Fundamentals of fundraising for startups: The Bangladesh perspective
Syed Rabius Shams
Money brings money and the simple math is that if you have money, you can use it to earn more money through investment. But the hurdle part is if you dont have capital but enthusiastic then how to jump over. Your intellect will kindle fund or your great endeavour will bring finance. Lets poke the query when alls said and done.
Apurba Biswas, a final-year student of BBA at BRAC Business School, is keen to be a startup founder. He doesnt yet find any idea, nor does he has the financial capability to set up a venture right now. Apurbas determination pushes him all day long for what to do, how to do and how to manage the investment. Whereas, his parents interest is that he should be a Bangladesh Civil Service Cadre instead of engage business. So, Apurba faces double dilemma i.e. lack of finance and familys concern. Since he has been attached to various entities in organising events and also attends in various initiatives to keep him updated and keep an eye for any opportunities. Jannatun Tagrin, a last- semester honours student at the Department of International Relations, Dhaka University, wishes to do something with her own creativity. She is at present an Ambassador of Youth Club of Bangladesh and a former Delegation Liaison Officer at IOM Bangladesh. Tagrin wants to do something parallel to her study. According to her, she is a bit stuck to move forward for money matter because whatever she wants to do funding is a barrier though she believes where is a will there is a way. Rezwan Akter Shahin is the Co-founder of a startup named Radia Inc. He with one of his friends is dedicated to establishing their event management venture. They have been working to promote the young people in the country organising various public relations for startups awareness events. They raise fund in various ways and still they are facing scarcity of finance for expanding their venture horizon. Asked why they need money for their business expansion, Shahin replied that since clients want smartness and lucrative presentation, they are in needed investment. They also need finance for business cards, company profile, clients lists, a dynamic website, social media site and a full-fledged working space, he added. Radia already co-organised some events name Tech Garage, Bangladesh Peace and Harmony Week 2017 etc. Shahin realises that if they could arrange for some investment, they could run their startup smoothly. These types of requirements are basically needed in almost all cases in their earlier stages of entrepreneurship.
So, we see that raising investment for a startup is one of the greatest hurdles to starting a business. Since money makes the business go, not only Apurba, Tagrin and Shahin but also every entrepreneur is worried about the initial stage of their startup.
EMK Center (Edward M. Kennedy Center for Public Service) is a partnership between the Liberation War Museum, Bangladesh and the American Center of U.S. Embassy Dhaka. The Centre sponsors a series of startup events that encourage students and fresh graduates to come up with new business innovation. It aspires to see many of them to come out as successful business entities and encourage other potential start-ups to come forward and establish themselves.
Pujee is a social venture which believes that with an evolving startup ecosystem future growth of Bangladeshi startups depends on access to finance and peripheral support services. It envisions a dynamic ecosystem with increasing participation of Venture Capital (VC) firms, angel investors and other equity-based funding sources that support entrepreneurs in raising funds.
Shetu is a platform where it brings the startup idea, passion and commitment to reality. The podium is guided through a rigorous validation process coupled with access to the right resources assisting transforming the startup idea into a great business. Toru is an Innovation Hub that facilitates the transformation of game-changing ideas into impactful solutions for greater social and economic inclusion.
An angel investor, also known as a business angel or informal investor or angel funder or private investor or seed investor, is an affluent individual who provides capital for a business startup, usually in exchange for convertible debt or ownership equity. Venture Capital: Venture capital (VC) is gradually gaining momentum in Bangladesh with huge potential to accumulate in the fund for entrepreneurship development. It is an alternative method of financing for enterprises that do not qualify for bank loans or financing by financial institutions (non-banking).
The crowdfunding mechanism which is the newest of its kind in Bangladesh to tap into this market aims to empower ideas and help the creative community, entrepreneurs and makers of all sorts to make their ideas happen through raising funds in a collective way. Projekt.co is a crowdfunding platform in the country that gives innovators, artists and Changemakers the opportunity to raise funds from their friends, family and awe-inspiring projekt.co community for a project they want to create. Crowdfunding Bangladesh, Crowdfunding Association of Bangladesh and Crowdfunding Soft are some of the Crowdfunding Facebook groups who work in fundraising for various issues for promoting startups.
There are several government initiatives for funding for small and medium enterprises in the country. Among those, Innovation Fund of Access to Information (a2i) Programme, Prime Ministers Office, ICT Division, Bangladesh Bank Equity and Entrepreneurship Fund (EEF) are to be highlighted. There is some other funding mechanism and these are for larger entities not suitable for startups. For instance, bartering, which is to exchange one commodity for another, can provide a source of financing. Some company does merger and acquisition, strategic alliances for overcoming financial scarcity.
So, one thing must be kept in mind that before going for fundraising, one has to have a pitch deck. Since investors will ask you various questions, the pitch will help you a lot in answering those queries. And financier or investor will see whether the business is at present in operation and be generating revenue though it may small scale. However, In relation to this, my first recommendation is that personal savings should be considered the primary source of funds for starting a business. If you havent started already, start now to begin accumulating investment through personal or friends and family (FF) savings and then think for a startup. Sometimes such a discussion arises with FFs who want to be your partners. Consider this first because it will increase the value of the business and will get a trusted support.
The writer is a freelancer [email protected]
