In 2025, Bangladesh's startups raised USD 124 million across 12 deals — a figure that sounds like progress until you look inside it and find that a single transaction, the USD 110 million investment tied to the ShopUp-Sary merger that formed SILQ Group, accounted for nearly all of it. Strip that deal out and the year looks thin; 99% of all capital deployed came from global investors, while local participation, according to LightCastle Partners' annual startup investment report, fell in both value and deal count. Startup investment as a share of Bangladesh's GDP remains at 0.03%.

Bangladesh Startup Investment Company (BSIC) PLC was built to address precisely that gap. On May 12, the company formally launched ONKUR — Bangladesh Fund I, an inaugural fund of Tk 4.25 billion (~USD 35 million) pooled from 39 commercial banks and operating under Bangladesh Bank's mandate requiring scheduled banks to set aside 1% of their net profits for startup financing. The name — Onkur, Bangla for seedling — was unveiled at the ceremony, alongside the clearest signal yet that the country's financial establishment has decided to back its own founders. "Foreign funds have always been trusting us," BSIC Chairman Mashrur Arefin told the room, "while we were behind, supporting the new ventures by giving them equity. Today, that chapter — we are saying goodbye to that chapter."

A market built on foreign faith

Of the $1.1 billion deployed into Bangladesh's startup ecosystem over the past decade, only 3% was raised locally. The companies the country points to with pride — bKash, ShopUp, Pathao, Shikho — were built almost entirely on foreign conviction, from Sequoia Capital India to Wavemaker to IFC Ventures, a dependency that carries real costs beyond the obvious ones. When every institutional cheque in a Series A room is foreign, rounds take longer, terms reflect a risk premium applied from a distance, and founders spend months selling the market before they can sell the company. LightCastle's data makes the structural picture stark: while global startup funding rebounded 47% in 2025 to USD 469 billion, Bangladesh's headline growth was driven by a single outlier, with the top three transactions accounting for 95% of all capital deployed and the broader pipeline of companies ready to go from traction to scale remaining largely unfunded. "BSIC unlocks capital from commercial banks into Series A investments at scale," said Bijon Islam of LightCastle Partners, "while crowding in additional institutional capital. This will create momentum for the ecosystem to move forward."

How the fund works

What distinguishes BSIC structurally is how it is designed to compound over time rather than simply deploy. Rather than 39 banks each sitting on small, undeployed pools of mandated capital with no venture expertise, those contributions now flow into a single professionally governed vehicle where every year, 1% of net profits from all participating commercial banks flows back in — not as a top-up, but as the seed of the next fund. As Bangladesh's economy grows and the banking sector recovers, so does the contribution; a Tk 425 crore Fund I becomes a Tk 600 crore fund once foreign banks join, and that becomes the base from which Fund II is raised, then Fund III. "After this first fund is utilised by the young, entrepreneurial minds of the country," Arefin said, "we will be launching a second fund, third fund. In the VC world, it is always a journey."

Rahat Ahmed, Founder & Managing Partner at Anchorless Bangladesh, and Consultant to BSIC, laid out the operating model at the launch around four interdependent governance layers: a local investment team working the ground, a global investment committee of venture professionals making final decisions, an advisory committee of international experts bridging board and investment team, and a board of five bank MDs. The investment thesis centres on co-investment — BSIC matches foreign VC leads, turning a local institutional commitment into a larger round and pulling in co-investors who have historically been entirely foreign — while portfolio companies gain preferential access to a Tk 500 crore non-dilutive working capital facility from Bangladesh Bank, debt that allows founders to grow without surrendering additional equity. 

Ahmed projected that USD 35 million, deployed with discipline across fintech, healthtech, and agritech over a decade, could generate USD 500 million in additional raised capital through co-investment multipliers, 15,000 indirect jobs, and USD 2 billion in cumulative economic value. "This is a permanent vehicle for our founders," he said, "for Bangladesh to back its entrepreneurs for decades to come."

What the government is committing to

Bangladesh Bank Governor Md. Mostaqur Rahman traced the institutional history at the launch, acknowledging that the central bank's first attempt at a startup fund in 2021 — a Tk 500 crore facility — "was not very successful," and that a subsequent directive requiring all scheduled banks to ring-fence 1% of net profits for startups created the raw material but not the mechanism. BSIC is the result of years of consultation between BIDA, Bangladesh Venture Capital, and Startup Bangladesh, and his single substantive ask to the fund's board was unambiguous: "You will certainly select your projects independently. But our request is that those projects should somehow have an impact on the rural economy. Developing our rural economy is very urgent at this moment."

Amir Khosru Mahmud Chowdhury, Minister of Finance & Planning, called BSIC "a startup for startups" — capital designed to multiply rather than distribute — and framed the fund's core purpose around Bangladesh's demographic dividend: employing ten million people, expanding opportunity beyond traditional industries, and removing the two barriers that have historically blocked young entrepreneurs, access to funding and mortgage requirements. "Both of these are now removed here," he said, "and the sanctioning process will be transparent, efficient, and strictly professional." On political independence, he was direct: "There will be no political appointments in the banking sector or BSEC. Political appointments are short-sighted — they ultimately work against the government itself."

Bangladesh Bank Executive Director Husne Ara Shikha made the regulatory counterpart explicit, noting that venture capital "works differently from conventional bank lending" and that BSIC would need sufficient autonomy to make fast, commercially-driven investment decisions using equity, convertible notes, or SAFE structures rather than conventional banking products — a signal that the regulator intends to give the fund room to operate like a venture firm, not a bank subsidiary.

What founders and investors actually think

For founders navigating the gap BSIC is designed to close, the response was substantive rather than celebratory. Shahir Chowdhury, who left London in 2021 to build Shikho and has since raised from Wavemaker, Learn Capital, and Goodwater Capital — each writing their first Bangladesh cheque — was direct about what the fund actually solves: "The founder has to sell Bangladesh first. Every dollar we've raised required that work. BSIC is a signal that the people who have built capital in this country for many years are now trying to build the innovation economy. The first problem it will help us solve is the Series A gap."

The global VC perspective was sharper. Tammer Qaddumi of VentureSouq, a Dubai-based fund with early positions in both Pathao and ShopUp, brought the room's most pointed observation: the real test of BSIC will not be the volume of investments it makes but whether exits materialise, because "all the pomp and circumstance surrounds the investment phase" and "the real reward is when the company is sold and the founder walks out paying their investors." He also named a tension few others would speak openly about — the 39 banks backing BSIC are, in some cases, the same incumbents that the most disruptive portfolio companies will eventually threaten. "We are trying to find companies that will take market share away from these stakeholders," he said. "That tension is going to be very hard to manage." His advice to founders on ambition was equally direct: "Don't get myopic. The real champions will do well in this market as a launchpad — and then build outside."

Shiv Choudhury of Wavemaker Growth, which has backed Bangladeshi founders for five years, noted the qualitative shift BSIC represents beyond the capital figure itself: "What's changing is making it less about only exceptional founders and more about the ecosystem. When that happens, it gives us more confidence that there's systemic improvement." What Wavemaker still needs to see — and what Choudhury said would unlock significantly more growth-stage capital — is a genuine path to exits through capital market reform and liquidity options for scaling companies.

The hard part

BSIC's most urgent challenge is finding the right person to lead it. Syed Mahbubur Rahman of Mutual Trust Bank, a board director, described the requirement plainly: the fund's leader needs what he called "dual fluency" — able to manage 39 banking shareholders and Bangladesh Bank on one side, and founders, startups, and international co-investors on the other. "I'm not sure whether that individual exists in the market in Bangladesh," he said. "But we need to find them."

BSIC aims to make its first three investments before year-end, and those early deals will determine everything that follows: whether Fund II attracts more capital, whether international co-investors begin treating Bangladesh as a deliberate allocation rather than an opportunistic one, and whether a country that has watched its best companies get funded from abroad can finally back them from home. "There has to be a series of investors," Bijon Islam said, "not just where Wavemaker sits, but what comes after, and then of course the capital market." The architecture is in place. What gets built inside it is the only question left.