BD Venture exits EON Foods with profits
BD Venture, the country's first venture capital firm, has recouped its investment along with profit after EON Foods, the start-up in which it put money into, turned profitable.
Venture capital is a financing that investors provide to start-up companies and small businesses believed to have long-term growth potential.
In January 2014, BD Venture had invested Tk 2 crore in EON Foods, which deals with meat processing, value-added poultry products, processed fish items and ethnic products.
Subsequently, it has made its exit by selling its equity back to EON Foods -- a development that both the companies termed a milestone for the country's nascent venture capital industry.
“Investment through venture capital is a new concept in Bangladesh and this exit is a great success for the nascent start-up ecosystem,” said M Ehsanul Haque, chairman of BD Venture.
Most entrepreneurs in Bangladesh do not have a clear idea of venture capital financing, he said an event organised yesterday at the office of EON Foods in Dhaka o announce BD Venture's exit.
It is a partnership-based investment and entrepreneurs do not have to pay any interest against the equity provided by venture capitalists.
Venture capital firms enjoy equities and a portion of profits if the start-ups can successfully expand their businesses and become profitable, he explained.
“We proved how to develop entrepreneurship through institutional partners. Our project is mature now,” said Momin Ud Dowlah, managing director of EON Group.
He said his company has already attracted foreign equity partners to accelerate business growth.
“I lived in the US for a long time where I saw that the majority of the start-up enterprises depend on venture capital firms to raise capital, as banks and other financial institutions are reluctant to lend to a new enterprise,” he added.
Shawkat Hossain, managing director of BD Venture, said start-up financing is not just about investing money; it is a holistic process that involves proper business planning with thoughtful growth targets and ensuring corporate governance in the company.
Venture capital firms should make investment after proper due diligence as it entails risk as well.
“Venture capital firms get back their capital along with profit if they provide funds after verifying the pros and cons of a start-up company,” he added.
The majority of BD Venture's capital comes from institutional shareholders and reputed individual investors. At present, there are 10 venture capital companies in Bangladesh.