‘Bangladesh is currently where Indonesia and the Philippines were four years ago’
Silicon Valley-based venture capital firm Pegasus Tech Ventures plans to invest $40 million in Bangladeshi startups within a few years as the fast expanding economy holds huge growth potential for budding entrepreneurs, said its top executive.
“We are committed to investing in Bangladesh’s startup ecosystem,” Anis Uzzaman, general partner and chief executive officer of Pegasus, told The Daily Star in an interview recently.
Pegasus Tech Ventures started its journey in Bangladesh in 2015 as Fenox Venture Capital. Later, it was renamed. It invested about $10 million in the last three years in various local startups.
Located in California’s San Jose, Pegasus provides early stage and final round funding. With several multi-million dollar funds under management, it focuses its investment in IT, health IT, artificial intelligence, internet of things, robotics, big data, virtual reality, augmented reality, fintech and next generation technologies.
In Bangladesh, Pegasus has investments in online ticketing and ride-sharing platform Shohoz, online shopping platforms AjkerDeal and Bagdoom, online marketplace HandyMama, business process outsourcing company Digicon and online news platform priyo.com.
The firm is interested in investing in some other companies.
“If these companies do better, Pegasus will increase its investment in them.”
Pegasus has raised huge amounts of funds from investors across the globe and is exploring opportunities to invest, said the serial entrepreneur.
The company did not get the growth that it had anticipated in the market as there were some infrastructural challenges. “Our expectation was much higher than the speed at which the market is currently growing.”
But the CEO is not frustrated as challenges are being addressed.
“We are very positive about the Bangladesh market and plan to invest continuously. We are considering invest $30 million to $40 million in the next three to four years.”
According to Anis, Bangladeshi youths are very smart and are aiming to build global companies. A good number of them have registered their firms in Singapore and this will ultimately help them raise funds from the international market.
Initially, there were challenges on payment systems. But those are gradually being addressed, Anis says.
People’s perception about e-commerce channel is also changing. Still, the market is lagging behind other countries when it comes to customer education, he said.
A Bangladeshi expatriate living in the US, Anis holds a bachelors degree in engineering from the Tokyo Institute of Technology in Japan, a Masters degree in engineering from the Oklahoma State University in the US, and a PhD in computer engineering from the Tokyo Metropolitan University.
“Bangladesh has changed a lot and digital infrastructure is taking huge strides. Mobile communication has developed tremendously as internet speed and penetration grew. This is a very positive signal for the startup market.”
Anis is very optimistic that Bangladesh will grab a strong position in the digital commerce ranking.
Bangladesh’s strength lies in its strong economic growth. The economy has boomed over the years and it is reflected in various international indexes.
“This is very important to attract investors.”
In the past, Pegasus heavily invested in countries such as Indonesia and the Philippines, drawn in by their tremendous economic growth. It made lucrative profit in the markets.
“Bangladesh is currently at the point where Indonesia and the Philippines were four years ago. This is an encouragement for investors like us. All the economic numbers of Bangladesh look very good. It can help bring in more investments to this market.”
The venture capital firm estimates that Bangladesh’s economy can maintain the current pace of expansion in the next few years.
“Pegasus will get good returns from its investments as the technology companies it is investing in will certainly clock the same rate of growth in line with the national economy. This is how it works — everywhere.”
Thus far, it has invested $100 million in about 45 startups in Indonesia, the Philippines, Malaysia, Vietnam, Singapore and Thailand.
These countries started their journey in the startup market just a little before Bangladesh did and the governments of the Southeast Asian countries have prioritised innovation as their main driver for economic growth.
The countries have also launched joint initiatives on innovation, which is why investors who have invested in one country gradually move to the other counties as well.
So far, Bangladesh hasn’t been able to pull much investment, especially from venture capital, but Anis says the scenario can change.
During his visit to Bangladesh, he also received good response from the local business community, which showed interests to join hands with him in the venture capital industry.
Recently, Bangladesh has taken some initiatives and a lot of new startups are sprouting up. The startups are getting government funds and incubation support.
“This is a superb initiative. Other countries also did the same to be successful in digitalisation. It needs to continue in the coming years and this will help create a startup ecosystem in Bangladesh.”
“Once there are plenty of startups, investors will automatically flock to the market and change the investment numbers.”
Pegasus has so far invested in 170 companies across the globe.
In order to build the startup ecosystem, Pegasus is also organising the Startup World Cup, which will link startups with the venture capital firms in Silicon Valley. Anis is the chairman of the global event. This year, 60 countries are going to contest after the country-level competition for the prize of $1 million.
The Bangladesh round of this year’s competition wrapped up on February 8. Gaze Technologies was chosen the winner.
National champions will present their ideas before investors at a gala event on May 20 in Silicon Valley and get funds.
Anis recommended incorporating entrepreneurship in academic curriculum as it has been already included in other countries.
In the US, students start learning about entrepreneurship in school. As a result, they become creative and the number of innovators is much higher than in any other countries, he said.
“This is not only the responsibility of the ICT sector. The education ministry also has a huge responsibility.”
Anis also praised the government for formulating standard rules and regulations for the venture capital industry. But it needs to take steps to brand Bangladesh to global venture capital companies.
“The government can sell that to US venture capital firms such as Pegasus that are already in Bangladesh. The message will give confidence to other investors,” added Anis, who co-authored a book, Startup Kingdom, with Shameem Ahsan, an ICT entrepreneur and a former president of the Bangladesh Association of Software and Information Services.