Startups struggle amid funding gaps, policy hurdles, lack of skilled talent: Experts

Despite a rise in tech-driven startups across Bangladesh, the country's startup ecosystem continues to suffer from critical challenges, including limited access to funding, regulatory ambiguity, skill shortages, and a lack of coordination between public and private institutions.

These issues were at the forefront of discussions at a national workshop titled "Youth Entrepreneurship: Investment, Policy and Ecosystem", jointly organised by the Bangladesh Investment Development Authority (Bida) and the United Nations Development Programme (UNDP) in Dhaka today (17 July).

Asif Mahmud Shojib Bhuyain, adviser to the Ministries of Youth and Sports and Local Government, addressing the event as chief guest, said, "We are still facing the same problem – unemployment – which triggered unrest last year. Although we are trying, we haven't yet achieved the scale required to bring real change," he said.

He noted that while the Department of Youth Development operates at the upazila level, its efforts are hampered by the absence of coordinated policy direction. 

He highlighted some progress, including the approval of the National Youth Entrepreneurship Development Policy 2025 and the expansion of youth loan ceilings from Tk 2 lakh to Tk5 lakh.

More than 100 participants – including youth entrepreneurs, investors, policymakers, and development partners – came together at the event to diagnose the structural bottlenecks within the startup landscape and offer concrete recommendations for inclusive, sustainable growth.

Funding, policy gaps

Participants identified several barriers impeding the startup environment. These included a lack of trust in financing processes, a reluctance among banks and regulators to invest, and the absence of investor incentives. Entrepreneurs also pointed to high early-stage tax burdens, a lack of skilled professionals, and no clear regulatory distinction between startups and SMEs.

"Founders manage everything in the early stages. But as the startup grows, they need skilled professionals across departments. Unfortunately, we have a serious shortage of talent," said Minhaz Anwar, chief storyteller at Better Stories Limited.

Ashiqul Alam, CEO of PriyoShop, said that despite Bangladesh Bank's startup funding guidelines, banks remain unclear about implementation. "Early-stage startups are forced to pay turnover taxes despite running at a loss. A temporary tax relief is essential," he said.

LightCastle Senior Business Consultant Ameera Fairooz added that tourism holds vast potential as a startup sector but suffers from poor branding and promotional strategy. "Strategic branding at the national and international level is crucial," she said.

Key recommendations

The workshop produced 17 key recommendations under three pillars: facilitation needs, policy incentives, and implementation mechanisms.

Suggestions included establishing a startup wing within Bida, launching a regulatory sandbox to foster innovation, and developing a secondary equity market. Participants also urged the government to define startups separately from SMEs, offer tax breaks for angel investors, and implement targeted policies for tourism and fintech ventures.

On the financing side, speakers called for operationalising a Fund of Funds, introducing credit guarantees, and enabling cross-border exit options.

Faiz Ahmad Taiyeb, special assistant to the chief adviser (ICT), shared updates on school-level entrepreneurship initiatives and digital training through Hi-Tech Parks. He said efforts are underway to raise $30 million in collaboration with Jica for the startup fund.

He added that Bangladesh Bank would allocate Tk100 crore this year for startup financing through selected institutions, and that the Bangladesh Innovation Grant (BIG) programme would resume once policy clarifications are in place.

Taiyeb also announced that Startup Bangladesh would transition to a funding intermediary model, meaning it will support startups indirectly through vetted investment partners rather than direct equity injections.

Bida's Executive Chairman, Ashiq Chowdhury, proposed forming a National Action Plan Committee comprising the Ministry of Youth, ICT Division, Bangladesh Bank, and Startup Bangladesh. This body will meet quarterly to monitor progress and submit reports, integrating feedback from the startup community.