A focus group discussion on “Connecting Innovative SMEs and Startups with Private Equity and Venture Capital Firms for Bridging Financing Gap” has been held on the DCCI premises in the capital.

At the event, Ashraf Ahmed, president of Dhaka Chamber of Commerce and Industry (DCCI), said, “building a knowledge-driven economy is vital for Bangladesh’s future, and new ventures need a supporting ecosystem to thrive. Funding, in the form of patient equity from venture capital firms, is critical for success. Financing of innovation is not within the expertise of banks, the traditional sources of financing.”

“Banks depend on valuation of physical assets to secure their lending, which should not be the focus of businesses creating intellectual property. 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 popularised in Bangladesh among the small enterprises," he added.

Professor Mohammad Abdul Momen, former director of Institute of Business Administration (IBA) at 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 these to sustain them 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 future.

Mohammad Ashraf Hossain, head of Compliance and Company Secretary at Maslin Capital Limited; Shawkat Hossain, CEO of Bangladesh Venture Capital Limited; Jasim Mohammad Miah, investment manager at X Angel Limited; and MM Ehsan Nizamee, CEO of Finager Fintech; also spoke on the occasion.

Speakers said that for gaining access to enough supply of funds, there are shortages of caterers and hurdles in proper process of valuation of assets. Moreover, secured investment and return of revenue are critical in this sector.

They also said that venture capitals 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 a critical for a tech company to get the finance from global financers. 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. There is a lack of qualified talents in this market told an entrepreneur.

They also stressed for focusing on policy reforms, setting up a logical exit plan for startups, fund raising especially from outside, valuation method etc.

A total of 8 representatives from private equity (PE) and venture capital (VC) firms participated in the event. Additionally, 14 startup companies and 26 SME companies took part in the event as well.

Members of the board of directors among others were present during the meeting.