Investment in Bangladeshi startups sees significant decline

The local startup scene is experiencing notable downward shifts in funding trends, even as the global startup ecosystem indicates slight growth. On a global scale, startup investments have risen marginally by 7%, totalling a formidable USD 73 billion in the third quarter of this year. But funding in Bangladesh plummeted to a mere USD 4.0 million in Q3 2023, a drastic 77% decline in comparison to the same period last year.

This trend was revealed in the recently released Bangladesh Startup Investment Report for Q3 2023 by LightCastle Partners.

The decline is even more poignant when considering the previous year's figures. Excluding a significant USD 30 million deal secured by ShopUp, quarterly investments have consistently hovered below the USD 10 million mark, showing a 42% dip from the preceding quarter. Furthermore, the total startup funding over the first three quarters of 2023 stood at USD 47.5 million, marking a stark 50% reduction from the previous year's figures.

In Q3 2023, Bangladesh's startup funding sphere saw active involvement from just two investors. This limited participation signals an air of caution, with most players maintaining a risk-averse posture throughout the year. Meanwhile, angel investors maintained their influence, mirroring their contributions from the second quarter.

Amidst these fluctuations, local investors have risen to dominate the investment landscape in Bangladesh. They accounted for an impressive 84% of total investments in Q3 2023, marking their presence in all six deals during this quarter. This significant involvement from local investors underscores a strategic shift, with local entities becoming key stakeholders in Bangladesh's startup journey.

Early-stage funding, which makes up a significant portion of the startup ecosystem, remained stable and showed no sign of waning. It constituted 62% of the total investments in the third quarter, maintaining its previous quarter's momentum.

Drawing a broader regional comparison, China sustained its stronghold in Asia with a modest 23% spike in funding during Q3. Notably, Singaporean startups experienced a remarkable threefold surge in investments, amounting to an impressive USD 3.4 billion. This Asian uptrend sharply contrasts with the diminishing enthusiasm in India and Pakistan. Indian startups experienced their lowest quarterly funding, amassing only USD 1.5 billion. Concurrently, Pakistan underwent a significant 88% dip in funding compared to the same period last year.

Within this Asian spectrum, Bangladesh, unfortunately, trailed behind, attracting the smallest funding chunk among the mentioned nations.