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Funding for local startups declines by 74% in 2022

Staff Correspondent
07 Feb 2023 00:00:00 | Update: 07 Feb 2023 00:27:02
Funding for local startups declines by 74% in 2022

Bangladeshi startups saw a downward trend in funding in 2022, declining by 74 per cent compared to the previous year, says a recent report.

The country’s startups have managed to raise $109 million in 2022, which was $415 million in 2021, according to the report, “Bangladesh Startup Investment Report 2022: A Year In Review”, prepared by LightCastle Partners.

Through 46 deals, 40 unique startups were funded in 2022 by over 20 investors. Among these, 26 deals were headed by investors at home.

The average investment of each Bangladeshi startup was $1 million. This average excludes the $63 million deal secured by ShopUp from Valar Ventures and Flourish Ventures in Q2 of 2022.

Startups in financial services (embedded finance/fintech) took the lead raising the most investments in 2022, while logistics and mobility, education, e-commerce and retail saw the largest number of deals in the year.

According to the LightCastle data, the local startups have received $823 million funding in last 12 years, out of which $777 million came from foreign investment and the rest from local sources.

Investment in 2020 was $40 million, which jumped to $415 million in 2021. Of the 2021 figure, bKash secured $250 million from Softbank. In 2022, investment dipped to $109 million.

More than 69.59 per cent of investments went to financial services (embedded finance/fintech) startups, followed by 11.44 per cent to logistics and mobility, 7.08 per cent to e-commerce and retail, 2.53 per cent to healthcare, 2.21 per cent to consumer services, and 1.88 per cent to software and technology.

The top five companies that received funding in 2022 were ShopUp ($63 million), Paperfly ($13 million), GoZayaan ($4.6 million), Shikho ($4 million), and 10 Minute School ($3.8 million).

The report also said the Russia-Ukraine war amid a global economy recovering from the pandemic has resulted in supply-chain issues around the world.

These have led to uncertainties rising globally, with climbing inflationary pressures and recessionary phases looming over majority of economies around the world.

As a result, startup funding has seen a downward trend in even the biggest startup hubs around the world, with a projected year-on-year decrease of 30%, from $630 billion in 2021 to a forecast of $439 billion in 2022.

The global economic downturn is predicted to continue until 2023.

Globally, startup funding has experienced a slowdown, raising $439 billion in 2022. Startups across the globe saw a year-on-year drop of 29% in 2022, due to the recent global economic conditions owed to post-pandemic recovery and the Russia-Ukraine war.

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