Bangladesh banks launch $35m fund to tackle startup financing gap

Thirty-nine Bangladeshi commercial banks have pooled capital to launch Bangladesh Startup Investment Company (BSIC), a US$35 million venture vehicle. The fund aims to address the lack of local institutional money to fund the late seed to series A rounds of the country’s startups. (Full disclosure: Tech in Asia attended the BSIC launch event in Dhaka at the company’s invitation.)

The Dhaka skyline / Photo credit: Mahtab Hossein / Shutterstock

The fund, formed under the guidance of Bangladesh Bank, aims to take advantage of the requirement for commercial banks in the country to allocate at least 1% of net profits annually to startup financing. This requirement has been in place since 2021, but in practice, it left capital fragmented across dozens of institutions with limited appetite or expertise to deploy it.

BSIC pools those obligations into a single, professionally managed vehicle. Its inaugural fund, Onkur, targets late-seed and Series A companies, with the first three investments expected in the fourth quarter of 2026.

Funding landscape

A report from local VC firm LightCastle Partners shows that Bangladesh’s startups raised US$124 million in funding in 2025. While this is higher than previous years, the vast majority of this figure came from one deal: the US$110 million merger between Bangladeshi B2B commerce platform ShopUp and Saudi Arabia-based Sary.

The report also showed that just 1% of the funding raised last year came from local investors.

The thin domestic capital base sits in contrast with the country’s fundamentals: 178 million people, a median age of 26, a growing middle class, and a trajectory toward becoming the world’s ninth-largest consumer market by 2030.

Seed capital is readily available through angels, accelerators, and a handful of local funds, but funding for late-seed, series A, and series B rounds is far harder to access. Founders have had to raise almost entirely abroad, typically requiring offshore incorporation and rounds structured around foreign LP preferences.

That dependency has grown more acute as international investors have become more hesitant to invest in emerging markets.

BSIC is structured to address the problem from two directions: deploying domestic institutional capital directly while enticing international investors who may be more willing to participate alongside a credible local investor.

The fund also targets a third pool that has largely sat on the sidelines: family wealth.

Rahat Ahmed, founder and managing partner of Anchorless Bangladesh and an advisor to BSIC, noted that because the banks backing the fund are institutions that wealthy families already trust, it gives local capital a credible process to invest alongside regularly.

Structure and governance

BSIC is chaired by Mashrur Arefin, managing director and CEO of City Bank and chairman of the Association of Bankers Bangladesh. Its board draws from local banks – which include City Bank, Prime Bank, Mutual Trust Bank, Sonali Bank, and Pubali Bank – alongside independent directors.

Ahmed said that the vehicle has a four-layer structure: a local investment team responsible for sourcing, an investment committee of professional VC practitioners, an advisory committee connecting global expertise to the board, and the board of directors representing the shareholder banks.

The challenges ahead