Since 2020, Bangladesh has consistently outranked its larger neighbor India on many key economic indicators such as GDP growth rate, per capita income, and female employment rates. Yet, Bangladeshi tech startups have been laggards in terms of fundraising compared to their neighbors. Bangladeshi startups received $150 million in venture investments in 2021 compared to the $38 billion put into Indian startups. The money raised was half that of Pakistan, which has a pretty nascent tech startup sector.

“Perception” has a lot to do with this trend.

Most global investors still perceive Bangladesh as a place for cheap labor and goods, not one for tech-enabled growth. “Our storytelling needs to be better,” Rahat Ahmed, the founder of Anchorless Bangladesh, the first Bangladesh-focused international fund, told me. “As a country, we don’t often understand the levers that need to be pulled to make investments happen — and that’s okay. We’re learning, and we will get there.”

Hussain Elius, the co-founder of Bangladeshi super app Pathao, said the first 30 minutes of all his fundraising meetings with Western investors were invariably spent explaining the basics: Where Bangladesh is located, the size of its economy and population, and why it’s an attractive investment destination. “If I have to explain that for 30 minutes, when do I talk about the company?” Elius, who stepped down as Pathao’s CEO in 2021, told me.

When he knocked on the doors of Middle Eastern investors who understood Bangladesh, the geographic positioning of the country posed a unique challenge, Elius said.

Geographically, Bangladesh is uniquely positioned between India and China. “When it comes to traditional investment mandates, that’s unfortunately a bit of a glitch: MENA looks at Pakistan as their next door neighbor, with India having its own robust investment environment. Southeast Asia usually stops at Myanmar since Bangladesh is considered South Asian. This has left the country out of many mandates,” Ahmed explained.

Bangladeshi startup fortunes have started to change in the past three years, as “India and Indonesia are getting relatively expensive, and Pakistan’s torrid 2021 has turned eyes to Bangladesh to see what’s going on,” Ahmed said.

Bangladesh also is awaiting a reverse brain drain —  a trend that has helped the Indian and Pakistani startup ecosystem immensely. Bangladeshi “alumni of global tech companies who have made [an] impact in the West” have yet to reconnect with the local tech, Elius said. This might change in the future with the increase in non-resident Bangladeshis helping local entrepreneurs with mentorship and investment from a distance. 

Ahmed is part of a new wave of diaspora Bangladeshis who recognize the lack of early stage funding; he founded Anchorless Bangladesh in 2019. “I strongly believe that Bangladesh should be included for anyone diversifying out their book for the next decade,” Ahmed said. It’s only a matter of time before the 170 million-strong country receives the attention it deserves.