Realities working with early stage operators in Bangladesh
Bangladesh 2.0 needs to set standards across all sectors; and here I dissect eight unique insights for the startup ecosystem, having interviewed over 1k+ founders.
I have had the unique privilege of co-building the largest and most active early-stage venture advisory firm - Bangladesh Angels Network (BAN); sourcing deals for a regional VC - Golden Sparrow, and providing impact advisory to a leading FO in Bangladesh - Sajida Foundation. Here are some hard facts I have uncovered about early-stage founders.
The founder’s mindset is real. Only the top 1% survive
Founders who are capable, coachable, pragmatic, and adapt quickly to systemic/systematic challenges are best poised to survive. Investors will fight to buy into their rounds. This is true for Bangladeshi founders too. Also, this is the first filter criteria for any investment decision - building the best team, even if you’re not the best at something. Those who do not, signal a weakness in the founding teams’ capacity to build products which can be 10x better than the status quo.
Julian Shapiro’s ‘adopting the proven business model to new regions’ theory is just a theory!
The literal definition can be applied to some sectors but it still needs to be combined with existing arbitrage opportunities, contextualized scaling, improvements in monthly unit economics, and focus on virality/product stickiness/network effects. While founders look at the first definition quite acutely, the latter is what makes companies great. I have to say it, founders please stop building another marketplace that doesn’t support the latter contexts. Stop identifying what’s worked in the US/Canada and building for a country like Bangladesh or the subcontinent. Reasons? Simply, your market is a whole lot different than developed economies and the problem sets are vastly diverse.
SME vs Startups vs Impact Enterprises
Don’t pitch everyone everything. It is important to know who you are. 80% of Bangladeshi ‘startups’ are service-based companies, at best tech-enabled SMEs. Identify the route you’ll take and only shift lanes if you have a unique insight that governs that decision. You don’t have to be a startup, and that’s okay! Sounds familiar? In short, startups need multiple financing rounds to find product market fit (e.g. Uber, Pathao). SMEs should operate under perfect competition, where product-market fit already exists (e.g. taxi cab service companies). This is the easiest way to identify which lane you stick to.
Now, IMPACT! It’s a mandate. Not the mode! Please read it again! It’s just a bylaw of the company. There are no separate laws governing impact enterprises in Bangladesh (even the infamous social business models). If you’re dedicated to delivering impact, ensure you have a purpose behind it and access to standard impact measurement and management practices. Take help from the B-Briddhi program for this! Both SMEs and startups with measurable impact can be identified as impact enterprises (IEs).
Getting Funded vs Building
If you’re in it for social media announcements, flashy personal purchases, and/or some attention, the truth is - you won’t survive. We all know who you are. Getting funded these days can be challenging but dubiously easy for some. Either way, don’t do it for the flash. Build products that solve everyday problems for a large group of people, pair them with your domain expertise, and make sure you take valuable insights from your customers, market, and stakeholders to make solutions that are 10x better. Funding is a prerequisite for building amazing growth-focused startups. Once you’re funded, focus on building what you have promised to your customers. Sometimes the market feedback will throw you off. This is why guidance, mentorship, and market access are also extremely crucial for your support system and backers.
Married to the idea and not the outcome
I have seen founders try and try to make their vision work. Most of the time, they will go into zombie mode - no traction, no growth in unit economics, but adamant about staying put in the hopes that the apple won’t fall from the tree. Gravity is real. Just give up the hope of an apple floating. More important than gravity: net promoter score and cohort retention rates. These usually paint a good picture of your company surviving and staying afloat in the 1% club. Credible founders understand when to pivot or close shop. This is better than wasting more resources on a deadweight idea.
Fail but don’t fraud
This is another 1% club that needs to be ZERO! Failure is acceptable. Failure teaches you more than winning ever does. I will not do a TED talk on this. However, it’s imperative to note that there’s a stark difference between fraud and failure. You can always bounce back from a failure and be even better. There’s zero tolerance for fraud in this tiny ecosystem. Some who have done it in the past are already blacklisted. In the diaspora network or within Bangladesh itself, word gets around quickly. So be real! Fail and fail again. Just don’t try to fool people. You can get by to a certain extent, after that, it’s only a sinkhole that gets deeper and deeper.
Three things to ask investors - and it's not only money
Ask for the money
Ask for market access - new opportunistic areas that align with your goals
Ask for technical expertise - software, hardware, tech, finance, etc.
Most investors just bring 1 to the table. If it’s just money and your runway is crunched, then most likely, you have to take what's on the table. That’s cool. You survived. If it’s just advisory for sweat equity, then stay away! You don’t need a law expert to own 10% of your company, in order to get a NOC out from a bureaucratic institution (e.g. Central Bank of Bangladesh). However, if you have planned your fundraiser correctly (6 months for pre-seed to seed at least), and you have multiple investors interested in your round, then consider asking for 2/3 or 3/3 things from the list. You should always pair capital with the word ‘smart’. Make sure you choose the right person in your cap table since it's a long-term commitment.
Bangladeshi founders’ resilience
My last observation of this group is truly awe-inspiring. I have to say this out loud - Bangladeshi founders are truly resilient. We are still the most undervalued, underfunded, and underpriced country for VCs in the region by a mile. Countries with much worse macro indicators/outlook ‘rank’ higher as an ‘ecosystem’ and attract more foreign investors. There are structural issues, which will be covered in my next piece around the ecosystem.
However, fighting through epidemics, overcoming geopolitical tensions, global inflation, and a revolution, Bangladeshi founders can endure! This test of endurance, ability to learn from past failures, and growing domain expertise can be the fuel for the next generation of builders in our country. A country that has over 60% of its population under the age of 28, offers 180 million people to solve problems for, and features a fast-growing MAC with a high-density dividend is destined to be the next Asian Tiger.
Photo Credit: Faisal Akram via Flickr