Mustafizur R Khan, founder of Startup Dhaka, speaks on his serial entrepreneurship
It was a chilly December morning in 2013 when Mustafizur R Khan and his team started videotaping a documentary about the start-up scene in Dhaka.
In two months, the 52-minute video - named after the company Startup Dhaka - was streaming on YouTube.
The budget for the documentary was a modest $9500, which was crowdfunded. Who pays this much for a documentary about Bangladeshi start-ups?
In fact, the country was just shy of a few months to see the likes of Pathao or Chaldal. "Start-up" was not something most people could associate with back then.
"The entire budget was crowdfunded on Indiegogo, donated by people I have never met," Mustafiz said in an interview with The Business Standard.
He had the money. But resorting to crowdfunding was not just a hipster move. "It was more of an experiment to see how people react about our idea," said Mustafiz.
Mustafiz, a third generation entrepreneur, has closely observed the local start-up ecosystem.
He founded Startup Dhaka - a company which he dubs as an educator of the start-up rulebook - with Fayaz Taher and Samad Miraly. The business started 5 months after the documentary was officially released.
"I met my co-founders while making the documentary, I did not know them before," Mustafiz smiled, as he recalled how the video had been a good mojo for him.
It would not be an overstatement to call this documentary an "unofficial motion picture adaptation" of Bangladeshi start-ups. For Mustafiz, the video is an emotional throwback.
"The power of stories can be amazing. Many expat Bangladeshis told me the documentary inspired them to come back. To start a business in their own backyard," he said.
Why did you create Startup Dhaka? What problem did you try to solve? We asked Mustafiz in the very fashion he asks entrepreneurs during pitch deck Q & As.
"You cannot have a thriving ecosystem if people do not take this business seriously," said Mustafiz. Educating the stakeholders was the first thing Startup Dhaka did.
"Networking events, a news portal about start-ups, activation and outreach –these were the things we did," Mustafiz said. "The awareness about the world of tech business had already reached a melting point. In this case, our job is done."
Hands-on impact with the start-ups: Startup Dhaka ticked its next goal by launching the country's first accelerator programme "GP Accelerator."
If start-ups were like students, GP Accelerator was the first school to prepare them for "the demo day" called graduation.
"Startup Dhaka mentored a host of start-ups and tried to make them investment-ready," Mustafiz said.
But evidently, structured incubation did not necessarily enable those start-ups to thrive in the cut throat world of traction and profit margin.
"It is simple math. If tech start-ups do not get institutional funding at their growth stage, then it is difficult to reach a sustainable path for their business" Mustafiz said. "As individuals, we joined as partners at IDLC VC Fund One, one of the prominent financial institutions in the market for venture funding. Together, we aim to provide strategic funding to the promising start-ups in Bangladesh." He went to say that, as fund managers, we have spoken to over 50+ startups in last one year and we are in final stages in deploying capital in first start-up in next few months.
Mustafiz said the IDLC Venture Capital Fund One not only can provide funding to the start-ups but also gives access to IDLC's 650+ corporate customers and benefit from their experience of taking 10 local companies to IPO.
Mustafiz compared the local start-up "gold rush" of Bangladesh to the dot com boom in the 1990s in Silicon Valley.
The first wave of start-ups came with the e-commerce businesses at that time. The Bangladeshi startup wave is kind of similar, he believes.
"Our first wave is mostly e-commerce driven which falls into 'concept arbitrage,' meaning taking a successful business model from other markets and applying to ours," he said.
For the last couple of years, the digital innovations that worked in the West were tried and tested in the Bangladeshi market.
It worked in many cases. Mustafiz thinks there are further territories to cover as Bangladesh becomes more digitally inclusive.
He said, "Fin-tech is a huge space to cover. bKash is not exactly a start-up, but it has spearheaded the digital finance game pretty well. The pandemic has also pushed us to embrace digital healthcare. It is a very promising field."
However, Mustafiz said agriculture has not yet seen visible innovation in digitalisation. "IoT is still a far cry in agro business. Supply chain is also disorganised. We need an imminent disruption in this sector."
The lion's share of Bangladeshis are yet to adopt tech business amenities. Working as a professional in this sector is not easy.
Unlike traditional businesses, this world is very unpredictable, risky even. "Light and day," that is how Mustafiz sees the difference between traditional and start-up businesses as professions.
"Young people face resistance from their parents while working for a start-up. But there is a brighter side to this story," Mustafiz said. "In a small organisation, young professionals get process driven learning. The pay may not always be lucrative in start-ups, but a freewheeling culture is always there."
"You have sat through myriad of pitch presentations. Could you share some dos and don'ts of convincing an investor?" we asked Mustafiz.
"Indeed, a very relevant question," Mustafiz's interest to talk about it could have been written in all caps to translate its gravity.
"There is a huge knowledge gap between the entrepreneurs and the investors. Not all investors are looking to invest in your business, even if it has the potential to scale," Mustafiz said about how investors have their own agenda. It does not always cross paths with a "great idea."
"Entrepreneurs should connect to an investor via a reference person. First things first, do not approach with a random proposal. Have a concrete plan. And nobody wants to invest in just a theoretical idea. Have some traction please," he added.
Mustafiz lightly joked about the countless "Bhai, I have an idea," DMs on LinkedIn.
Local investment margin in start-ups is considerably low.
Hence, Mustafiz suggests it is important to walk the talk and build trust while approaching an investor. "If you are not ready, do not ask for funding," he said.
"Start-ups are like the Olympics. You cannot run it if you are not prepared," Mustafiz said about the urgency of grit and preparedness required to raise money. "And please, have a proper pitch deck!"
As the interview was concluding, we asked about the reality show that made StartupDhaka up the ante in the angel investment scene - with a dose of reality check for startups and entertainment for audience.
"Tiger Cage," a reality show about start-up investment, had created quite a buzz when it premiered online.
Mustafiz and his partners intend to run a third season of the show when the pandemic takes a safer turn.
"We are huge fans of 'Shark Tank," Mustafiz said about the internationally acclaimed reality show that inspired them to launch their own. "Tiger Cage had incredible reach, both among local and expat investors. An investor offered a cheque to a start-up after he watched the pilot episode. In fact, Samad and I ended up investing in one of the startups that we showcased in Tiger Cage. That is something, right?"