Once celebrated as a promising hub for innovation, Bangladesh’s startup ecosystem now grapples with significant challenges, including dwindling funding and a lack of local investment. The sector’s reliance on foreign capital has become increasingly apparent, with local contributions to startup funding plummeting by 95% in 2024. This decline has persisted into 2025, highlighting the ecosystem’s vulnerability. Unlike neighboring countries like India and Vietnam, where local venture capitalists actively support early-stage startups, Bangladesh struggles with a lack of domestic investment.
The global shift of venture capital towards artificial intelligence and deep tech has further exacerbated the situation, leaving Bangladesh with limited opportunities to benefit from these emerging trends. Political instability and economic uncertainty have also deterred potential investors, while high internet costs and a small market size hinder startup scalability.
Despite government efforts to support the sector, bureaucratic hurdles and restrictive financial regulations continue to pose challenges. Without successful exits and a more engaged local investment community, the future of Bangladesh’s startup ecosystem remains uncertain. The initial excitement surrounding “Digital Bangladesh” has given way to a period of apprehension, with the path to becoming a leading South Asian innovation hub still fraught with obstacles.
