Developing a thriving ecosystem for start-ups

During a national dialogue to foster the start-up ecosystem in Bangladesh, nine start-ups consisting of two members each were given a unique opportunity to present their business ideas in front of top corporates on September 7. Prior to that, the teams received assistance and mentoring for two days to polish their ideas before their final presentation.

The project, presented by Youth CoLab and Youthopia.bangla, led jointly by UNDP and Citi Foundation, is a “key initiative which has been introduced in 18 countries throughout the world”, according to Ke Linka Lin, national dialogue coordinator, UNDP's Bangkok regional hub.

And, because of its success, it is now being extended to even more countries, including Bangladesh.

For a country like ours, where nearly a third of the population is between the ages of 18-35 (numbering 60 million by 2020), this is particularly exciting.

Bangladesh is soon set to become a middle-income country after several years of consistent economic growth, which means investing in start-ups and small business enterprises now becomes even more crucial.

Thus, a great way of combining the two together is to encourage young people to become entrepreneurs, as that would be a great way of ensuring that we maximise the benefits of our current demographic dividend.

This is where UNDP, along with its partners, have teamed up to act as an accelerator behind accelerators to try and empower young people to start their own businesses. But, for young people, starting a business is not an easy task by any means, especially in Bangladesh.

Despite today's youth being more educated and proficient with technology than previous generations, financial constraints remain a major barrier for them to start their own business.

Getting the necessary financing from banks become especially difficult because of their demand for collateral which many young people do not have readily available. What then is the alternative?

Well, as this project demonstrated, getting start-ups to pitch their ideas to corporations, who can then finance their projects is one innovative way of circumventing the problem of financing.

Not only does this help start-ups find alternative investment sources, but it also helps established corporations overcome some of their rigidity and invest in potentially great business ideas that can change society for the better.

Given that it is often difficult for start-ups to get their ideas to the market, interacting with well established businesses, on the other hand, can help young entrepreneurs overcome some of the common problems that they face such as finding the right direction for their ideas, sustainability and the scaling up of their business later on.

But what value can start-ups bring to society, in exchange?

As Tina Jabeen, deputy project director for ICT innovation at Startup Bangladesh, explained during the discussions, Bangladesh is targeting to become a developing country by 2021.

For the past few years it has been enjoying a 7-plus percent GDP growth. However, “in order to sustain we need to have minimum 8 percent GDP and that is not easy.”

This is why start-ups are so important, as they “can bring a lot of employment with more innovative businesses which would require technical knowledge”.

Moreover, “in order to enjoy 8 percent GDP we need $20-25 billion foreign investment in Bangladesh”. And start-ups are perfectly aligned to attract the increased investment that is necessary, as in today's world, it is much easier to attract investors through companies that are tech-driven.

Therefore, although the start-up ecosystem in Bangladesh is currently in its infancy, more focus should be shifted towards it so that the economy can reap the benefits from it in the long-run.

In that regard, it is important to understand that there are more barriers to setting up a new business than financing alone.

Young people in Bangladesh are often discouraged from taking the risk of starting their own business, and are encouraged to settle for something that seems to be a safer bet. Because of familial and other kinds of pressure, they are prevented from pursuing their dream of starting a new business.

However, as Wahid Hossain, founder and CEO of Tiger Bow, explained, start-ups need training and guidelines, besides other kinds of support.

The government alone cannot provide these supports.

And, along with that, society at large too must be made aware of the benefits that start-ups can provide to our economy. Once that has been achieved, developing a thriving ecosystem for start-ups can proceed much faster, generating much greater profits for our nation in the years ahead.

Eresh Omar Jamal is a member of the editorial team at The Daily Star. His Twitter handle is: @EreshOmarJamal