatory environment for alternative investments. Under his leadership, BVCL is working to close its first impact fund of 100 crore taka while continuing to make investments from its balance sheet.
In this in-depth conversation, we sit down with Mr. Hossain to unpack the state of Bangladesh's venture capital ecosystem, the policy hurdles hampering its growth, and why despite having more than 25 organizations with alternative investment licenses, only a handful are actively investing. He shares wisdom gained from his journey as one of the pioneers of the venture capital ecosystem in Bangladesh, talks about BVCL's thesis and approach to early-stage investing, how the firm scouts and assesses startups to invest and reflects on what separates founders who persevere through challenges from those who don't.
As Bangladesh looks toward becoming a more vibrant startup nation, this excellent interview with Mr. Hossain offers valuable insights for entrepreneurs, investors, and policymakers alike. I hope you enjoy reading the interview as much as we enjoyed doing it. Happy building!
Mohammad Ruhul Kader: Thank you so much for agreeing to this interview. I would love you to start by talking about Bangladesh Venture Capital Limited (BVCL), its background, and your ambition at BVCL.
Shawkat Hossain: Bangladesh Venture Capital Limited (BVCL) started its journey in 2013 as an investment arm of Daffodil Group. In the early days, it invested in different types of companies including a good number of SME type businesses. So far, we have made more than 20 investments. The investment size ranges from 20 lakh to one crore taka.
In 2018, we received a license from the Securities and Exchange Commission as a fund manager under the alternative investment rule. Since then, we have been operating as fund managers. We have invested in a few companies. However, we have invested mostly from our own balance sheet, meaning from the company's capital.
I joined in February 2024. One of the initiatives I'm pursuing is to create a fund. Venture capital is all about raising funds and investing those funds in different companies. We are working to create a 100 crore taka fund, an Islamic impact fund.
The procedure for raising a fund is to apply to the SEC for permission, and we are currently in that process. If we receive the permission, we will start working in the impact space.
Our license allows us to work as a fund manager for VCs, PE, and impact. We plan to start as an impact fund. Afterward, we have plans to launch VC funds as well.
We have made three investments so far since I joined in 2024—Chaldal Sokrio, and Adeffi. At the same time, we are nurturing our previous portfolio companies.
Ruhul: That’s an excellent summary. Can you please expand a bit on how you operate as an organization? How big is the organization? How do you work with your portfolio companies? Also, please tell us about how you scout and screen companies for investment.
Shawkat: We are a small team of 7-8 people. Each person has their own responsibilities. We have an investment analysts team who looks after the deal sourcing and analyzing those deals. We also have people on our investment committee, who suggest, advise, and participate in our investment process.
We have another small team who monitor and work with our existing portfolio, maintaining a tab on them and providing the help they need. We take this work quite seriously because we feel it allows us to stay in touch with our portfolio companies and understand their trajectory. We also have an operational support team that looks after our accounting, finance, etc.
In terms of deal sourcing, we have connections across the ecosystem from where our deal flow comes. We also receive applications from startups. People reach out via various channels including social media and our website. Similarly, we also reach out to startups when we come across an interesting company.
Ruhul: You have been investing quite actively for a while. You have made three investments in recent times in companies coming from different sectors. You said your first fund, which is currently under process, will be an Islamic impact fund. Can you please tell us about your thesis and focus?
Shawkat: We have a few specific sectors that we want to focus on as we close our first fund including agri-tech, health-tech, ed-tech, green-tech, and fintech. These are some of the sectors we want to focus on.
While we are flexible about our investment parameters, we don't invest in pre-revenue companies. Since we have not closed our fund yet and are investing from our balance sheet, sometimes we invest in very early-stage companies if we find a really good company.
Ruhul: You said you plan to invest in both startups and SMEs. Many people want to put startups and SMEs in two different buckets. While I'm not sure whether any real difference exists between these two types of business that can't be overcome, people want to say there are some differences that can influence your return. When you are investing in two different types of companies, how do you reconcile that difference?
Shawkat: The key criterion for us is that whatever investment we make should make business sense. One criterion people talk about is growth. Startups are expected to grow fast with scale potential. At the same time, early-stage startups are also heavy-burn companies. On the other hand, SMEs are also expected to grow but scale potential is not something you are too concerned about. In both cases, you want growth. The second thing is profitability. For SMEs, this is something you can expect within a reasonable time frame. For a startup, this is not something you can expect. It might take a long time to make a profit. These are some of the things you have to consider.
However, for us what we ultimately look into is whether an investment makes business sense, whether the enterprise has a solid business potential. We are looking for the right businesses and the right founders. If a business has the fundamentals right, we are interested in it regardless of how you categorize it.
Ruhul: That is interesting and it also partly answers my next question, which is what do you look for in a company before investing?
Shawkat: We look into whether the market opportunity is big enough for a business. We usually look for businesses that have some significant differentiation factors. If it has some innovation, that's great. If it is not an innovation, we expect some sort of significant innovation in the business model, process, or how they approach the market, etc. The thing is the business has to have something that separates it meaningfully in the market. It has to have something new and unique to it. We are not interested in a business that is too traditional and mainstream. We look for a unique market approach, something new, especially involving technology, not something traditional, something happening right now.
Ultimately, the company has to make business sense. Profitability is important to us and we look for companies with a clear path to profitability.
Finally, we look at the entrepreneur and the founder. That is the most important criterion. While ideas, markets, and many other things are important, we are essentially betting on the founder. We try to understand the founder and the team’s chemistry, capability, integrity, and domain knowledge.
Ruhul: You are one of the pioneers in the venture capital space in Bangladesh. You have been investing in startups since 2013. From your experience, what separates the companies that do well from the ones that don't?
Shawkat: There is no silver bullet that ensures the success of a company. Many things matter for success, not only the business idea but also the timing of the idea. An innovative idea may not succeed if the market is not ready for it. If you have a great idea and the timing is right and the market is ready, then there are chances of success. The team is very important. You may have an innovative idea, but if the team is not appropriate, or is not ready with firm conviction, then it will not work.
The capacity of the entrepreneur, their intention, and willingness to fully focus, these things are critical. The market changes. Take the example of COVID-19, which changed many things. Many things can influence the market. To that end, the founder has an important role. The founder’s ability to persist, adapt to change, and focus fully on the business can make or break a company.
Ruhul: Can you expand on this? Some of the companies you invested in such as Brain Station 23 and Eon Food, these companies did quite well. What are the things that these companies did better than the companies that didn't do that well?
Shawkat: Entrepreneurs actually make the difference. The founders of these companies are passionate, focused, capable, honest, and persuasive and they made the biggest difference. In Bangladesh, integrity is very rare among people. You can’t go very far, or sustain for long, with poor integrity. Their integrity level is very high.
Ruhul: What makes these founders different? What are the common character traits and key skills these founders have that others don't?
Shawkat: Skill is important but hard skill is not everything. You can hire someone with hard skills. It also varies from business to business. There are more important things than skills.
If you consider Brain Station, the founder is an engineer and comes with deep domain knowledge of his industry. This—domain knowledge of the founder—is critical. That is one thing. The next is passion, which is a big thing. Because the journey is full of ups and downs. When things are down, unless you are truly passionate about what you are doing, you won't be able to keep going. You would give up.
The entrepreneurial journey is very lonely. It is more so when things are not going well or you are failing. Founders find it extremely hard to share their inner turmoils and frustrations. Sharing itself can be tricky. When you share, people might laugh at you, criticize you, or demotivate you. So during those times, you have to keep pushing forward. If you persevere, you might find a way out. But it is not easy to do so. Most people give up when the going gets tough. Sticking through the hard times is not easy. It is not a single trade-off. You are not only giving your time but losing your money and potential opportunities. That’s why people give up. That’s where passion comes in. If you are passionate about your business, it becomes relatively easy to persevere. And usually, when you stick through, eventually things improve. Almost all successful businesses are the outcome of years of struggle.
To survive these times and keep the morale up is a huge challenge. Ultimately, if you stick through this difficult period and keep hammering, everyone will be successful. If you persevere, you will find a way. Not necessarily, your main idea would succeed. You may have to pivot. But if you stay in the game long enough, there are chances that you will eventually find success. But for that, you must concentrate. It should be your everything. You have to sleep with it, you have to live with it, and then you may find a solution. This is why passion is such an important ingredient.
Ruhul: That’s beautifully put. Also, if you stick with it, then the timing issue is solved. For a particular period, it might not be the right time. But if you keep at it for two or three years, the market might become ready.
Shawkat: Things take a long time to happen. You have to wait for it. I know the story of Sohag of OnnoRokom. It took him six or seven years to get Udvash to break even or earn a profit. Four or five founders started the business. Everyone gradually left. Two of them kept at it, and ultimately, after seven years, they saw success. The point is, how many people can hold on for that long? Not only time, it involves money, energy, and patience. Now, consider how big Udvash has become. If they hadn't held on, they wouldn't be where they are today.
Ruhul: You said you are working on raising your first fund. Where do you stand in terms of progress and what's your plan?
Shawkat: The rules and regulations of Bangladesh are very cumbersome and time-consuming. For a fund, you need many parties. For example, we are the fund manager, but we also need a sponsor and trustees. When the permission is granted, we need LPs. We are the GP. Finding a sponsor can take a long time in Bangladesh. Because the sponsor has to contribute 10% of the fund, which means 10 crore taka of 100 crore taka. It's not easy to get that from some individual or institution.
Since we have sponsors in-house, it saved us time. After that, you need trustees that have to be an NBFI, a bank, or an insurance company, with a capital of 50 crore taka, along with some other conditions. There is a strange rule here. They have to get separate permission for each fund.
Initially, we approached a few of them who were not interested. After much back and forth, we managed to find one and we applied with that. Now it's been several months, and the application is still pending.
In the asset management company, you also need trustees. But, once one trustee is approved, they can work as a trustee for many funds. Unfortunately, in our case, you need separate permission for every specific fund, which is an unnecessary hassle.
It has been a while since we applied and we don't know how much longer it will take. If we don't get the permission, we cannot apply. We have to apply with an approved trustee. This time is being wasted. If it was one-time permission for a trustee with some other condition, then anyone with a good track record could work for at least several funds as a trustee. If a trustee violates the rule then their approval can be revoked.. If our trustee gets the approval, we will be able to apply. After that, we don't know how long it will take there.
Ruhul: All these steps, are they necessary? What is your take on this process, since you have gone through this process before?
Shawkat: We have raised this issue to the SEC in the past. And there are also other challenges that I think the SEC should pay attention to. The total number of fund managers in Bangladesh is very small. Only a handful. If we fail to develop the VC ecosystem, it will also limit the development of our startup ecosystem.
Ruhul: You are in the process of raising your first fund. Please tell us more about it—who can invest, strategy, and so on.
Shawkat: As per law, any individual, corporate, bank, insurance company, or any fund, can invest, be it local or foreign. High net-worth individuals who have 2 crore or more taka in their assets statement submitted to NBR, can invest.
For us, our ticket size—which we call a unit—per unit is 10 lakh taka. This is a long-term investment.
In Bangladesh, a significant percentage of investment in the startup ecosystem is foreign investment. Many people in Bangladesh may not have much idea about this instrument or asset class. Since it is an equity instrument, a fair amount of risk is involved, which makes many people afraid of what might happen. However, the return on successful investment is significantly higher. For instance, bKash, which has raised significant capital from international investments, is now a multi-billion-dollar company. Unfortunately, bKash didn’t or could not raise much capital from Bangladeshi investors, which means Bangladeshi investors lost the opportunity that they could have gotten. It's sad that foreign investors, be it SoftBank or Alipay, are investing and taking the benefit. We might regret it later, that yes, this happened, like with Grameenphone, where all the profits are going abroad. The point is, if you don't take risks, don't jump in at the right time, when the fruit is ripe, and you regret not being able to eat it, it's no good. You have to take risks.
In Bangladesh, there is no shortage of money. Many people are buying land and apartments. If even a small percentage of the High net worth people invest 5% of their assets here, the situation would change.
There are many good startups in Bangladesh. For example, people who invested in Pathao have received good returns. These things are not common knowledge, but those who are aware know it. If you continue investing, you will find success. In venture capital what happens is that if you invest in 10 start-ups, maybe one will succeed. You have to take risks. If you are successful, it may give you a 10 times (or more than that) return. I would say people who have wealth in Bangladesh should take an interest in this sector.
The investors in Bangladesh have a role in developing this sector. The government also has a role in building awareness that this is a new asset class where there is opportunity. Those who are only looking for FDRs or land as investment instruments, if they invest in this instrument, they can diversify.
Ruhul: You have been working in this space for many years. How do you see the overall progress? If you compare 2012 to today, 2024?
Shawkat: Of course, there has been progress. We now have a growing angel investors group. A growing number of corporate houses are taking interest in the sector and are investing actively. This is a change and progress. However, there is more to do.
Ruhul: What is your evaluation of our venture capital ecosystem in Bangladesh? By this time, we should have had a relatively strong local VC ecosystem. We started in 2012. We are in 2024, it has been quite a long time. I think it is fair to say that we have not made much progress in this space. Why is that?
Shawkat: There are many gaps in the ecosystem. There are significant knowledge gaps among the stakeholders including the regulators. For example, the Bangladesh Bank created a startup fund of 500 crore taka in 2021. Banks were told to allocate 1% of their profit for the startup fund which accumulated another Tk 500 crores. Even after three years, the fund is highly underutilized. The Bangladesh Bank fund was supposed to be used to refinance the investments in start-ups. It didn’t work. The model and channel for the fund were not appropriate.
It was treated as debt whereas early-stage startups need equity investment. Debt is useful when a startup has reached a certain stage, has revenue, and when they can repay the loan. Equity means you are becoming part of the company. You have to bear proportionate loss. One can take a loan when he/she has revenue and can repay it. Then, An enterprise with 70% equity, may borrow 30%. However, entrepreneurs can't start with a loan. This was a mistake in terms of the instrument.
Secondly, the fund has been channeled through banks. Banks don't understand startups. Instead, some banks gave money to those who were already established. Startups, the new ones, didn’t get any money anywhere. As a result, despite all good intentions, the fund remained underutilized. I would say, not even underutilized, but unutilized. If out of 1000 crores, you give only 30 crores in three years, that is nothing.
In my view, if this fund has to be given, it should be given to venture capital funds as a fund of funds. It should be given to those who handle equity like Startup Bangladesh Limited (SBL). They have been dealing with equity. They could be a good channel for mobilizing these resources.
In terms of channeling resources, I will give an example. The PKS Foundation in Bangladesh also gives funds to the Micro Finance Institute (MFI). PKSF is also a government body, like SBL. If you compare the two, there is a parallel. Just like PKSF receives funds from the government and the development partners and gives them to MFIs. Similarly, SBL, initially, was funding startups themself. From that point, they can scale up and move to a fund-of-funds model. And in that case, they can also attract global funds. The World Bank has a fund, ADB has a fund, they can raise a big fund of several million dollars, and they can give that as a fund of funds. The biggest challenge for the local VCs right now is raising funds.
Very few people understand venture capital. The government can create a fund of funds. If a VC can raise some money from the government, they can then go to others. The government or its agency will have criteria and processes, like registered companies, present investment portfolio, existing human resources, etc. Once the government provides some funds, we can go to other investors and say that see we have raised this much from the government, you should invest too. It adds to the credibility. This is our expectation from the government.
Ruhul: Fund is one aspect of it. Has the regulatory challenge contributed to this underdevelopment of the sector?
Shawkat: Yes, regulatory obstacles are definitely there. The biggest challenge for foreign investors is exit. For example, if someone invests here, they want to exit and take their profit along with their principal. And that should be legal. There can be profits, abnormally high profits, or even losses. Naturally, if you get a return on an investment, you should be able to take it back without any hassle. That's how the game works.
If the regulator thinks that someone has invested one crore taka and they are taking ten crores back in five years, what are they doing? Then, you won't get investment from outside.
There are policies for exit but the execution of policies is important. Those who invest will see how many exits have happened and whether they were able to take their money back smoothly. The people at the execution level, whether in the Bangladesh Bank or other regulatory bodies, need to think about this., Bangladesh is not considered a good destination for Investment because exit is not perceived as smooth. That's why all the investors, when they see a startup, ask to register in Singapore or the US. Many issues contribute to this including the ease of doing business. If these things don't improve, our startups will have to register in Singapore, which is not possible for everyone.
We are unable to put ourselves on a global map. Say some VC or Angel invested in a good Bangladeshi startup and got a good return. But as the VC did it through Singapore, for them it is a good return from Singapore. They will never say that they got a good return from investing in Bangladesh. Bangladesh loses its track record because exits are not being registered as exits from Bangladesh. If these things don't improve, it will not be easy to attract foreign investors.
Ruhul: One is, as you mentioned, the fund-of-funds approach, where the government can better channel and utilize its existing allocated funds, which might solve part of this problem. On the regulatory side, the government can make it more investor-friendly so that investors can invest easily and repatriate easily. These are the important ideas. If you look at this space, many people have taken venture capital licenses. When the alternative investment rules were made in 2015, many people took licenses. Today we have more than 25 organizations with licenses under the alternative investment rules. Unfortunately, out of all these organizations, there are only one or two that are actively investing.
Shawkat: Yes, Beside BVCL. IDLC is active. BD Venture, which used to invest recently, has become quiet. They could not raise the full amount of funds. No one else is active although 28 licenses have been issued.
Ruhul: Moreover, no one has been able to meaningfully raise funds.
Shawkat: Yes, they haven't been able to. Many took permission for funds, such as LankaBangla, BD Venture, Maslin Capital, UCB Capital, and X-Angels, but they struggled to raise funds.
Ruhul: Why do you think that is the case? The international investors will come and invest. We have a relatively good angel investment scene. People can raise small investments. The problem is that for relatively mature companies, at the series A or B stage, raising funds has become very challenging. An active local VC ecosystem could have been a game changer for us. Why do you think that hasn't happened? One thing is, as you mentioned, if there was a fund of funds, some money would have come from there. However, I don’t think that would have solved the whole problem.
Shawkat: To solve the problem, we need more individuals, as well as corporate investors. Behind corporate entities, there are individuals. Without their participation, it will not happen.
An ecosystem does not develop overnight. You need examples to encourage people. The media has a role to play. You are doing it, and the traditional media, the mainstream media, should also share these stories. Now, you see in the news about startups, most of the focus is on how much money someone has raised. In many cases, they show that as a measure of success. However, raising funds is not necessarily a success. Success is the exit. And we have not seen many exits. There might be some but people don't disclose exits for many different reasons. We need transparency. In our case, when such news comes out, the tax authorities swoop in. The mindset of the tax authorities should change. In many cases, I have seen that businesses are not able to maintain their books properly. Because they are afraid of what the tax authorities might do. People want to pay taxes, but they are afraid of harassment. You may pay proper taxes, but then you may find yourself in a situation where it becomes a huge burden. The tax authorities may try to find ways to harass you. If the tax authorities don't create a comfortable environment, this will create a gray environment. If news came out that someone made a big exit, others would be encouraged to see that this is an opportunity.
There is no single-bullet solution. It takes time to build an ecosystem. It might take us longer. It has been 10-15 years. If we consider bKash as one of our early startups, it has been 14 years. In 14 years, we haven't achieved what we should have. If you compare it to India or other places, I went to Turkey, they said that they started in 2016-17, and in 7-8 years, they have 180 funds running. Last year, they received 2 billion dollars in investment. We have not yet touched one billion in 10 years. Although Turkey is a developed country, you can understand the difference.
In Bangladesh, everyone takes a license just for the sake of it. There are significant policy gaps. For example, to get a fund manager license, you need to have a capital of five crore taka whereas the main asset of a fund manager is their intelligence and experience. It's like a professional firm, where their expertise is their asset. As a result of this rule, those who have money have taken licenses, but those who understand the business, but couldn’t arrange five crore taka couldn’t take the license. This is also a regulatory barrier. The licenses have gone to the people, with money but do not understand the space. If nothing happens with some 25 licenses, there must be something wrong. Right people don't have a license. We should also think about it. We should think about whether we should have this five crore barrier.
Ruhul: You have recently written an article about how we can become a startup nation. It is not that we haven't made any progress, we have but we are closer to where we were in 2012. We haven't moved much further. If we want to change this in the next five years, what five things do you think we should do in the next five years?
Shawkat: First of all, political will is needed. Like India, if something is related to startups, it gets fast-tracked. This mindset needs to come from the top. If you go to a ministry and they don't even understand what a startup is, then it will not work. The government has given funds, but the people down the line, can't distribute it. Banks don't understand or don't care about startups.
Secondly, there needs to be countrywide awareness. This will not happen overnight. It requires continuous hammering through articles in newspapers, and TV, like Shark Tank episodes, so the younger generation understands what a startup is. Educational institutes need to have the right kind of resources. Now they think they would rather work at a bank or a government job instead of joining a startup. We are not able to properly change that mindset. Of course, there is social pressure but it is also true that young people still think that they get more value from working at an MNC. If you say you are working at a startup, no one values it. Society is not used to it.
To become an entrepreneur, there are obstacles. We don’t encourage entrepreneurship as a society. They repeatedly say that you should pursue a job. So many things need to be removed. More important than money is awareness.
Ruhul: We need a cultural change.
Shawkat: A cultural change and political will. You can do everything, but if you have policy limitations and if the people implementing the policy don't understand it, things will not move. Like the startup fund, the fund is there, but there is no one to execute it. The mindset is not there. For that, there needs to be education and awareness.
Ruhul: You launched and ran the first venture capital fund in Bangladesh. You are doing it again. For those who want to do similar VC funds, what do you think are the challenges and what would your advice be? We discussed that there is a lack of active funds. Among the active funds, you ran one of them. What do you think needs to be done to accelerate the VC ecosystem in the country?
Shawkat: There are many different aspects. One is your skill and your learning. Look at what others have done in those countries where they have been successful. Think about what we might learn from them. Why have we not been successful? What are our shortcomings?
There is also a resource gap. It's not just in fund management. We feel that when we are looking for good analysts, there aren't any in the market. Those of us who are here did not come from a VC background. We came from different backgrounds, and we learned by doing and making mistakes.
What happens in the VC space globally is that successful entrepreneurs become VCs. They exit with good money, and then they invest. The advantage here is that it's their fund, so decision-making is easy. Secondly, you know the game. In many cases, it does not work with mathematics or formulas. In many instances, you need to have the hunch that an idea will be successful. Having a lived experience is immensely useful when decisions are like that.
If you are restricted by too many restrictions, you might not be able to invest. When it is your own money, you can take the risk. When successful entrepreneurs come in as VC investors, the success rate is much higher. You see globally many have come from that background.
It is not that we don't have anything like that. For instance, we have people like Fahim Mashroor. Although he didn't start a VC, he has been a very active angel investor. More of this should happen. It's easy for them to understand the business. If you have money and you just throw it around, it will destroy the ecosystem. More people like them who have been successful should come forward. For example, the entrepreneurs from bKash should come. If they come in a big way, it will create a trend and impact. When they work, they will work with 10 other people, and those 10 people will be trained, which is how an industry grows.
My point is that perhaps we do not have many success stories where people made big bucks from exits. However, we have no shortage of successful entrepreneurs and they should come forward and invest in startups. If this happens, it will transform the industry. Real entrepreneurs should come. If entrepreneurs come, then things will change. It will have a big impact.
Ruhul: Coming back to BVCL, what are your priorities now?
Shawkat: While we are working on raising our first fund, we are also investing from our capital for which we have developed a process. We feel that if we wait to close the fund before making any investment, it will take time and when the fund finally comes, our staff will not be ready. Our people need to be trained. They need to go through the process of how to analyze an investment, how to talk to a startup, what information to ask for, and how to verify the information that they have gathered. If we don't have this process in place, when the fund comes, we won't have the human resources to deploy the fund. That is part of the reason why we are investing from our capital. We are trying to build our team, which is one of our top priorities.
We are also working with our existing portfolio, nurturing them, and trying to help them get to the next stage, which is another major priority.
Ruhul: How do you work with your existing portfolio companies? Is there a structured process?
Shawkat: We have monthly meetings with our portfolio companies. We maintain a close tab and try to monitor their progress. If there are any suggestions, we provide them, which is usually done formally. When they need something, they call us. Our monitoring team visits them from time to time. It's not just monitoring, we try to be helpful as much as possible. We also provide training, in the area, they are lacking. We also extend our hand to establish a network, required for their business expansion.
Ruhul:: What is the long-term vision for BVCL?
Shawkat: We want to build one of the most important venture capital firms in Bangladesh. We are now working on our first fund of Tk 100 crore. We have plans to explore launching another fund outside of the country after we launch this one. It may not be through BVCL because BVCL cannot invest outside Bangladesh.
Similarly, we also have plans to do another VC fund. Because it is not a one-time thing. Every year or two, we have to launch new funds. And we have to give exits to the funds that have matured. For the immediate future, these are some of the goals. We want to make this work.
Ruhul: How much have you evolved as an investor? If you think about 2012/2013 and today, what are the differences between the Shawkat bhai of 2013 and Shawkat bhai of today as an investor?
Shawkat: It is hard for me to judge. However, change is natural. The space has changed so much. Twenty years ago, you would not have thought of me as an investor. Before I came to this space, I did not understand what a startup was. Being a banker, I had a particular perspective about investment. After coming to this world, I learned what startups are. I went to different trainings, both locally and internationally. In 2012, my then company sent me to a seven-day training at ISB in India. After that, I went to places like Silicon Valley. I went to various places, met people, and learned. In Silicon Valley, I learned how startups work and how an ecosystem such as the valley functions.
As a banker, I had a different perspective. If you apply the perspective of a banker in this field, many things can be counterproductive. It took some time to unlearn that. It also took time to learn new things.
My feeling is that if I had come here when I was younger, that would have been better. Technology is for young people. To understand venture capital, you have to understand startups. Those who are good at technology will do well. Naturally, those who come from that line will do better in the future as VCs.
Ruhul: For you, it was a challenge. As you said, being a banker, you have a different perspective in terms of investment from how startup investment works. At the same time, you also had to develop the ecosystem. You had to educate the market and educate the regulators that there is an opportunity here and that we need regulation. You had to navigate a complex and challenging path.
Shawkat: That's why I wrote many articles at that time because people did not understand this business. It was not as much for my benefit as it was for developing the ecosystem. It was about sharing information about an emerging industry.
Ruhul: What are some of your biggest lessons from your journey in this space so far? What are your realizations and lessons?
Shawkat: The progress is there, but not as much as it should have been. There are many reasons for that. If you compare it to the US, their venture capital and startup history is 50 years. Our neighboring country India has a nearly 30 years old history in the sector. They started in the mid-80s. Compared to that, our 10-15 years is not an excuse to be complacent. The progress has not been adequate.
There are many reasons for this. There are policy issues. For example, we have lobbied with the NBR for some tax breaks. A big reason why investors don't come is that if they had tax benefits, they would have come. When you do your end-of-year tax filing, if you get some sort of tax benefits for your investment in a venture capital fund or startup, it would encourage people. In many countries, pension funds are big investors in VC funds. In our country, this has not happened for many different reasons. The Trust Act and the Income Tax Act do not encourage them to do it. For that, policy changes are needed.
Although the ICT Ministry has done some work, what has happened is that corruption has been more than the work. If corruption was not there, the ecosystem would have developed faster. Take the example of the LICT project. That project was not bad in itself. But if all the money is stolen, you can't expect results. We need human resources. It would have benefited us immensely to have capable people. Today, it is hard to find good programmers. Many companies in Bangladesh are hiring programmers from India, or are setting up offices outside Bangladesh. If these training programs were executed well, it would have solved our skilled manpower challenges at least to some extent.
Some of the government's roles were questionable. In my view, the government should not be in business. Because when the government is in business, there will be corruption and mismanagement. Their focus should be on ensuring that policies are correct and that the private sector can do business. Here, it's the opposite. The government is in business, and the private sector is facing increasing challenges. The government also has a huge role in procurement, where they tend to buy from abroad. There are two issues here. One is corruption, where they show inflated prices. The second is a mentality that local companies are not good. We have to come out of this mindset. We should get rid of this bias against local companies. We should judge based on quality and work, not based on local and foreign companies.
Ruhul: That was the last question. Any parting thoughts?
Shawkat: We have covered a lot. One thing I would say about awareness, which we have discussed, is that it's a big part of it. Those of you who are working in the media, and outside of the traditional media, are doing a good job. I think that should be strengthened.
Ruhul: This has been a wonderful conversation. Thank you so much for being generous with your time and insights.
Shawkat: Thank you, Ruhul. Speaking with you is always a pleasure.
