In a landmark development for Bangladesh's financial and innovation ecosystem, 39 commercial banks have jointly established a new startup-focused investment company aimed at accelerating funding for emerging entrepreneurs across the country.
The initiative, named the Bangladesh Startup Investment Company (BSIC), is scheduled to formally begin operations on May 12. It marks one of the most coordinated efforts by the banking sector to directly participate in venture capital-style financing in Bangladesh.
The move comes at a time when access to early-stage financing remains one of the biggest challenges for startups, particularly those outside the traditional information technology sector.
Officials said the company has been formed with the support of the Association of Bankers Bangladesh (ABB) and under the facilitation of the Bangladesh Bank, the country's central bank.
Initial Fund of Tk 450 Crore, Expansion Plan to Tk 700 Crore: The BSIC will begin its journey with an initial capital base of Tk 450 crore, which is expected to be increased to Tk 700 crore by the end of the current year as participating banks continue their contributions. Each of the 39 participating banks will contribute 1 percent of their annual net profit to the fund, ensuring a steady capital inflow for startup investments.
Officials involved in the initiative said the structure is designed to ensure long-term sustainability rather than one-time financing, allowing continuous reinvestment in high-potential businesses.
A senior official involved in the project said, “This is not just a fund, it is a structured venture capital ecosystem supported by the banking sector. The goal is to identify scalable businesses and help them grow through equity-based investment.”
Venture Capital Model Instead of Traditional Lending: Unlike traditional banking loans, BSIC will operate as a venture capital institution, investing directly in startups through equity participation rather than providing debt financing.
According to project officials, the company will not issue loans. Instead, it will provide capital investment in exchange for ownership stakes in promising startups.
ABB Chairman and City Bank Managing Director Masrur Arefin, who has been appointed the first chairman of BSIC, said the institution will prioritise entrepreneurs who have already validated their business ideas.
“We will not limit ourselves to IT-based startups. Entrepreneurs from all sectors will be considered, but priority will be given to those who have already developed prototypes or have begun early-stage operations,” he said.
He added that BSIC would function as a professional venture capital institution, focusing on commercially viable and investment-ready businesses. “The company will provide capital, not loans. It will hold equity, participate in ownership, and play a role in governance. Essentially, BSIC will operate as a venture capital firm,” he said.
Focus on Early-Stage and Scalable Startups: Officials said BSIC will primarily invest in startups that demonstrate scalability, innovation and market potential. The focus will be on early-stage companies that have moved beyond the idea phase and entered prototype or pilot stages.
The model is expected to address a long-standing gap in Bangladesh's startup ecosystem, where many promising entrepreneurs struggle to secure early funding despite having viable concepts.
Bangladesh has seen rapid growth in digital entrepreneurship over the past decade, but access to structured venture capital remains limited compared to regional peers.
A senior banking official involved in the initiative said, “There is no shortage of ideas in Bangladesh, but there is a shortage of risk capital. This initiative is designed to bridge that gap.”
Regulatory Structure and Governance Model: BSIC has already completed its legal registration under the Registrar of Joint Stock Companies and Firms (RJSC).
However, one of the key concerns surrounding the initiative is the absence of direct regulatory oversight from the central bank in its operational structure.
Although the company was developed with support from Bangladesh Bank, it is not classified as a subsidiary of any financial institution, which limits direct regulatory control by the central bank.
Addressing concerns over governance and transparency, BSIC Chairman Masrur Arefin said discussions are underway to involve the central bank in some form of oversight mechanism.
“We are exploring ways to include Bangladesh Bank in the governance framework. Discussions are ongoing, and a regulatory oversight structure may be introduced in future,” he said.
Previous Startup Funding Efforts and Limited Impact: Bangladesh has made earlier attempts to develop a structured startup financing ecosystem. In 2021, the government established a Tk 500 crore refinance scheme through Bangladesh Bank to support technology-based startups at a subsidised interest rate of 4 percent.
In addition, commercial banks were instructed to create dedicated startup funds by allocating 1 percent of their net profits annually under central bank guidelines. So far, 52 banks have complied, and the combined fund size has exceeded Tk 500 crore.
However, despite these initiatives, actual disbursement has remained limited. According to central bank data, total startup investment from these funds has not crossed Tk 50 crore.
A senior Bangladesh Bank official said, “Although banks have created funds, actual investment activity has been very low. Only a small number of entrepreneurs have received financing so far.”
He added that a dedicated institutional mechanism like BSIC could help address this gap. “A specialised venture capital institution is necessary to ensure that funds actually reach entrepreneurs,” he said.
Structural Challenges in Startup Financing: Experts say Bangladesh's startup ecosystem faces structural challenges including risk aversion among banks, lack of experienced venture capital professionals, and weak exit mechanisms for investors.
Unlike traditional lending, venture capital requires long-term risk tolerance and active involvement in business development, which many commercial banks have historically avoided. Analysts believe BSIC could mark a shift in mindset by introducing a professional equity-based investment model within the banking sector.
However, they also warn that success will depend on governance standards, investment discipline and the ability to avoid politically influenced or non-commercial investments.
Banking Sector's Role in Economic Diversification: The launch of BSIC is being seen as part of a broader effort to diversify Bangladesh's financial sector involvement in high-growth industries beyond traditional lending.
Officials say the banking sector's participation in venture capital could help channel idle liquidity into productive innovation-driven sectors. At the same time, experts caution that without strong monitoring mechanisms, there is a risk of inefficient capital allocation.
Outlook: With operations set to begin on May 12, BSIC is expected to become a key player in Bangladesh's emerging startup ecosystem. If successful, the initiative could significantly improve access to early-stage financing and help scale innovative businesses across technology, agriculture, healthcare and manufacturing sectors. However, its long-term impact will depend on governance transparency, investment discipline and the ability to attract and nurture viable startups in a highly competitive global environment.
