Quality education for students has always been the utmost priority in society.
To bridge the gap, two friends Sohel Ahammed and S M Tanveer came up with the idea of offering pre-recorded lectures at all the outlets of their coaching centre.
This initiative would allow every student to have access to the same learning experience.
To give life to their idea, Sohel and Tanveer bought the necessary equipment and started producing videos for different courses.
But their initial investment was not enough to support the entire operations.
"In order to record lectures of all the courses, we needed more funds," recalled Sohel.
This led them to approach entities offering venture capital.
"Back in 2015, there were not as many investors as there are now," remembered Sohel.
They first approached Bangladesh Venture Capital Ltd but the meeting went southwards.
"We faced many questions of which we did not have answers to. Our first approach turned out to be very demotivating," expressed Sohel during an interview with The Business Standard.
Their venture – "Esho Shikhi", was still at its initial stage and they were only presenting lectures on whiteboards.
Sohel mentioned that their videos were not even close to the ones being made now.
Even then, Sohel and Tanveer did not lose hope and approached a venture capital (VC) firm - BD Venture Ltd.
"Believe it or not, I myself would not have invested in our start-up if I was an investor," remarked Sohel while recalling their meeting with the VC firm.
Despite the company being at an infant stage, BD Venture Ltd realised Esho Shikhi's potential and decided to invest in it.
Ever since, this VC firm has been supporting and guiding the edu-tech start-up throughout their journey.
By the end of 2019, Esho Shikhi received a second-round investment from BD Venture Ltd.
This time, Bangladesh Angels Network (BAN) co-invested in it.
Reminiscing about the twists and turns, Sohel said, "If such investors would not have come to Bangladesh's market, we would not have been able to establish Esho Shikhi today."
Like Esho Shikhi, there are many start-ups in Bangladesh striving to create a space in the market.
Behind every start-up, there is someone with an idea, and there are some entities who believe in such ideas and invest in them.
However, investing money in a start-up is not an easy thing to do.
And that too when the minds behind the ideas do not have any collateral to offer in turn for the investment.
So, how do start-ups end up getting funds from investors?
According to Nirjhor Rahman, CEO of BAN, the start-up and funding ecosystem of Bangladesh has not yet reached the level where founders can raise investments for start-ups that are at the concept stage, outside of close friends and family.
In an interview with The Business Standard, Nirjhor said, "We prefer looking into companies that have spent a year or two in operations because, within that time-frame, founders can put together a team and a product or service that has been circulating in the market and has a firm customer base."
Besides this, there are three main criteria that BAN considers while deciding to invest in a start-up:
The quality of product or service
If the investors or individuals present in the meeting do not find a particular product or service useful, securing investment can turn out to be very difficult.
"It is very hard to fake a bad product. When customers look at a product, they have a natural intuition on whether it is useful for them or not," mentioned Nirjhor.
This is why, it is imperative for the founding team to ensure that their product or service is worth buying for customers and worth funding for investors as well.
The second and most important factor is the team behind the venture.
Many start-ups start operating with a team which has members working part-time during the initial stage.
Partners at BAN believe that as start-ups are difficult to operate part-time, ventures need the full-time attention of the founding team.
In this regard, Nirjhor mentioned, "We like to come in when the founders have settled their affairs and are committed to their idea full-time."
Almost every start-up has a unique product or service to offer to the market.
And no matter how distinctive your product is, your venture must have a particular customer-base that can drive investors to believe in your product.
According to Nirjhor, traction can be defined in many ways; even if the revenue model is not at its most optimal, the growth can also be evaluated based on momentum.
He said, "Although it is not easy, we like start-ups that are able to sign up customers who are continuing to use the product or service and are referring others to do so."
Bangladesh's current start-up scenario
According to a survey carried out by LightCastle Partners in April this year, there are more than 1,000 start-ups operating in Bangladesh.
The top five sectors preferred by investors are ride-sharing and logistics (85 percent), fin-tech (83 percent), health tech (67 percent), edu-tech (67 percent), and e-commerce (50 percent).
Due to an increase in consumer demand, ride-sharing and logistics platforms have been able to grab the limelight within the start-up ecosystem.
Even during the Covid-19 pandemic, a VC firm - Anchorless Bangladesh decided to provide an initial seed fund of $600,000 to Loop Freight – a goods hauling service provider.
The Founding Partner and CEO of Anchorless Bangladesh, Rahat Ahmed, believes that Bangladesh's market has a huge potential as the country is the eighth-most populated country in the world.
"We look for start-ups that can utilise the opportunities being offered by such a dense consumer base. Loop Freight entered the market with the motive of re-shaping the goods transport industry of Bangladesh and that was exactly what we were looking for," said Rahat in an interview with The Business Standard.
He believes that the start-up culture in Bangladesh has the potential to reach great heights.
The money coming in from foreign companies and investors will aid in strengthening Bangladesh's economy.
Till now, start-ups in Bangladesh have been able to raise $200 million in the form of international venture capital.
However, the Covid-19 pandemic has led start-ups to face a decline in revenue of approximately $54 million for the year 2020 as per a survey conducted by the Venture Capital and Private Equity Association of Bangladesh (VCPEAB).
Around 24 percent of start-ups had to shut down completely, 32 percent of start-ups witnessed a 50 percent decrease in business, and 60 percent of start-ups are now left with a runway less than three months.
On the other hand, seven percent of start-ups incurred a 20 percent increase in business and five percent of start-ups witnessed a 50 percent increase in business.
Among the list of unaffected start-ups were the ones operating in the fin-tech, grocery, and logistics sectors.
Amid the pandemic, the demand for food and grocery delivery services, telemedicine, and cashless payment spiked which led many start-ups to expand their operations.
The global crisis has adversely impacted many entities across the world.
In Bangladesh's context, according to industry experts, with the help of the government, the start-up ecosystem is expected to contribute to the GDP by 2025.
Not only can it aid in the growth of our economy, it can also create millions of job opportunities in our highly competitive market.