Building a knowledge driven economy is vital for Bangladesh’s future, and new ventures need a supporting ecosystem to thrive.
Speakers said this at a seminar on “Connecting Innovative SMEs and Startups with Private Equity & Venture Capital Firms for Bridging Financing Gap” at Dhaka Chamber of Commerce and Industry (DCCI) in the city.
They said that funding, in the form of patent equity from venture capital firms, is critical for success. Financing of innovation is not within the expertise of banks, the traditional sources of financing.
Addressing the seminar, DCCI president Ashraf Ahmed said that banks depend on valuation of physical assets to secure their lending, which should not be the focus of businesses.
He said that as entrepreneurs, both as investors in growth and raising funding for innovation, “we should focus on overcoming our challenges ourselves, within existing regulatory constraints.”
“Private Equity (PE) and Venture Capital (VE) need to be popularized in Bangladesh to the small enterprises. While the demand and innovation are happening somehow, we don’t see enough of the match-making between the PE & VC Funds and entrepreneurs”, he added.
Professor Mohammad Abdul Momen, former director of the Institute of Business Administration (IBA), University of Dhaka said that the sector needs a conducive policy regime to grow.
He said, “Many innovative startups are coming out which is a good sign and we need to nurture them to sustain from the very beginning for the sake of the country's overall economy.”
He also called upon the young innovators of Bangladesh to patent their innovations for the future.
Mohammad Ashraf Hossain, Head of Compliance and Company Secretary, Maslin Capital Limited, Shawkat Hossain, CEO, Bangladesh Venture Capital Limited, Jasim Mohammad Miah, Investment Manager, X Angel Limited and M M Ehsan Nizamee, CEO, Finager Fintech also spoke on the occasion from the venture capital and equity funding firms’ perspective.
Speakers said that for access to finance there are shortages of caterers and hurdles in the proper process of valuation of assets. Moreover, secured investment and return of revenue are critical in this sector.
They also said that venture capital and private equity investors can be the best option of alternative financing other than banks for the potential SMEs and startups. Tech companies are facing difficulties in the valuation audit process due to having their assets in intellectual form.
So, packaging a valuation is critical for a tech company to get the finance from global financiers. Finding Limited Partners (LP) and raising funds are still a challenge for the venture capital firms, they added. “We need to make our startups attractive globally to get outside funding,” said one speaker.