Bangladesh's 39 commercial banks pool $35M into joint venture fund for late-seed and Series A startups

Thirty-nine Bangladeshi commercial banks have pooled around $35 million to launch the country's first joint institutional venture capital fund, addressing a chronic shortage of late-seed and Series A capital that has forced local founders to raise almost entirely from abroad.

The fund, called Onkur and intended as the first of a planned series, is managed by Bangladesh Startup Investment Company Limited (BSIC), a new vehicle formed under the guidance of Bangladesh Bank and chaired by Mashrur Arefin, who is also chief executive of City Bank and chairman of the Association of Bankers Bangladesh.

BSIC plans to make its first three investments in the fourth quarter of 2026. Initial capital totals 425 crore BDT, with Arefin telling the launch audience the fund expects to grow to around 600 crore BDT (roughly $50 million) once the local subsidiaries of foreign banks complete their participation, which has been delayed by legal complications around equity holdings at their head offices.

The vehicle consolidates a 2021 regulatory requirement that commercial banks allocate at least 1% of net profits annually to startup financing, an obligation that had previously sat fragmented across dozens of institutions with limited appetite or in-house expertise to deploy it. Annual top-ups from participating banks' profits will compound the capital base over time.

(Disclosure: FWDstart attended the BSIC launch in Dhaka at the company's invitation.)

BSIC's governance is structured in four layers. A local investment team handles sourcing on the ground, an investment committee made up of venture capital practitioners assesses deals, an advisory committee links global expertise to the board, and the board of directors itself represents the shareholder banks.

Initial board members come from City Bank, Prime Bank, Mutual Trust Bank, Sonali Bank, and Pubali Bank, alongside independent directors. BSIC has added Dinar Ahmed, a partner at Canada's BDC Capital (which runs a venture programme backed by Canadian banks and provides the closest international precedent for the BSIC model), to the investment committee. Sami Ahmad, a general partner at Eduardo Saverin's $11 billion B Capital, has joined the advisory board.

Rahat Ahmed, founder and managing partner of Anchorless Bangladesh and an advisor to BSIC, used his launch presentation to position the fund within a longer capital ladder rather than as a standalone vehicle.

At the bottom of the chain sits the government-run iDEA project under the ICT ministry, which seeds ideation-stage entrepreneurs. Above it are the international accelerators that have begun operating in the country, including 500 Global, Orbit Startups, and Plug and Play. The seed tier then runs through Startup Bangladesh, a $33 million fund-of-funds operated under the ICT division and backed by Japan's JICA. BSIC slots in above that layer, targeting companies that have outgrown accelerator cheques but lack a credible domestic source of growth capital, leaving founders to fly to Dubai, Singapore, or Silicon Valley for $2 to $5 million rounds. Ahmed framed BSIC's role as providing the missing middle tier in that chain.

The size of the gap is well-documented, despite Bangladesh's demographic fundamentals making it the kind of market international venture investors would otherwise be expected to focus on. The country has 178 million people, a median age of 26, and a trajectory toward becoming the world's ninth-largest consumer market by 2030. Bangladeshi startups raised $124 million in 2025, according to a report from Dhaka-based VC firm LightCastle Partners, but the vast majority of that figure came from a single transaction, the $110 million merger between B2B commerce platform ShopUp and Saudi Arabia-based Sary. Just 1% of last year's total came from local investors.

Arefin used his own remarks to lay out the longer historical picture, namely that roughly $1.1 billion of venture capital has ever been deployed into Bangladeshi startups, of which around $950 million came from foreign sources including Peak XV (formerly Sequoia Capital India), Wavemaker Partners, VentureSouq, Conjunction Capital, Openspace Ventures, Golden Gate Ventures, IFC Venture Capital, Grab, and Sturgeon Capital. Domestic capital has contributed somewhere in the region of only $150 million across the entire history of the ecosystem.

A third pool of capital BSIC is targeting, alongside its own bank-shareholder commitments and the foreign capital it hopes to attract, is the country's family wealth, which has largely sat on the sidelines of venture financing to date. Ahmed argued in his launch presentation that the banks backing the fund are institutions wealthy Bangladeshi families already trust, and that the structure therefore gives local capital a credible process through which to invest alongside professionally managed venture capital for the first time. The expectation is that a $5 million round into a BSIC portfolio company could be topped up by family-office capital co-investing through the same diligence framework, increasing local participation in rounds that would otherwise be entirely foreign-led.

BSIC is not the first attempt at domestic institutional venture in Bangladesh, however, and the country has a record of locally-backed venture vehicles that have failed to deliver returns or sustain follow-on rounds.

Bangladesh Bank Governor Md. Mostaqur Rahman acknowledged that history at the launch himself, conceding that the central bank's first dedicated startup financing facility, a Tk 500 crore vehicle set up in 2021, "was not very successful," and that the subsequent 1% directive on commercial bank profits had created the raw material for BSIC but not, on its own, the mechanism to deploy it.

Saiyed Mahbubur Rahman, chief executive of Mutual Trust Bank and a BSIC board member, broadened the point on the launch panel. "In Bangladesh there are a couple of venture capital funds that were here. The local ones also were established by some institutional investors and we have seen them not being successful," Rahman said.

His framing of the operational challenge was that BSIC will need to choose between doing this "quickly or well," and that the credibility of the fund will rest on the discipline of its first investments. Rahman flagged that BSIC's success would depend on hiring leadership with what he called "dual fluency," able to speak the language of 39 bank shareholders subject to assets-and-liabilities thinking and the language of venture-stage founders working on much longer horizons with materially higher tolerance for failure. "I'm not sure whether that individual exists in the market in Bangladesh," Rahman said. "But we need to find them."

A related structural question for any fund whose capital comes entirely from regulated banks is whether the investment vehicle will operate as venture capital or as a lending book in disguise. Bangladesh Bank executive director Husne Ara Shikha addressed the point at the launch, committing to allow BSIC the operational flexibility to use convertible notes, SAFEs, and equity instruments rather than forcing the fund into conventional banking products. The central bank has also designated a Tk 500 crore (around $42 million) non-dilutive working capital facility that BSIC portfolio companies will be able to access at concessional rates, giving founders a debt option for scaling without further dilution, and has put in place share swap mechanisms designed to make it easier for foreign-incorporated companies with Bangladeshi operations to redomicile. Foreign banks operating in Bangladesh have not yet joined BSIC directly, with the central bank indicating their participation will route through capacity-building work (skill development, incubator support, and ecosystem programmes) rather than direct equity until the legal complications are worked through.

BSIC has also been built to insulate decisions from the political pressures that have historically complicated state-adjacent capital in Bangladesh. Amir Khasru Mahmud Chowdhury, the country's finance minister, told the launch audience the fund would not be subject to political interference, and Arefin said the minister had personally instructed him to push back on any politically connected founders attempting to lean on the fund.

Tanveer Ali, managing director of Startup Bangladesh Limited (which runs the JICA-backed fund of funds at the seed tier of the capital ladder), used his panel remarks to recast the funding-gap problem in terms foreign investors actually face. Foreign investors looking at Bangladesh, he noted, are simultaneously looking at twenty to thirty other countries and hundreds, if not thousands, of companies, meaning Bangladeshi founders are competing not just against each other for capital but against the global investable universe. "We're sometimes comparing ourselves more insularly," Ali said, arguing that BSIC's most useful function may be the signal it sends to foreign LPs that a credible local co-investor exists, rather than the absolute size of the fund itself.

The structural piece no one at the launch claimed to have solved is exits. Shiv Choudhary, a partner at Singapore-based Wavemaker Partners, which has been an investor in Bangladesh for almost five years (Shikho, GoZayaan and Tiger New Energy), said on the panel that the missing layer is not seed or growth capital but liquidity. "If there is an ecosystem that works towards exits and possibilities in capital markets or private equity investments, that's when we get really excited," Choudhary said. He flagged capital market reform, particularly for small and medium enterprises, as the next structural piece the country needs to build. He also warned against BSIC accidentally undoing one of Bangladesh's existing advantages, namely the capital efficiency of its startups, by deploying too liberally. "You don't want it to become the other way," he said, referencing the over-funded ecosystems in some other emerging markets that have struggled to produce returns.

Tammer Qaddumi, co-founder and GP of Dubai-based VentureSouq, which led the $12 million pre-Series B round for logistics and ride-hailing firm Pathao and was on the Saudi side of the ShopUp-Sary merger, flagged two further structural risks. The first is selection discipline. "What you don't want this to be is an entitlement to anyone who wants to start a company," Qaddumi said. "The people approaching it should not treat them like a government agency obligated to give them money." The second is harder to design around. Venture returns require an exit, and the banks backing BSIC may eventually find themselves as shareholders in startups attempting to take market share from their core businesses. "We are actually trying to find companies that are going to take market share away from these stakeholders," Qaddumi said. "That tension is going to be something very, very hard to manage."

Qaddumi also reframed what BSIC is actually trying to produce over the longer term. Venture capital's structural payoff is not the investment phase but the exit phase, and the bigger long-term effect of producing successful companies in any market is the talent dispersion that follows. "Hewlett Packard is known to be the origin of almost all of Silicon Valley," Qaddumi said. "Intel had a similar effect. And more recently PayPal, they call it the PayPal mafia... we saw it in our region with Careem." Pathao and ShopUp, in his reading, are not just two successful companies but the seed conditions for the next generation of Bangladeshi founders. Qaddumi warned the audience against the internally-focused view of what those companies represent. Their value is partly that they have already pushed beyond Bangladesh, with Pathao operating in Nepal and ShopUp now controlling the merged Saudi entity, and the next champions, Qaddumi said, will be those that use the domestic market as a launch pad rather than as a destination.

The launch drew a heavy foreign VC contingent. General partners and investment leads from VentureSouq (UAE), Wavemaker Partners (Singapore), Orbit Startups (Singapore), 500 Global (Malaysia), GFR Fund (Singapore), Conjunction Capital (UAE), and ADB Ventures attended. Several of those funds are already active in Bangladesh.

BSIC's own projections for the fund's impact are aggressive. Ahmed forecast at the launch that the $35 million of initial capital will catalyse roughly $500 million in follow-on funding into BSIC-backed companies, create 15,000 indirect jobs, improve five million livelihoods, and generate $2 billion of cumulative economic value and $250 million in tax revenue over a ten-year horizon. The targeted multiplier on the original deployment is 40x. Hitting those numbers will depend on factors largely outside BSIC's control, including the willingness of foreign capital to keep showing up for Series A rounds in Bangladesh, the development of public market exit options Choudhary flagged, and the basic question of how many genuinely venture-scale companies the ecosystem can produce in any given cohort.

For founders on the ground, the signal from BSIC may matter as much as the capital itself. Shahir Chowdhury, founder of edtech startup Shikho, which is currently raising its Series A round and has previously raised from Wavemaker, Silicon Valley's Learn Capital, and Goodwater Capital (each writing their first cheque into Bangladesh), said the fund could "act as a catalyst to get a lot of foreign venture capitalists looking at Series A companies. If the 10 to 12 of us who are ready for Series A can get funded, it builds that momentum." Chowdhury framed BSIC less as a source of capital and more as the institutional credibility that Bangladeshi founders need when selling their market to foreign investors.

The harder test will ultimately be whether 39 commercial banks accustomed to assets-and-liabilities discipline can sit comfortably with the longer holding periods, structured equity instruments, and higher failure rates that venture capital actually demands. For now, Bangladesh's domestic institutional capital is being routed deliberately, for the first time, into the part of the funding ladder where its founders have most consistently fallen off.