ABB to launch Tk 450mn startup investment firm next week

Its initial fund of Tk 450 million is expected to rise to Tk 700 million by the end of the year

In what is billed as a big boost for Bangladesh’s startup ecosystem, 39 commercial banks have teamed up to launch a dedicated venture capital firm to provide equity financing to young entrepreneurs.

The new entity, named Bangladesh Startup Investment Company (BSIC), is set to be formally inaugurated next week by Finance Minister Amir Khosru Mahmud Chowdhury.

The Association of Bankers, Bangladesh (ABB), the forum of private bank executives, took the lead in forming the company under the supervision of the central bank.

BSIC will start with an initial fund of Tk 450 million, which it plans to scale up to Tk 700 million by the end of this year.

Unlike traditional banking, BSIC will operate as a venture capital firm, providing capital in exchange for ownership rather than issuing loans.

"We will not just provide capital to the IT sector, we will prioritise youth across all sectors," ABB Chairman and City Bank Managing Director Mashrur Arefin told bdnews24.com.

"The company will provide capital as equity. It will not give any loans. It will hold shares and oversee the operations," he said, adding that the firm's tagline is “Capital for Next Generation”.

The company has already completed its legal registration with the Registrar of Joint Stock Companies and Firms (RJSC).

Under the arrangement, the 39 shareholder banks will contribute 1 percent of their annual net profit to grow BSIC's capital every year.

Although Bangladesh Bank created a Tk 500 million refinance fund in 2021 and instructed banks to allocate 1 percent of net profits to startup funds, less than Tk 50 million has been invested despite an available pool exceeding Tk 1 billion.