Almost every conversation about Dhaka’s startup scene these days quickly gravitates toward the familiar repertoire of complaints: founders wasting investor money, a discount frenzy that destroys unit economics, fraud, and a persistent shortage of quality talent. These are from the people who are critical of the current state of startups in the country. Industry insiders, however, view the challenge differently. They think the problem is a lack of local capital, doing business is costly and tough, there are not nearly enough incentives, and so on. We have written about these before.
Some of these criticisms, from both sides, carry real weight. The ecosystem has genuine execution problems. The difficulties of doing business in Bangladesh are well documented. Others, such as perceptions about capital raised by founders in Dhaka, come from a lack of understanding.
That said, the current discussion doesn’t nearly explain the more fundamental question: why, fifteen years into this experiment, has Dhaka’s startup scene produced only incremental progress, a handful of notable companies, and no globally legible exits built by local founders?
It appears to us that these complaints are symptoms. The disease is structural. And we don’t spend nearly enough time talking about those structural challenges.
We’ve been writing about this for years at Future Startup. As I wrote recently, Bangladesh’s startup ecosystem approaches the problem in an unhelpful, siloed manner. Most discussions quickly turn to capital, incentives, and tax breaks or surface-level criticism of the ecosystem actors. Although these are important issues, without addressing the structural constraints, they won’t be resolved sustainably. You remain in constant mercy of Band-Aids.
This article is an attempt to understand some of these structural constraints and argue for the kind of changes that could actually move the ball.
Before moving on, I want to note that this has turned into a series without me knowing it. I’m tentatively calling it making sense of an ecosystem: Structural challenges of Bangladesh’s entrepreneurship ecosystem. You can read the previous articles in the series here.
Back to today’s discussion.
The dominant mental model in Bangladesh treats the startup ecosystem as an isolated sector that can be improved on its own terms. More government-backed funds and programs. More accelerators, more grants, more competitions, better founder training, improved investment readiness workshops. All of these have their place. None of them is the core problem.
Startups don’t grow in a vacuum. They grow in economies. The health of a startup ecosystem is a function of the broader normative and economic reality it inhabits. The norm of the society toward business, the quality of the talent pool, the depth of local capital markets, the openness of the regulatory environment, the ease of doing business, the presence of global companies that train people and create networks, the ease of moving money across borders, the attractiveness of the market to international investors, and the degree to which the country is integrated into regional and global trade flows. These things significantly dictate how well a market performs.
Bangladesh’s startup ecosystem is weak partly because Bangladesh’s broader economy has structural constraints that have never been seriously addressed in the context of entrepreneurship.
This is the framing shift we need. Startups are not a sector that can operate in a silo. They are a reflection of an economy.
There is a related point worth making here. Research by Valentina Assenova of the University of Pennsylvania, tracking 192 countries over nearly two decades, found that the strongest predictors of entrepreneurial activity are normative. Social norms and cultural values, not just capital or policy frameworks, play an important role in entrepreneurial activities in a society.
Societies that reward performance and meritocracy produce more founders. Bangladesh is not a meritocratic society. Your background, family status, closeness to power, and group affiliation shape access to opportunity far more than ability does.
This creates a structural dampener on the supply of founders that sits entirely outside the startup ecosystem’s control and that no accelerator program can resolve.
One of the most consequential and least discussed structural gaps in Bangladesh is the near-total absence of major global companies with substantive operations in Dhaka.
In Bangalore, Hyderabad, Jakarta, Ho Chi Minh City, and Kuala Lumpur, ambitious young people fresh out of university can join Google, McKinsey, or Accenture. They learn how world-class organizations operate. They build professional networks that span borders. They develop a sense of what excellent execution looks like. And when they eventually leave to start their own companies, which many of them do, they bring that knowledge, those networks, and those standards with them.
In Dhaka, this pipeline barely exists. As I’ve written before, one important distinction between India or Indonesia and Bangladesh is the availability of opportunities for talents to train early.
In those markets, you can find all the big consulting firms, tech companies, and other global organizations. Local talents get excellent opportunities to learn and grow in these organizations, which provide excellent early training grounds for ambitious people and better prepare them for entrepreneurial journeys.
Bangladesh’s regulatory environment has historically made it difficult for global companies to set up meaningful operations here.
Profit repatriation restrictions, bureaucratic complexity, opaque licensing processes, and an overall climate of uncertainty about policy stability have kept many multinationals at arm’s length.
Some have entered in limited capacities, but the deep operational presence that trains engineers, produces managers, and creates professional networks is largely absent.
The downstream consequences for the startup ecosystem are meaningful. The talent available to early-stage companies in Bangladesh is largely untrained in global standards of product development, go-to-market strategy, financial rigor, and operational discipline.
This isn’t a problem of Bangladeshi talent; it’s a problem of the environment that talent has been placed in. You cannot fault people for not knowing what they’ve never been exposed to.
Broad economic liberalization, such as meaningful investment policy, transparent regulatory processes, enforceable contracts, and consistent policy environments, can help change this over time. Global companies would enter. They would hire local talent. That talent would build skills, networks, access to capital, and eventually, companies.
This is not a novel theory. It is what happened in Vietnam over the last decades, and it is a meaningful part of why Vietnam’s startup ecosystem today is structurally stronger than Bangladesh’s despite comparable starting points.
Bangladesh sits at one of the most strategically valuable geographic positions in Asia, between India’s northeastern states, Myanmar, and the Bay of Bengal, with easy access to Southeast Asia by sea. It is a natural hub for regional trade. And yet the country’s economic integration with its neighbours remains remarkably shallow.
The consequences for startups are direct. Market size is one of the fundamental determinants of startup success. Investors need to believe that the market a company is addressing can support a large business.
Bangladesh, with 170 million people and a growing middle class, is not a small market in absolute terms. But in digital terms, the addressable market for most categories, adjusted for internet penetration, purchasing power, and payment infrastructure, is considerably smaller than the headline population suggests. And it is enclosed. Companies that want to expand beyond Bangladesh face a completely different regulatory and market context the moment they cross a border.
Regional integration would change the calculus. As BIDA executive chairman Ashik Chowdhury argued at the 2025 Bangladesh Investment Summit, Bangladesh’s investment narrative should move beyond the 180 million domestic market to focus on a much larger regional market that can be served from Bangladesh.
A Bangladesh deeply integrated into regional trade, digital payment, and regulatory frameworks becomes a much larger market proposition for founders and investors alike.
ASEAN provides a useful reference. Vietnam’s integration into ASEAN trade structures and its bilateral agreements with major economies gave Vietnamese startups a natural expansion path. A company building in Vietnam could credibly tell investors a story about a market that extended well beyond Vietnam’s borders.
Bangladesh has no equivalent story to tell today. The path from Dhaka to the regional scale runs through regulatory, currency, and market context discontinuities that make expansion disproportionately expensive.
Bangladesh needs meaningful bilateral and multilateral agreements beyond SAARC, which has been effectively dead, with South and Southeast Asian economies that can reduce frictions in digital trade, financial services, and logistics. This is a government-level priority, not a startup ecosystem initiative. Until it becomes one, the ceiling on what Bangladeshi startups can build will remain artificially low.
Starting a company in Bangladesh remains unnecessarily expensive and cumbersome. We’ve been making this point for years, and it remains true today. Trade license fees are high. Incorporation is expensive. Most of the steps are not fully digital.
These are not minor inconveniences. They act as filters that screen out exactly the kind of first-time, resource-constrained founder that most successful ecosystems depend on for their long-tail of experimentation.
Making starting companies less expensive — making trade license fees nominal, making incorporation cheap and digital — would have compounding effects on the volume of new ventures over time.
Lowering fees may cause a short-term revenue loss for the government, but the long-term upsides, in terms of employment, GDP contribution, and tax revenue from successful companies, are significantly larger.
The investing side is more complicated still. Bangladesh’s foreign exchange controls, restrictions on the repatriation of returns, and unclear legal frameworks for venture investment have historically made it difficult for both domestic and foreign institutional capital to deploy into local startups cleanly and predictably.
As we have noted many times before, the biggest challenge for the ecosystem is regulatory and policy challenges, not funding in isolation. If these policies don’t change, the startup ecosystem will not grow.
What investors need to deploy capital at scale into an emerging ecosystem is predictability. They need to know that when a company succeeds, they can exit their position and repatriate their returns without regulatory uncertainty.
They need a legal framework that makes term sheets, SAFEs, convertible notes, and equity
structures enforceable in a way that global investors recognize. Bangladesh’s current environment provides none of this with sufficient clarity.
The result is that international capital largely passes Bangladesh by, and local capital has limited established vehicles through which to operate.
There is also a related structural issue around the cost and stigma of failure. Bangladesh lacks a meaningful social and economic safety net for failed entrepreneurs.
This makes the downside of starting a company high financially, professionally, and reputationally. This structurally limits the supply of people willing to take entrepreneurial risk.
Normalizing failure and designing policies that reduce the personal cost of an unsuccessful venture would expand the pool of people willing to try.
This too is a structural policy question, not an ecosystem mindset problem.
In 2023, local investors deployed roughly $19 million into Bangladeshi startups. By 2024, that figure had collapsed to $1.1 million — a 95 percent drop. In contrast, India and Vietnam benefit from local VCs and corporates anchoring early rounds, fuelling a virtuous cycle of more experiments, faster learning, and bigger exits.
In Bangladesh, corporates, family offices, and business leaders are yet to fully engage.
The absence of meaningful local institutional capital is one of the most consequential structural gaps in the ecosystem.
When local capital is absent, the ecosystem becomes entirely dependent on foreign capital, which is episodic, macro-sensitive, and increasingly concentrated in a handful of more mature markets.
When the global venture market turned sour after 2021, Bangladesh felt it disproportionately because it had no local capital cushion to absorb the shock.
Local conglomerates in Bangladesh have largely defaulted to building everything in-house rather than investing in the ecosystem. As I’ve argued at length elsewhere, this is a strategic vulnerability for the conglomerates themselves, not just for the ecosystem.
When established companies attempt to enter new digital sectors through internal corporate units rather than by investing in startups, the innovator’s dilemma plays out predictably. The evidence across multiple verticals — e-commerce, mobile financial services, edtech — shows that corporate-led internal ventures fail at high rates. The smarter approach is minority investments in startups that maintain founder autonomy.
Beyond conglomerates, local philanthropy remains a largely untapped resource for the ecosystem.
Across the world — in the US, in India, increasingly in Southeast Asia — philanthropic capital from wealthy individuals and business families has played an important role in seeding early-stage ventures, funding research, and building the institutional infrastructure that sustains ecosystems.
In Bangladesh, while charitable giving is widespread, productive philanthropy directed at entrepreneurship and innovation remains modest relative to the wealth that exists in the country.
Wealthy Bangladeshis have the capacity to fund grants, fellowships, and early-stage investment programs that would dramatically expand the pipeline of founders.
The institutional will to do so has not yet materialized.
Bangladesh’s pension funds, insurance companies, and development finance institutions remain largely uninvolved in venture investment. In more mature ecosystems, pension fund allocations to alternative assets provide a patient capital base that sustains the ecosystem through cycles.
Bangladesh has the underlying assets. It lacks the regulatory and institutional frameworks to channel them into productive early-stage investment.
Building local capital infrastructure requires clear frameworks for domestic venture funds, simplified LP-GP structures, and tax treatment that makes startup investment attractive relative to other asset classes.
Bangladesh produces a large number of university graduates every year. It produces very few people with the specific combination of technical depth, business judgment, and global awareness that high-growth startups require. This is a structural talent supply problem, and it sits upstream of everything else in the ecosystem.
The problem has several dimensions.
University curricula remain largely disconnected from the realities of modern business and technology. Industry-academia collaboration is limited and largely informal.
The absence of global companies with substantive local operations means there is no large-scale on-the-job training happening at the level of rigor that produces entrepreneurially ready talent.
Local university curricula should teach about local entrepreneurs and businesses — celebrating and documenting what Bangladeshi founders have built — so that entrepreneurship becomes a legible career path for the best graduates rather than an outlier choice.
There is also the structural concentration problem.
Bangladesh’s startup ecosystem remains highly concentrated within a certain group of people — well-connected, educated in a handful of institutions, based in Dhaka’s tri-state area.
This is partly a reflection of how opportunity access works in a low-trust society: you help people from your school, your village, your social class. But it is also a function of policy choices. Incubator and accelerator programs, government grant schemes, and investment networks all disproportionately reach the already-networked. This limits not just fairness but potential.
The next generation of breakthrough founders may be sitting in Chittagong, Sylhet, or Rajshahi, with no path into the ecosystem.
Building a more open, accessible, and geographically distributed ecosystem would expand the long-tail of experimentation that successful ecosystems depend on.
There is also a structural problem with talent retention at the ecosystem level. The best Bangladeshi engineers and managers often leave for better opportunities abroad — not because they are unpatriotic, but because the local ecosystem cannot yet offer the compensation, growth, and network opportunities available elsewhere.
Diaspora networks, which have been a major source of both capital and talent return in India, remain underutilized in Bangladesh.
Creating structured pathways for diaspora engagement — return fellowships, diaspora angel networks, formal advisory roles in Bangladeshi companies — would tap a substantial and currently squandered asset.
Startup ecosystems are not evenly distributed phenomena. They concentrate. Silicon Valley, Bangalore, and Shenzhen did not emerge because those geographies had better raw inputs than everywhere else. They emerged because specific combinations of university research, industry presence, capital networks, and founder density created self-reinforcing feedback loops.
Bangladesh’s policymakers and industry leaders have paid insufficient attention to the deliberate construction of these kinds of clusters.
Bangladesh has successful precedents to learn from domestically. The RMG industry is, in many ways, a manufacturing cluster. A concentration of related firms, suppliers, skills, and knowledge that created competitive advantages no individual company could have built alone.
Pharmaceuticals is another example. As I’ve argued elsewhere, studying these successful clusters—how they formed, what policy conditions enabled them, what knowledge spillovers they created, and applying those lessons to tech and startup development would be more productive than importing cluster models wholesale from Singapore or Bangalore.
The Bangladesh High Tech Park Authority has attempted to create physical infrastructure for technology clusters. This is a reasonable starting point. But physical infrastructure alone does not produce a cluster.
What produces a cluster is the co-location of talent, capital, research, and market access in a way that creates serendipitous knowledge spillovers and network effects.
The policy work required is far deeper than building a park. It involves university reform, industry-research linkages, anchor tenant attraction, and talent pipeline development, all sustained over years.
A startup ecosystem without exits is an ecosystem without a flywheel. Exits — acquisitions and IPOs — are the mechanism through which capital is returned to investors and recycled into new companies, through which founders become angels and second-time entrepreneurs, and through which the ecosystem demonstrates to the world that it is capable of producing globally legible value.
Bangladesh has essentially no exit history worth pointing to. Every major acquisition in the Bangladeshi startup scene over the past decade — Daraz, Foodpanda, Bikroy — involved companies that were not built by Bangladeshi founders. Daraz and Foodpanda were Rocket Internet vehicles. Bikroy was built by Saltside Technologies, a Swedish company. Global capital has been redistributed between global operators. That is a meaningfully different thing from a Bangladeshi founder-built company being acquired by a global player.
What India and Indonesia show is that the exit gap can be closed, but closing it took a decade and a half of consistent policy work and institutional capital, a large enough domestic market to produce genuine category leaders, and a local corporate sector willing to participate in M&A.
Vietnam shows that even a market smaller than India can develop local acquirers if the policy environment, normative reality, and institutional infrastructure support it.
Without exits, institutional investors have no return history to point to when making the case for Bangladesh allocations.
Without institutional investment, companies can’t reach the scale at which they become acquisition targets. Without acquisition targets, there are no exits.
Breaking this cycle requires simultaneously building companies to global standards of governance and financial reporting, developing the policy infrastructure that makes M&A transactions clean and predictable, and creating enough local institutional capital to support companies through their middle stages.
IPO pathways matter equally. Bangladesh’s capital markets remain thin, and the DSE is not currently a credible listing destination for high-growth technology companies. This is not irreversible, but reversing it requires capital market reforms, a different class of listing requirements for growth companies, stronger institutional investor participation in public markets, and better market infrastructure, which have not been prioritized.
Bangladesh has talked about building a startup ecosystem for fifteen years. It has organized summits, announced initiatives, and issued policies. What it has lacked is a rigorous, research-grounded industrial policy framework for the sector that identifies specific structural constraints, sets measurable targets, designs high-leverage interventions, and tracks outcomes over time.
The most successful startup ecosystems in developing markets were not accidents. Singapore’s position as a regional hub was the product of decades of deliberate policy work around investment facilitation, talent attraction, and regulatory clarity. Vietnam’s transformation to a recognized regional ecosystem was driven by consistent legislative action — the 2016 Law on Technology Transfer, the 2018 Decree 38 providing legal protections for startups, and sustained bilateral trade agreements that expanded the market available to Vietnamese companies.
Bangladesh needs something equivalent. A policy framework developed through genuine research that treats startups not as a separate category of policy concern but as part of the broader economic liberalization agenda.
The question of how to build a vibrant startup ecosystem cannot be separated from the questions of how to attract more foreign direct investment, how to integrate regionally, how to reform capital markets, and how to build world-class universities. These are the same questions asked from different angles.
The comparison with Vietnam explains, to some extent, Bangladesh’s situation most clearly. The two countries share similar population sizes, similar histories of agrarian economies transitioning through manufacturing toward services, and similar starting points for digital economy development in the early 2010s.
Today, they are in meaningfully different places.
Vietnam has four unicorns — VNG, MoMo, VNLife, and Sky Mavis — all locally founded and still operating independently. Global companies have acquired local startups there. Local companies have become acquirers themselves. The market has matured enough to produce exits in multiple directions. Vietnam has recorded over 200 total startup acquisitions to date.
What produced this difference? Vietnam pursued aggressive regional integration through ASEAN and bilateral agreements, which expanded the addressable market for Vietnamese companies and made the country legible to international investors with regional mandates. It liberalized its investment environment meaningfully over consecutive years. It attracted global technology companies into substantive local operations, which trained Vietnamese engineers and managers to global standards. It developed a policy framework for startups that included legal protections, access to state funding, and technology transfer provisions.
None of this happened quickly. It was the product of consistent policy effort over fifteen years.
Bangladesh has had fifteen years. The difference is not effort — many dedicated people have worked hard on this. The difference is that Bangladesh’s efforts have been concentrated on the wrong level of the problem.
Let me be precise about what I’m arguing.
I am not saying that accelerators, grants, mentorship programs, and investor readiness training are without value. They have value at the margin. What I’m saying is that these are second-order interventions, and the ecosystem is being managed as if they are first-order ones.
The first-order changes are:
Broad economic liberalization that makes Bangladesh genuinely open for global companies to operate substantively. This means transparent investment facilitation, reliable rule of law, enforceable contracts, and consistent policy environments. The goal is to make Dhaka a city where a global tech company would consider locating a regional office or engineering center.
Meaningful regional economic integration beyond SAARC. The goal is to make Bangladesh part of a larger market story that global investors can invest in, rather than a standalone 170 million-person market with limited expansion opportunities.
Investment environment reform that creates clean, internationally legible legal frameworks for venture investment, clear forex pathways for foreign investors, simplified incorporation processes that lower the cost of starting a company close to zero for small ventures, and reduced social and economic costs of failure that expand the supply of people willing to take entrepreneurial risk.
Local capital mobilization through regulatory frameworks that encourage conglomerate venture investment, family office participation in startup funding, structured local philanthropy directed at innovation, and institutional investor allocation to alternative assets. The goal is to build a local capital base that can anchor the ecosystem through global cycles.
Deliberate cluster development that combines physical infrastructure with university reform, industry-research linkages, and anchor company attraction, informed by studying Bangladesh’s own successful clusters in RMG and pharmaceuticals.
Capital market reform that creates credible IPO pathways for high-growth technology companies on the DSE, supported by stronger institutional investor participation and improved market infrastructure.
A research-grounded national policy framework for innovation and entrepreneurship that is integrated into the broader economic policy agenda, sets measurable targets, and is reviewed and updated systematically.
These are not startup ecosystem policies. They are economic policies with implications for the startup ecosystem. That’s the point. The startup ecosystem cannot be fixed from inside the startup ecosystem. It can only be fixed by building a better economy around it.
Bangladesh’s remarkable underlying assets hardly need retelling. It has 170 million people, a median age below 28, a garment industry that has already demonstrated the country can build globally competitive manufacturing at scale, a diaspora with deep networks in financial centers worldwide, and a generation of young people who are more globally aware and more entrepreneurially inclined than any that came before them.
The question is whether the policy environment will be reformed to allow those advantages to compound, or whether the ecosystem will continue managing symptoms while the structural conditions that produce them go unaddressed.
Dhaka’s startup scene is fifteen years old and has produced incremental progress. That is not nothing. But it is far short of what the underlying opportunities should produce, and the gap between Bangladesh and its peer markets is not narrowing.
Closing that gap requires the same level of deliberate, patient, research-grounded policy work that Vietnam and Indonesia applied to their ecosystems over a decade and a half.
The cosmetic solutions are not wrong. However, until we address the structure, we’re rearranging furniture in a building that needs a new foundation. That’s the honest assessment. And it’s also, if we take it seriously, the beginning of a real plan.
