Local start-ups in Bangladesh are struggling to attract financial support leaving them to see a substantial decline of 77 per cent in funding to $4 million in the July-September period of 2023, compared to the same period of last year, while start-ups around the world saw slight growth in receiving funding.
Overall, start-up funding across the three quarters of 2023 amounted to $47.5 million, showing a stark 50 per cent reduction compared to last year’s first three quarters.
LightCastle Partners revealed the data in its latest Bangladesh Startup Investment Report for Q3 2023, where it said, “This decline underscores the impact of the ongoing global funding slowdown on the local startup ecosystem.”
Meanwhile, globally, start-up funding has increased by a slight margin of 7 per cent amounting to $73 billion in Q3 of the year, compared quarter-on-quarter, it said.
However, amidst economic challenges, local investors stepped up their investments in Q3, accounting for an impressive 84 per cent of total investments.
The report said that as the economic and political climate evolves, maintaining agility and adaptability remains vital. The startup investment landscape in Bangladesh remains influenced by global and local factors, requiring startups and investors to navigate a complex and evolving environment, it said.
“The focus on early-stage funding, combined with an increasing interest in late-stage investments, showcases the potential for both emerging startups and those on a growth trajectory. Thus, adaptation and relationship-building are key to ensuring resilience and growth in this dynamic ecosystem,” it said.
On the Asian scale, China maintained its leading position in Asia, projecting a modest 23 per cent rise to $14.1 billion in funding during Q3 while Singaporean start-ups witnessed a three-time increase in investments, amounting to $3.4 billion.
Meanwhile, Indian start-ups experienced the lowest quarterly funding totalling $1.5 billion in Q3, and similarly, Pakistan witnessed a substantial 88 per cent decrease to 6.8 million in funding — compared to Q3, 2022.
Bangladesh attracted the lowest funding among its Asian neighbours, underscoring the investment landscape's volatility this year, said the report.
“With global vulnerabilities creating disruptions across economies, Bangladesh has been experiencing multiple economic hurdles such as a shortage in foreign exchange reserves, persistent inflationary pressures, and an increasing current account deficit.
“Despite caution by the International Monetary Fund, the government revealed a growth-oriented financial budget of $70 billion and a cautionary monetary policy regime, in order to manage public sentiment,” it said.
“The upcoming general election is set to take place in January 2024. As the country approaches general elections, economists fear that the volatility of the political situation might further exacerbate economic woes,” the report mentioned.
“Recent economic shifts and upcoming elections has been influencing Bangladesh’s political landscape too,” it added.
