The past roughly two and a half years have been remarkably quiet for Dhaka's startup ecosystem. Funding has become sporadic. New companies entering the scene have dwindled to a trickle. Ecosystem activities have dimmed considerably. If you were tracking the scene through press releases alone, you might conclude the party is over.
Many have reached exactly this conclusion. The cynics—and Dhaka has plenty—have announced the death of the startup dream with a mixture of vindication and relief. The startup scene was always a bubble, they say, selling air to gullible investors.
Others believe this is merely a temporary setback tied to politics. Once a new government comes and certainty returns, funding will flow again and everything will normalize.
Both readings are wrong.
What's happening in Dhaka is neither uniquely Bangladeshi failure nor temporary political hiccup. The reality is shaped by two forces: one global, one local.
The global force is the end of the Zero Interest Rate Policy (ZIRP) era and a new capital cycle. The local forces are structural—our political economy lacks vision, our policies consistently fail entrepreneurial spirits, we have no meaningful local VC ecosystem, our founders struggle with execution compared to peers, and Bangladesh's geographic position makes it hard for international investors to include us in their mandates.
These aren't temporary problems that resolve with government change. They require sustained effort to overcome.
From 2008 to 2022, central banks kept interest rates near zero—the Zero Interest Rate Policy (ZIRP) era. When safe investments yield nothing, institutional money pours into higher-risk opportunities like venture capital. Money flowed abundantly into startups globally. Valuations soared. The entire ecosystem operated in unprecedented liquidity.
Then came the correction. Central banks raised rates to combat inflation. Safe investments started offering decent returns. Capital into startups turned into a trickle. Even mature markets like the US saw funding drop 50-60%. Bangladesh's startup funding collapsed to $41 million in 2024—a 41% decline, with local participation falling 95% year-on-year.
This is crucial to understand: much of what's happening in Dhaka is global recalibration, not an entirely localized failure. Bangladesh was always a marginal player in global VC. When money is abundant, investors make risky bets on emerging markets. When it's scarce, they retreat to proven territories.
The ZIRP era is over. We've entered a new capital cycle—higher rates, disciplined allocation, emphasis on profitability over growth, flight to quality. This affects every ecosystem globally. The difference is mature ecosystems have reserves—established companies, local capital, angels with dry powder. Dhaka doesn't, making the impact more severe.
If you're waiting for 2019-2021 funding levels to return, you might wait years. That era was an anomaly, not the norm.
The global capital cycle explains the funding slowdown, but not everything. Bangladesh faces unique structural constraints that make our situation more challenging.
International VCs mostly organize by geographic mandate—Southeast Asia, MENA, India, Africa. Each comes with a thesis about market potential and risk.
Bangladesh fits nowhere neatly. Geographically we sit between India and China. Both are large markets with their own dedicated mandates and mature local investment scene. MENA looks at Pakistan as their next door neighbor. Southeast Asia usually stops at Myanmar. Bangladesh is considered South Asian.
This means most international VCs have no mandate for Bangladesh. When evaluating Southeast Asia portfolios, we're not on the list. When looking at South Asia, it's India or nothing. A VC partner might find a Bangladeshi startup interesting, but without mandate, the deal doesn't happen.
For consistent international attention, we need incorporation into existing regional mandates (likely Southeast Asia) or demonstrate sufficient opportunity for Bangladesh-specific mandates. Neither has happened, nor likely will soon.
This constraint is independent of startup quality or policy. Even excellent Bangladeshi startups struggle with funding because they don't fit investor mandate structures.
In healthy ecosystems, local angels and early-stage funds provide initial capital before international VCs arrive. Bangladesh has virtually none of this.
Yes, 17 Alternative Investment Fund Managers (AIFMs) are SEC-licensed. Most haven't raised meaningful funds. A handful—BD Venture, IDCL VC Fund I, BVCL—are active, but capital base and deployment remain limited.
Multiple causes: underdeveloped regulatory frameworks, local wealthy with limited tech startup exposure, preference for real estate and traditional businesses with predictable cash flows. Successful Bangladeshis built wealth through trading, manufacturing, real estate—businesses they understand viscerally. Tech startups lose money for years before potentially becoming profitable. This feels alien and risky.
Policy hasn't helped. Governments pay lip service to startups while doing little to create regulatory and tax incentives for angel investing and VC formation.
This creates a vicious cycle. Without early-stage funding, startups can't build traction for international VCs. Without successful exits, there's no demonstration effect for more local capital. The ecosystem stays perpetually early-stage.
I've written before that starting companies in Bangladesh remains expensive and complex. Incorporation takes time and money. Licenses require bureaucratic navigation. Running a business means unpredictable regulatory changes and officials who don't understand technology.
These persist because of deeper problems: lack of vision and ambition in our political economy. Our political elites offer no compelling vision beyond maintaining garment exports and remittances. No grand narrative about becoming a technology hub or building globally competitive companies or creating a knowledge economy.
Without vision at the top, mobilizing administrative machinery to enable startups becomes impossible. This trickles down. When national conversation is about survival rather than building a different future, it shapes how individuals think about possibilities. It fuels cynicism and makes risk-taking culturally illegitimate.
The political economy is driven by short-term self-interest rather than long-term institution building. Policies serve immediate political or economic interests, not sustainable value creation. The result is an unpredictable, often hostile environment for building anything new.
An uncomfortable truth: compared to peers, average Bangladeshi operator quality is lower. Not intelligence or work ethic—but specific capabilities that matter in startups.
Communication is the glaring gap. Successful startups require constant, effective communication—with teams, investors, customers, partners. You need clear vision, articulation, compelling pitches, emails that get responses, simple explanations of complex ideas, and resonant storytelling.
Many Bangladeshi founders struggle here. They can't distill business models into simple narratives or make cases to international investors with only minutes to evaluate.
Part of this is language—English isn't our first language. But it goes deeper. It's about being able to think and communicate clearly, understanding what information matters to investors and leading with that. This has a lot to do with the poor state of our education system.
Execution is the second gap. Startups require rapid iteration, disciplined resource allocation, effective hiring, and operational efficiency.
Many Bangladeshi startups struggle with execution. They're overstaffed relative to revenue. Products are poorly designed and buggy. Decisions take months where competitors take weeks. They lack basic operational discipline—meeting deadlines, maintaining systems, measuring what matters.
These gaps exist for understandable reasons. Bangladesh has limited exposure to world-class companies. Most founders haven't worked at Google, Facebook, Amazon, or Big four. They haven't seen exceptional operations firsthand. They're figuring things out from scratch, making avoidable mistakes.
The ecosystem has been slow to acknowledge these gaps, preferring to blame external factors—policy, funding, market conditions. This is a mistake. In global competition, these gaps matter enormously. An investor choosing between a Bangladeshi startup and an Indonesian one with similar traction will often choose the Indonesian if the founder demonstrates superior communication and execution.
Until we honestly address these gaps and systematically close them—through better training, mentorship, exposure to world-class companies, deliberate skill development—they'll remain structural constraints on growth.
Beyond funding drought, the most concerning indicator is the dramatic slowdown in new company formation. During 2018-2021, new startups emerged regularly. The pipeline felt active.
Now it's very difficult to find new promising companies. This matters more than funding because startup ecosystems are long-tail games. Success is proportional to attempts. If 100 companies start, one or two become significant and ten do reasonably well. If 1,000 start, you get 100 doing well. Quantity produces quality.
Several factors explain this:
The demonstration effect turned negative. When the ecosystem buzzed and companies raised funds, it inspired others. Now the visible narrative is struggles, shutdowns, funding difficulties. Starting a company seems riskier and less attractive.
The easy ideas are taken. Low-hanging fruit—ride-hailing, food delivery, basic e-commerce—has been picked. What remains are harder problems requiring sophisticated solutions or deeper domain expertise. This raises the bar for new entrants.
More importantly, we continue to struggle culturally, about which I have written in the past.
The irony: the current environment—less hype, less competition, focus on sustainable business models—might actually be ideal for starting companies. But perception often matters more than reality, and current perception is distinctly unfavorable.
First, clarity about our challenges. This isn't a temporary downturn resolving with political stability or government change. While stability would help, core constraints are structural, requiring sustained, deliberate effort.
Second, reset expectations. The 2018-2021 funding environment was anomaly driven by unprecedented global liquidity. It's not returning soon. The new normal is constrained capital—emphasis on revenue, profitability, capital efficiency, sustainable growth rather than growth-at-all-costs.
This isn't necessarily bad. The ZIRP era created bad habits—overvaluation, excessive burn, focusing on metrics uncorrelated with long-term success. Disciplined capital forces focus on fundamentals, rewards companies solving real problems and generating real value.
Third, systematically close capability gaps.
Better training for founders on communication, strategic thinking, execution. Through incubators, accelerators, mentorship providing hands-on guidance rather than performative pitch events.
Greater exposure to world-class companies and operators. Founders need to see excellent operations through fellowships, exchanges, or bringing experienced operators as mentors.
Honest feedback culture. Move beyond politeness toward frank conversations about what works and doesn't. Founders need people telling them the truth about pitches, products, execution.
Fourth, policy reform. Starting and running companies must become simpler and cheaper. Incorporation should take days, not months. Licenses straightforward. Regulations clear and stable. Tax policies encouraging risk capital.
This requires political will and administrative capacity largely absent. But it's essential. Every day without reform, we fall further behind peers actively easing company creation and scaling.
Fifth, address the mandate problem. Bangladesh needs incorporation into regional VC mandates, likely Southeast Asia. This requires diplomatic engagement, demonstrating market opportunity, systematic relationship-building with regional VCs, and successful companies as proof points.
Sixth, local capital formation. This requires successful exits demonstrating returns, regulatory incentives for angel investing, educating potential investors about startup asset class, and patient capital willing to wait years. Government, business community, and successful founders all have roles.
Finally, cultural work—addressing cynicism, lack of vision, reluctance to take risks and support those who do. Culture changes slowly but starts with individual choices. Every time we support rather than tear down, encourage rather than discourage, focus on possibilities rather than constraints, we move the needle.
None of these changes happen quickly. Some require years of sustained effort. Some depend on factors beyond ecosystem control. Building startup ecosystems takes decades, not years.
Silicon Valley wasn't built overnight—it took generations of entrepreneurs, failures, successes, capital formation, institutional development. Same for every successful ecosystem—Bangalore, Singapore, Beijing.
Dhaka's startup journey began earnestly only 10-15 years ago. We're still early. Current challenges—while real and significant—are part of maturation, not evidence of failure.
The question isn't whether Dhaka will have a thriving ecosystem. Eventually, it will. Bangladesh's fundamentals remain strong—young population, rising middle class, increasing internet and smartphone penetration, improving infrastructure. Opportunities are real and substantial.
The question is how long and what path we'll follow. Will we continue blaming external factors and waiting for conditions to improve, or work systematically on things within our control? Will we maintain discipline and patience for long-term building, or give up after each setback? Will we support the quiet builders, or stay distracted by performative startup theater?
The current quiet moment might be exactly what the ecosystem needs. Without abundant capital and media attention, focus returns to fundamentals: building real businesses, serving real customers, generating real revenue, developing real capabilities.
Founders building now—in this difficult environment—tend to be more thoughtful, disciplined, focused on substance over show. They understand that building in hard mode develops muscles serving them well when conditions improve. They're not waiting for the perfect moment; they're building with what they have.
This won't generate headlines. But for those taking the long view, what's happening isn't death but transformation—painful, necessary for building a sustainable ecosystem.
The next Bangladesh unicorn is probably years away. The next funding boom might be far off. But meanwhile, a generation of founders is learning to build without abundant capital, without media fanfare, without assuming growth solves all problems. They're learning that great companies are built through sustained execution, deep customer understanding, relentless focus on creating value.
These skills matter in any capital environment. Trees growing fastest in favorable conditions often fall first in storms. Ones growing slowly, developing deep roots in difficult soil, tend to last.
For those actually building, none of this is news. They already know it's hard. They already know it takes time. They already know the only way forward is focusing on what they control—product, team, customers, execution—and ignoring the noise.
And that, more than funding numbers or press releases or political stability, will ultimately determine the ecosystem's future.
