Thirty-nine Bangladeshi commercial banks launched Bangladesh Startup Investment Company PLC (BSIC) on May 12th in Dhaka, introducing its inaugural fund, Onkur Bangladesh Fund 1, with committed capital of Tk 425 crore — roughly $35 million. Finance Minister Amir Khosru Mahmud Chowdhury was the chief guest. Bangladesh Bank Governor Md Mostaqur Rahman attended. The launch event was held at the capital's Radisson Blu Water Garden Hotel.
BSIC aims to address the lack of local institutional capital to fund the late seed-to-series A rounds of the country’s startups, the funding gap that has been most acute for Bangladeshi founders.
The immediate origin of BSIC goes back to 2021, when the Bangladesh Bank required all commercial banks to allocate at least 1 percent of their annual net profits to startup financing. While the intent was sound, less than Tk 5 crore of a pool exceeding Tk 100 crore was ever deployed. The banks had the mandate, but they didn’t have the expertise, the appetite, or the structure to act on it.
BSIC is the institutional response to that failure. Rather than 39 banks each running their own startup investment activity, the capital is pooled into a single, professionally managed entity with its own governance and its own investment mandate.
The expectation is that the firm will help build the much-needed local venture capital ecosystem, where startups will be able to access late-stage local capital. An almost non-existent local venture capital ecosystem has been one of the major drawbacks for Bangladesh on its way to becoming a major startup hub in the region. While there are several firms with alternative investment licences, almost none of the firms have been able to raise capital. Naturally, local venture capital deployment has been meagre in the country. It can be said that the country doesn’t yet have a local venture capital ecosystem, which significantly constrains the growth of the country's startup ecosystem.
For instance, Bangladesh's startups raised $124 million in 2025, and out of that, local investor participation was under $1 million, about 1 percent of total funding. An additional caveat is that $110 million of that total funding came from a single deal: the merger of ShopUp and Saudi Arabia's Sary into SILQ Group. Strip that out, and the ecosystem raised roughly $14 million.
Lack of a local venture ecosystem not only makes it difficult for the local startups to raise local capital, but it also creates real and perception challenges when it comes to attracting international investors. People involved with BSIC expect that the fund will help address some of these challenges.
The governance runs on four layers: a local investment team for deal sourcing; an investment committee of professional VC practitioners; an advisory committee; and the board of directors representing the shareholder banks. The design aims to keep investment decisions insulated from the banking culture above them.
On capital, the 39 banks contributed their 1 percent obligations covering the period 2020–2024 to form the founding corpus.
Going forward, the annual 1 percent contribution continues, making BSIC self-replenishing. Annual inflows are projected at around Tk 200 crore. The authorized capital ceiling is Tk 2,000 crore. The banks are shareholders, not lenders; their exposure is capped, and any returns come through dividends and capital appreciation.
BSIC targets late-seed and Series A companies. The rounds that have historically been hardest to access in Bangladesh. The overall seed funding landscape in the country has reasonably improved over the years. Although more work needs to be done there, a growing base of local, diaspora, and international angel investors and a growing number of Bangladeshi companies attending regional and global incubator and accelerator programs have helped improve the early-stage capital access.
However, the gap has been wide at the stage where companies need patient institutional capital to grow, and where a credible local investor can help bring international co-investors in alongside them.
Priority sectors include healthcare, agriculture, education, transport, retail, and logistics. The mandate also extends to SMEs, broader than most commentary on BSIC has noted. Investment instruments include equity, SAFEs, and convertibles.
BSIC will not back idea-stage companies. The first three investments are targeted for Q4 2026, with eight to twelve portfolio companies by 2028. Exits are planned from 2029 onward through DSE listings or direct stake sales.
Who Is Behind It
Mashrur Arefin, managing director and CEO of City Bank and chairman of the Association of Bankers, Bangladesh, is BSIC's first chairman. The nine-member board draws from the managing directors of City Bank, Prime Bank, Mutual Trust Bank, Sonali Bank, and Pubali Bank, alongside four independent directors.
Nazeem A Choudhury, additional managing director of Prime Bank, is serving as interim CEO while BSIC searches for a permanent chief executive with multinational venture capital experience. The managing director, CIO, and full investment committee are expected to be in place by Q3 2026.
BSIC has brought in practitioners with actual venture investing experience to fill key roles. Dinar Ahmed, a partner at Canada's BDC Capital, has joined the investment committee, where deal approvals will happen. Sami Ahmad, a general partner at Eduardo Saverin's B Capital, has joined the advisory board. Rahat Ahmed, founder and managing partner of Anchorless Bangladesh, is a named consultant.
The shareholding reflects the breadth of participation. BRAC Bank holds the largest stake at 7.71 percent, followed by City Bank at 6.74 percent, Dutch-Bangla Bank at 6.67 percent, Pubali Bank at 6.5 percent, Sonali Bank at 5.73 percent, Eastern Bank at 5.58 percent, and Prime Bank at 4.98 percent.
The co-investment angle. BSIC's stated ambition is to function as the local anchor that draws international VCs into Bangladeshi deals. Representatives from 500 Global, Plug and Play, ADB Ventures, Sturgeon Capital, Wavemaker Partners, VentureSouq, GFR Fund, Conjunction Capital, and Orbit Startups attended the launch, a signal of engagement, not commitment, but a meaningful one.
Family wealth. Rahat Ahmed of Anchorless Bangladesh noted at the launch that because the backing banks are institutions wealthy families already trust, BSIC gives local private capital a credible channel to co-invest alongside them. Bangladesh has substantial privately held family wealth that has had no structured way into startups. This could change that. However, it also raises the question whether the government-mandated fund will stifle the growth of a private venture capital ecosystem in the country.
Political independence. Finance Minister Chowdhury stated explicitly at the launch that the government would not interfere in BSIC's investment decisions.
The ecosystem context. BSIC sits alongside Startup Bangladesh Limited's forthcoming Fund of Funds, a $33 million vehicle from the ICT Ministry aimed at anchoring private VC managers at the pre-seed and seed stage. The two have been positioned as complementary: SBL at the earliest stage, BSIC at late-seed to Series A.
If you look at the details, BSIC is a credibly structured domestic venture institution. The key design improvement over the previous attempt is structural separation: by creating a standalone entity rather than mandating banks to invest from their own balance sheets, BSIC routes capital through an institution with the right mandate and the right people. That structure is critical because it is actually the reason the previous five years of mandated financing produced almost nothing. With this new structure, it can change everything.
It also comes with associated challenges. Thirty-nine shareholders with varying levels of enthusiasm can become a governance challenge. The investment committee's independence from the banking-sector board above it will be tested when early investments underperform, as some will. The BB Governor's request for BSIC to prioritize the rural economy sits in tension with the commercial return expectations of 39 shareholder banks and any international co-investors. And as Tammer Qaddumi of VentureSouq observed at the launch, the banks backing BSIC may eventually hold stakes in companies that take market share directly from their own businesses, a tension with no clean institutional answer.
The appointment of BSIC's managing director and CIO will tell you more about what this institution actually becomes than anything in its prospectus. Genuine venture experience and the independence to act on it would give BSIC a real chance at doing something. Given the real improvement in the structure, if the operational body gets true independence, BSIC can even overcome the innovators’ dilemma Tammer Qaddami mentioned.
On the side, however, there are questions of second-order consequences. Public sector mandated venture capital firm, albeit commercial bank-backed but still mandated by Bangladesh Bank, can come as a question mark to many private sector players.
It also runs several other risks. For one, part of the challenge BSIC aims to address is the lack of local venture capital availability in late-stage startup investment in Bangladesh. The most sustainable approach to solving it is by encouraging and helping grow a private venture capital ecosystem in the country. That ecosystem needs both public sector policy support and private sector appetite in order to happen. While BSIC helps address the capital problem for the time being, it doesn’t address the question of how to create a local venture capital ecosystem that didn’t happen over the preceding ten years despite various government-led initiatives. An ecosystem means you have a lot of different types of players operating in the sector.
To that end, BSIC runs the risk of stifling the growth of a private venture capital ecosystem on both sides of the market—policymakers may think that there is now a venture capital institution, so why do we need to address any existing policy challenges, and many private wealthy institutions and family offices may prefer to work with BSIC rather than working with a private sector player. And BSIC, being a bank-backed and BB-mandated firm, could suffer from incentive misalignment to the extent that it would fail to deliver on its key ambitions.
Having said that, for this very moment, this is a huge progress. It has already created positive expectations around the fledgling startup scene in the country. If BSIC can follow through on some of its goals, it can meaningfully change the trajectory of the country’s startup ecosystem. And that will be a huge achievement.
