Interviewed by Anisha Saha, MBR Team

MBR: 2021 has been an exciting year for Bangladesh’s startup ecosystem as a whole. What are your thoughts on the landscape?

Syed Javed Noor: The startups are expected to grow fast in Bangladesh, taking advantage of the excellent IT or digital payment infrastructure of the country. As this is a recent trend around the globe and local investors lack exposure, most of the startups are funded or guided by the global players. Like the other countries around the globe, we may see increased activities in startup funding system along with large influx of talents. Recently VC investment has generated huge interest as a new asset class in Bangladesh, and thus it is expected that local investors will also catch up quickly.

MBR: How important is the role of active early-stage investors for the growth of the startup ecosystem? It would be great to know your opinion on how to improve this practice.

Syed Javed Noor: By definition, the initiatives of startups are taken by young founders, who have the idea and ready to give their best to grow the business, but most of them lack business experience. In most cases, the early stage investors support the founder not only with the money but also with continuous coaching and 3rd party opinion to fill the gap.

MBR: What are some local industries that you feel have immense potential to produce billion-dollar companies in the next 5 years? Any specific trends that you foresee, which will encourage foreign venture investments in the country?

Syed Javed Noor: Healthtech, Consumertech, Edutech, Agritech, logistics are the five areas which I think has the potential to produce billion dollar companies in the next five years. These sectors have potentials to produce multiple unicorns in near future in our country. Historically, venture capital industry of Bangladesh was driven by the foreign investment and at least for the next 5 to 7 years, it may remain so. Be it Shopup or Chaaldal, most of the startups are backed by the foreign investors. If you look at the startups, these are basically people and business ideas. When investors look into a company, they judge the team — whether the team has the capacity to execute and are committed to stay on the course — and they review the projected numbers which the founding team can generate. When investors are convinced about the team and find the numbers believable, they invest. The key concern for any foreign investor is ease of exit which I think regulators may look into.

MBR: How do you see the pandemic as a catalyst causing the rise of tech enabled businesses?

Syed Javed Noor: During pandemic movement was restricted and as a result, the startups got the opportunity to introduce new model or framework of delivering their services and products to the consumers. As the citizens were locked at home, they had no choice other than adopting the online services which was the biggest blessing for the startup ecosystem. This new trend has fast forwarded the whole ecosystem by almost 8 to 10 years.

MBR: In terms of total investments into startups this year, a lion’s share came from foreign investors. What do you think the local institutions and investors could do better to expedite the gap in local fundraising?

Syed Javed Noor: Most of the local people who has the money to invest in startups lacks exposure to VC ecosystem and also we need pool of talented individuals to take risk to start their business or associate them with new businesses. To encourage the local investors, awareness program of this new asset class may be organized and also tax break for VC investment may be considered. Government may also take steps to introduce tax incentives for the Startups and formulate regulation to allow share option pool for the key employees of startups to attract and retain talents which is key for their success.