Today: Apr 23, 2024

Startups shrink due to funding squeeze and rising inflation pressures.

4 months ago

Startups in Bangladesh are downsizing and implementing cost-cutting measures due to funding shortages and high inflation. The number of employees has decreased by nearly one-third since mid-2022, with the headcount dropping from around 50,000 to approximately 35,000. Funding for Bangladeshi startups dropped to $72 million in 2023 from $125 million in the previous year. High inflation, which has been at around 10% since March 2023, has made it difficult for businesses to retain volumes. The decrease in funding has forced many startups to reduce expansion plans and downsize in order to survive. Startups in the tech industry have faced challenges in securing funding as global venture capital became conservative in 2022, resulting in a reversal of employment growth. Many startups have reduced their team sizes and put expansion plans on hold. However, a handful of startups, including Sheba Platforms, Pathao, and SteadFast, have managed to create jobs and expand despite the funding crunch. The government has recognized the need for increased funding, particularly for growth-stage startups that have the potential to scale up and create jobs. The government aims to build 50 home-grown unicorn startups in the next two decades and create one crore jobs. Bangladesh is hoping to attract $5 billion in foreign investments in startups every year. In neighboring India, investment in startups dropped by 60% year-on-year in 2023, reaching a seven-year low of over $10 billion. To attract more investment and remove barriers for investors, Bangladesh needs more startup success stories and improvements in its startup ecosystem.