“If the government supports the startups to survive the next six months, they would grow ten times later,” said the VCPEAB President
Startup and IT-enabled ventures have a significant role to play in coming days and they need supports to survive the ongoing crisis and other challenges before that.
Venture Capital and Private Equity Association of Bangladesh (VCPEAB) on Sunday urged incentives, policy support, and better financing for the local start-ups in the budget for fiscal 2020-21.
The association, working to improve the local venture capital and private equity ecosystem, held a virtual roundtable session named "Budget Discussion on GDP Contribution by start-ups" in partnership with Capital Market Journalist Forum (CMJF).
VCPEAB President Shameem Ahsan, in his keynote speech, said in the period 2014-18 under One Bangladesh plan, start-up and IT-enabled services industry has achieved each of the goals including 1 percent GDP contribution.
"In last decade, Bkash has grown 50 times in value and emerged as an unicorn—a start-up to touch $1 billion valuation mark, while local startup Pathao in last five years grew 100 times and became a $100 million company," he said.
Vision 2025 includes having five unicorns in Bangladesh, which is one right now, increasing the value of the entire start-up ecosystem to $10 billion from current $1.45 billion.
Startups currently employ 1.5 lakh people directly and the vision is to make it seven times higher up to 10 lakh jobs. Now the sector is behind 7 lakh direct and indirect employment, which would be 50 lakh in 2025 and including family members, Bangladeshi startups are believed to cater 2 crore people.
The vision 2025 also includes target contribution of 2 percent to the GDP.
But the ongoing pandemic threw a survival challenge to most of the startups too, where more than 80 percent would run out of cash within six months while revenue dropped to half for top 15 startups combinedly and the situation is worse for some of them excluding those who are operating in e-commerce.
"If the government supports the startups to survive the next six months, they would grow ten times later," said the VCPEAB President.
Earlier in a statement, his association estimated that the country's startups are facing a Tk450 crore of financial loss due to the pandemic.
Citing that a large number of startup firms have preparation or qualification to avail government-declared stimulus loans worth Tk20,000 crore, the association of alternative investment fund managers demanded easing rules for startups as they are young businesses aspiring to thrive based on innovative ideas mainly.
Fiscal incentives, both for the startups and their investor funds, along with those who operate the funds is a must to unleash the potentials of the firms who might have a greater ground to take off from in the post-pandemic business environment, said the discussants, citing that startups in our peer countries have gained momentum mainly because of the supports.
A large number of startup entrepreneurs, experts and investors discussed in the online roundtable, where Planning Minister M A Mannan was the chief guest.
ICT division State Minister Zunaid Ahmed Palak; Bangladesh Securities and Exchange Commission Chairman Professor Shibli Rubayat-Ul-Islam and Sheikh Fazle Fahim, president of the apex business body FBCCI, spoke as special guests.
Each of the government representatives has pledged to add supports from their respective offices for a stronger startup ecosystem in Bangladesh.
ICT State Minister has mentioned government's vision and already taken initiatives like accelerator and funding program under Startup Bangladesh and said, "We will continue to give both policy and financial support to these startups to grow."
BSEC Chairman explained the current facilities for alternative investment and listing of the young firms in the local bourses' SME platform. He also sought proposals from experts to further develop the ecosystem that would help achieve industry goals.
Shawkat Hossain, the secretary-general of VPEAB, demanded a state-funded special fund that would invest in expert-run local alternative investment funds as India did.
His association also urged for policy pushes to inspire pension and insurance funds and high net worth individuals to invest in the alternative investment funds alongside offering both investors and investees a tax waiver.
Bill Gates, Jack Ma invested in Bangladeshi startup because of potentials while local riches are staying away, they said.
President of BASIS Syed Almas Kabir; Investment Advisor of Startup Bangladesh of ICT Division Tina F Jabeen; Chairman of FNS Media Limited Ferdous Ahmed; Founder and Managing Director of Maslin Capital Ltd Wali-Ul-Maroof Matin; Advisor of BUILD Arastoo Khan; Business Editor of Prothom Alo and Executive Member of Capital Market Journalist's Forum (CMJF) Sujoy Mohajan; CEO of Pathao Hussain M Elius; Co-Founder of Startup Dhaka Samad Miraly; Executive Editor of The Business Standard Sharier Khan; CMJF President Hasan Imam Rubel and Secretary Munir Hossain were present among others.