This article was originally published on The Daily Star.
Here is the link of Part 1- https://sdasia.co/2017/02/26/43362/
Mustafizur R Khan, CEO of SD ASIA
Fayaz Taher, CFO of SD ASIA
Every ecosystem will have challenges and it is important to be aware of them that could hamper growth.
The Trust with the consumers are the most important factor for growth in the ecosystem. If consumers do not feel comfortable conducting commerce online, it will slow the growth. This is why it is important to establish Consumer protection program and policies that cover refund, fraudulent activity and consumer data. There needs to be reporting mechanisms and actions taken so that consumer feels protected. There will be huge amounts of data being generated and there is needs to stricter data protection laws in place where penalties in place so that one cannot easily give consumer data to anyone.
We need to create companies in 1 day and also make it easy to close down companies. Startups now face tough task of incorporation, getting trade license, VAT registration, bank account due to the number of steps. It is also very tough for a startup to rent a commercial property in order to get Trade license and other necessary paperwork’s to open the company.
We do believe that everyone needs to operate with the same rules. In the startup world, it is best to let the customers choose the winner. This will enable to strive and carry the industry to drive better results and improve standards of the businesses to keep up. Consumers will also adopt technology startups at a faster rate through experience better quality. Though the word of caution is for international companies who spend outside of the country due to mother brand having global spending contracts. A local company face restrictions especially when sending money abroad for advertisements where as foreign companies can spend from their foreign company accounts which is faster and easier to deploy.
We are proposing few suggestions that we earlier shared with stake holders as we believe it may help accelerate the growth of the eco-system.
Raising capital is not easy, from the seed round to different fund raising rounds until exit or IPO. The market hasn’t matured to attract mainstream international investors, as deal flow is still limited and growing. Although alternative vehicle policies are being created to attract mainstream investors, we need to grow our local angel investor scene with policy incentives by giving tax credits. We propose Tax incentives to encourage investors to risk their money in startups. Since access to startup funding is an issue, tax incentive to encourage people with considerable risk appetite can be a good alternative for the local market. This will help to fund more early/seed stages startups to increase deal flow for the entire ecosystem.
Matching Govt Grant For Fund Raised by Startups
Singapore government has launched initiative like Business Angels Scheme (BAS), which matches any investment up to SG$2 million (US$1.32 million) that a startup raises from a business angel investor through its investment arm SPRING SEEDS Capital Pte Ltd. Bangladesh government has similar grant for technology companies called Innovation Fund, which is really not promoted among the community. This fund could be easily be used to match with fund raised by local startups to provide financial backing that the startups require so desperately.
India, Singapore, Vietnam, Malaysia, Thailand, Indonesia and Philippines have a growing startup community. Privately a lot of local startups are connecting regionally, but from government level we need to connect as well. These markets have policy frameworks that we can use and best practices that we can implement. We need to bridge the stakeholders from the regional startup community for idea sharing to better support the eco-system. The government can also provide subsidies to participate in the regional tech events to the startups.
Bridge The Academia With Entrepreneurship
The Many entrepreneurs in Bangladesh have started by necessity or taken risk with a leap of faith to earn more. Though many have gone through a formal education system, there is a vast amount who haven’t been able to for various reason and access to quality education. Knowledge is the key to any economy moving towards an advance society. Therefore vocational training to provide basic knowledge to startup entrepreneurs is a necessity to build solid companies based on fundamentals.
Mindset of young founders needs to change when they are learning at schools and universities. Government education policy needs to align with their vision of digital ecosystem so that there is a pipeline for talents in the private sector. It’s a long term process but in the short term there has to be a way to make the education system more relevant for the ICT sector. One way the government can encourage students to get more relevant job experience in early stages is by subsidising paid internship programs in Tech companies. This way both students and tech companies benefit from developing talent that is more prepared for the future.
Contribution From Most Important Stakeholders
The Telcos, Payment providers, logistics, Service companies and Government (ICT Ministry) should support local startups in next 5 years to get decent valuation. The 5 parties are integral parts in the making the machine move in the right direction. The telcos need to make the data service cheaper, payment providers need to make online payment secured and seamless, logistics services need to be reliable and designed to support cash on delivery system, which is a dominant payment solution in South East Asia, service companies need to start solving real problems that is affecting the bottom of the pyramid, and ICT ministry needs to work with all the parties so that real change can happen.
Mustafiz is an entrepreneur, angel investor, startup community organiser and a marketer with over 17 years of experience of heading teams across diverse industries in Asia. He started his career as an entrepreneur managing an engineering SBU and later managed brand like HSBC in several countries. He co founded coolest co-working space in Dhaka, crowd funded and directed a documentary on tech startups in Dhaka which later pivoted to local a business news site called Startup Dhaka. He is passionate about technology and studies film in his spare time. He holds a double major in business and fine arts from COE College USA and an MBA from Nanyang Business School in Singapore
Fayaz is a serial entrepreneur, investor, mentor and a startup community advocate from Bangladesh and the current CEO of Fortuna, an innovative group of companies invested across various industries. Fayaz was one of the youngest Vice-Chairman of the Bangladesh Finished Leather, Leather Goods Manufactures and Exporters Association.
Fayaz is also passionate about community building. Fayaz started his first venture at the age of 13 starting in retail and later went on to found Fortuna Fried Chicken while he was in High School. Fayaz was also a Director of Union Capital Leasing Ltd, and also helps set strategy with Peoples Life Insurance Company and Popular Life Insurance Company ltd. Fayaz is also an integral member & co-founder of Infrablue technology which as was announced as one of the winners of the Facebook Fund for their technology skills back in 2008, the only company from Bangladesh. Fayaz completed his undergraduate degree at Babson College in Entrepreneurship in ‘03 and completed his masters in International Development and Social Change at Clark University in Massachusetts, USA in ‘09. He is also a research fellow at Bangladesh Enterprise Institute and a fellow at Jaago Foundation.