Bangladesh has built its economic backbone on the strength of its conglomerates. From ACI to PRAN-RFL to Walton, these diversified business houses have demonstrated remarkable resilience and staying power. The conglomerate model has served us well. In many ways, it is a superior business model. It diversifies risk across multiple sectors, accelerates organizational learning, and provides the financial heft necessary to navigate the uncertainties of markets.
But this same model, despite its many virtues, carries an inherent limitation; one that's becoming increasingly costly for the local conglomerates and for the broader entrepreneurial scene in Bangladesh.
Culturally, Bangladesh suffers from a collaboration problem, an instinct that runs deep in our culture. We love to do everything in-house. When a conglomerate identifies an opportunity in a new sector, the default response is: we build a team internally, develop the capability from scratch, and try to crack the market independently. It's a mindset rooted in self-reliance, control, and scarcity.
In business, this approach has its place. In stable, well-understood industries where the rules of the game are clear, doing everything in-house can work. But when you venture into emerging sectors characterized by technological disruption, uncertain regulatory environments, and rapidly shifting consumer behaviors, this strategy becomes risky and inefficient.
Evidence is growing in multiple sectors. In ecommerce, we've seen initiatives from several well-capitalized conglomerates stumble despite significant resources. In mobile financial services, attempts of bank-led players to compete have largely failed to gain meaningful traction. We can find similar examples of failures in software and many other verticals. You can say that in technology-driven ventures, the graveyard of corporate initiatives is growing. These aren't isolated failures. They represent a pattern.
The fundamental issue is the innovator's dilemma, a phenomenon well-documented by the late Harvard Professor Clayton Christensen. Successful companies, particularly large and well-run ones, develop organizational structures, decision-making processes, and cultural norms optimized for their existing businesses. These same attributes become liabilities when attempting to build something radically different. Their success becomes the cause of their failure.
A traditional conglomerate business unit operates with established revenue targets, known customer segments, and predictable growth trajectories. When you try to build a startup inside this structure, the DNA mismatch becomes fatal.
Startups require experimentation, tolerance for failure, rapid iteration, and long gestation periods before profitability. With many new markets emerging with relatively small opportunities, large companies find long-term commitment hard to justify with the investment required. Corporate environments demand quarterly results, risk mitigation, and clear ROI timelines. You must justify the investment with the return. When investing in a current business that shows immediate returns, potential future returns don't sound as exciting.
The result is predictable. The startup initiative gets squeezed into the parent organization's framework. Decision-making slows down. Risk tolerance diminishes. The team becomes demoralized. Eventually, the venture either dies quietly or limps along as a zombie, consuming resources without delivering results.
However, there's a better way. And it's almost a standard practice in many mature markets, but strangely absent in Bangladesh. Corporate venture capital, strategic investments in startups, and genuine partnerships with entrepreneurial ventures offer a fundamentally different approach to entering new markets and accessing innovation. Instead of building everything from scratch, you identify promising startups solving real problems, make minority investments, and provide strategic support without stifling their entrepreneurial culture.
The logic is compelling. Startups have what large companies lack: speed, focus, hunger, and the ability to operate outside conventional constraints. Large companies have what startups desperately need: capital, distribution networks, operational expertise, regulatory knowledge, and customer relationships. When structured correctly, the combination can be extraordinarily powerful. The conglomerate model works perfectly for some businesses, but is not the right fit for others, where corporate venture capital works much better.
This is part of the reason corporate venture capital (that happens in several different forms) has become an important vehicle for growth for highly successful companies across markets. Google Ventures' portfolio includes companies like Uber and Slack. Salesforce Ventures recognized Zoom's potential early and benefited enormously as the company scaled. These aren't altruistic gestures. They're strategic investments that have paid off handsomely while keeping the parent companies connected to innovation frontiers.
In Bangladesh, we've seen glimpses of this approach. OnnoRokom Group's launch of OnnoRokom Uddokta, an accelerator program supporting early-stage ventures. Bangladesh Venture Capital Limited anda few others have been active in the ecosystem, but these remain exceptions rather than the norm. And many initiatives remain limited in their operations.
The broader landscape tells another story. Most conglomerates remain firmly committed to the do-it-yourself approach. When they explore new sectors, they build new subsidiaries rather than investing in existing startups. This is both a missed opportunity and a strategic vulnerability. It is also a disservice to the country's broader entrepreneurial ecosystem.
Consider the practical benefits of a corporate venture capital approach:
Risk distribution. Instead of betting big on a single internal initiative, you can make smaller investments across multiple startups, diversifying your exposure to new markets or technologies. If one venture fails, others might succeed.
Access to innovation. Startups often operate at the bleeding edge of technology and business model innovation. By investing in them, you gain a window into emerging trends and capabilities that would take years to develop internally.
Speed to market. Building a new business from scratch takes time. Partnering with or investing in a startup that's already achieved product-market fit accelerates your entry into new sectors dramatically.
Talent access. Startups attract a different caliber of talent than established corporations. By investing in startups, you gain indirect access to entrepreneurial talent and thinking that can inform your own organization.
Exit optionality. If a startup in your portfolio succeeds and aligns strategically with your core business, you can potentially acquire it later. If it doesn't fit, you can exit the investment and redeploy capital elsewhere.
The economics make sense, too. Corporate venture capital historically generates solid returns while serving strategic objectives. According to research, CVC investments now account for nearly a quarter of all venture capital activity globally and 45 percent of later-stage rounds. The model has proven its value repeatedly.
But there's a critical caveat. For corporate venture capital to work, you must resist the temptation to demand controlling stakes while being judicious about making your bets.
This is where many Bangladeshi companies stumble when they do attempt startup investments. The instinct is to take majority ownership, install your own management, and run the startup like another subsidiary. This defeats the entire purpose. Startups succeed because founders have skin in the game and maintain autonomy over decision-making. When you take a controlling stake, you eliminate the incentive structure that makes startups dynamic. The founder becomes an employee. Culture shifts from ownership to execution. The very attributes that made the startup attractive in the first place disappear.
Moreover, when you integrate a startup into your corporate structure, you recreate the innovator's dilemma that made the external investment necessary. The startup begins operating under corporate constraints, making committee-based decisions, avoiding risks, and optimizing for quarterly results rather than long-term value creation.
The smarter approach is minority investments with strategic support. You provide capital, mentorship, market access, and operational guidance, but you leave the founders in control. You benefit from their success through appreciation of your equity stake and strategic alignment with your business objectives.
This requires a different mindset. It means accepting that you won't control everything. It means trusting external teams with your capital. It means tolerating failure in some portfolio companies while others succeed.
For many Bangladeshi business leaders accustomed to direct control, this represents a significant cultural shift. But it's a shift worth making when you apply a professional approach and judgement in your investment process.
The current approach of building everything internally has led to too many failures in fast-moving sectors. We've seen conglomerates with deep pockets and strong brands struggle to compete with nimble startups in digital businesses. We've watched internal innovation initiatives wither under corporate bureaucracy. We've observed talented teams leave because the corporate environment couldn't accommodate the speed and autonomy they needed.
Meanwhile, Dhaka's startup ecosystem, despite its challenges, continues producing interesting companies. Programs like Accelerating Asia continue to back more and more Bangladeshi companies, matching or exceeding representation from more mature ecosystems in certain rounds. Startups like Pickaboo, iFarmer, Pathao, and others have demonstrated the ability to build meaningful businesses addressing real problems.
These companies need capital and strategic support to scale. Local conglomerates, with their market knowledge, distribution capabilities, and financial resources, could provide exactly that support while benefiting strategically and financially.
The missing piece is conviction and framework.
Bangladeshi business leaders need to accept that they cannot and should not try to do everything internally. They need to develop the capability to evaluate startup investments, structure minority deals that align incentives properly, and provide strategic support without stifling entrepreneurial culture.
This means building dedicated corporate venture capital or some form of investment arms staffed with people who understand both startup dynamics and corporate strategy. It means developing investment theses that identify which sectors and business models align with your long-term strategic interests. It means committing capital with a realistic understanding that venture investing requires patience and portfolio thinking.
It also means changing how we think about collaboration more broadly.
Bangladesh remains what social scientists call a low-trust society. We're hesitant to collaborate with people outside our immediate networks, and we assume the worst about unfamiliar partners. This cultural characteristic, while perhaps protective in certain contexts, limits our ability to build the kind of ecosystems that drive innovation and growth.
Successful startup ecosystems require collaboration across institutional boundaries. They need angels who invest in companies they don't personally manage. They need corporations willing to partner with ventures they don't control. They need mentors who share knowledge without demanding equity. Building this collaborative infrastructure requires us to develop greater institutional trust.
The economic case for corporate engagement with startups extends beyond individual returns. When established companies invest in and partner with startups, they strengthen the entire entrepreneurship ecosystem. They provide capital that enables more ventures to launch and scale. They offer expertise that helps founders avoid common pitfalls. They create exit opportunities that encourage more people to start companies.
This ecosystem development is particularly critical in Bangladesh's current stage of development. We're at a point where entrepreneurship needs to become a mainstream career path for talented young people, not an outlier choice.
We have roughly two million young people entering the workforce annually. Traditional employment can't absorb this cohort. Entrepreneurship has to play a significantly larger role.
But entrepreneurship can't flourish without an enabling ecosystem. And that ecosystem requires capital, particularly growth-stage capital that can help promising startups scale beyond initial traction. Local conglomerates sitting on substantial balance sheets could fill this gap while serving their own strategic interests.
The policy environment, while improving, still presents obstacles. Regulatory frameworks around alternative investments remain underdeveloped. Tax incentives for angel investment, venture capital, or corporate venture capital formation are limited.
Many startups structure themselves offshore specifically because domestic regulations make raising capital locally difficult. These are problems that need addressing at the policy level.
But even within current constraints, local companies could be doing far more. They could set up dedicated funds to invest in startups aligned with their strategic sectors. They could partner with accelerators to gain early access to promising ventures. They could build venture studios that systematically launch and support new businesses. They could create strategic partnership programs that integrate startup innovations into their existing operations.
Some might argue that Bangladesh's startup ecosystem is too immature for meaningful corporate engagement. There is some truth to that claim. Dhaka's startup scene has yet to produce many meaningful successes. There needs to be more high-quality ventures and operators. However, we also have to acknowledge the fact that the overall support and investment have been meager. And many companies like Pickaboo in ecommerce, iFarmer in agriculture, and several others across sectors have shown excellent capital efficiency. With meaningful capital and support, these companies can make huge progress, benefiting all involved.
More importantly, ecosystems mature through participation, not passive observation. When corporations engage actively, they help build the infrastructure, expertise, and track record that attract more capital and talent. When they remain aloof, the ecosystem develops more slowly.
The opportunity cost of inaction is substantial. Every failed internal venture represents capital that could have been deployed across a portfolio of external investments. Every missed partnership with a promising startup represents a potential competitive advantage lost. Every year that passes without building a corporate investment strategy is a year that competitors in other markets pull further ahead.
We should be clear about what this requires. Building corporate venture capital capabilities is not trivial. It demands different skills than running traditional businesses. It requires patience with longer investment horizons. It means accepting that some portfolio companies will fail. But the alternative, continuing to build everything internally while watching startups repeatedly out-innovate corporate initiatives, is increasingly untenable.
The path forward isn't either-or. Conglomerates should continue building businesses in sectors where they have clear competitive advantages and where the conglomerate model makes strategic sense. But in emerging, technology-driven sectors where speed and innovation are paramount, the better approach is strategic investment in and partnership with startups.
Bangladesh has built remarkable companies through the conglomerate model. Now we need to evolve that model to incorporate collaboration with the broader entrepreneurship ecosystem. This isn't about abandoning what works. It's about complementing internal capabilities with external innovation. It's about recognizing that in certain contexts, investing in and partnering with entrepreneurs is smarter than competing with them.
The pieces are in place. We have conglomerates with capital and market presence. We have a growing pool of entrepreneurs building interesting companies. We have an improving regulatory environment, however slowly. What we lack is the institutional willingness to bridge these worlds through strategic investment and genuine partnership.
The question isn't whether this approach works. It demonstrably does so in markets far more mature and far less developed than Bangladesh's. The question is whether our business leaders will embrace it. If they do, it’ll likely benefit strategically and financially while accelerating the country's overall entrepreneurial landscape.
