A lack of adequate funding continues to hold back aspiring entrepreneurs in Bangladesh. This is not only demotivating for entrepreneurs but also economically self-defeating for a country that needs more innovation, investment and job creation. According to a report by research firm LightCastle Partners, startup funding plummeted by 95 per cent year-on-year to a meagre $6.0 million in the first half of 2026. The figure stood at $120 million during the same period in 2025. This steep decline highlights two worrying trends: while budding startups are being stymied by a chronic shortage of funding, ventures that manage to survive and reach the scaling stage are becoming overwhelmingly dependent on foreign capital. The extent of this dependence is particularly concerning. Since 2013, Bangladeshi startups have raised around $1.1 billion, of which $879 million, or 80 per cent, went to late-stage deals. But an overwhelming 98 per cent of this late-stage funding — about $857 million — came from foreign investors. In the first half of 2026, the dependence became even more pronounced as foreign investors supplied 100 per cent of the capital raised by Bangladeshi startups, leaving domestic investors with no participation at all.
This is particularly concerning at a time when global venture capital is becoming increasingly selective, favouring high-tech ventures while Bangladeshi entrepreneurs pursuing traditional business models are finding it harder to convince investors. Data show that artificial intelligence alone attracted 74 per cent of the $510 billion raised globally in the first half of 2026. A case in point is Revora, which has secured $2.0 million in seed funding to build an AI operating platform for online merchants. Capital is still available for startups in sectors such as financial services, healthcare and logistics, but investors are increasingly demanding proven and sustainable business models, clear paths to profitability and greater financial discipline. This makes the funding environment particularly challenging for startups in emerging markets, where many promising ventures are still at an early stage of development. When international investors concentrate their capital in a handful of sectors and markets, countries without strong domestic funding ecosystems are inevitably pushed to the margins. The situation underscores the need for Bangladesh to explore local investment opportunities and develop alternative financing mechanisms.
However, a recently formed public company for startup investment is expected to help bridge the financing gap faced by early-stage enterprises. The new company, Bangladesh Startup Investment Company PLC, was launched on May 12, 2026. Supported by 39 commercial banks under the guidance of Bangladesh Bank, it is the country’s first bank-backed venture capital platform. The company has already inaugurated its first fund titled ONKUR – Bangladesh Fund I, worth US$35 million. In addition, the FY2026-27 budget earmarks Tk 5.0 billion for the IT sector, including support for startups. These initiatives are steps in the right direction, but their success will depend on how effectively the funds reach promising ventures and whether financing is provided on commercially sound and transparent terms. At the same time, the authorities need to create a more favourable legal environment that encourages local investors, banks, corporations and other private institutions to participate more actively in startup financing. By creating an environment for local investment, the government can help startups reduce their excessive dependence on foreign capital and build a more resilient and sustainable funding base.
Equally important is improving the regulatory environment so that emerging ventures are not bogged down by complex bureaucratic procedures. Business registration and compliance requirements should be simplified, while regulations must be transparent and predictable. Overall, adequate funding and a supportive environment are imperative to boost investor confidence, encourage both local and foreign investment, and unleash the potential of innovation-led economic growth.
