Generally speaking, any new business initiative comes under the ambit of ‘startup’. But the term became synonymous with ICT startups because that is what we talk about all the time. So, there is a commonly accepted perception that startups should be supported and some of them should get sponsorship from the government or the private sector.
In that context, my organization BASIS (Bangladesh Association of Software and Information Services), and the ICT Division are working to provide the necessary help to startups. Under our initiatives there are startup competitions through which winners are selected who then get support. This support includes providing space at the Janata Tower and or at the High-Tech Park, which comes from the government. What BASIS does, however, is providing guidance to these startups. We do not provide funding.
My personal assessment is that the Bangladeshi startups do not progress to the level they should. We select some startups and give them a space in Janata Tower or provide them some tools. But that is not enough for startups. What I have noticed is that when a startup gets a space in the Janata Tower, it does not necessarily goes onto become a success. An institution cannot come into being on its own. When you find out a smart and young, but inexperienced people and give them a platform, expecting a particular outcome, you will not get the outcome that seemed theoretically possible.
The first problem these startups face is a lack of operational cost or investment. What are the potential sources of investment? In reality no one invests in the ICT sector in Bangladesh. The main reason for this is that the established convention in Bangladesh is to not invest on the basis of talent. A culture of nurturing talents has never been able to find its footing here. If you look at the institutions that work as banks or other investment sources like the EEF (Equity and Entrepreneurship Fund) of the Bangladesh Bank, which the government has recently ceased, they would want collateral security. So, the young person who wants investment based on his ideas does not have any collateral security to offer. Where will this person get the funding? Without funding s/he can’t transform his/her ideas into reality. In fact, they can’t even start.
I think that the prevailing system is flawed. We are trying to help startups through this flawed system. It does not produce results and it is set to fail. Ultimately, if we select one hundred startups, maybe only two or three will survive, and even that is doubtful.
From my perspective the venture capitalist or VC firms in Bangladesh are totally uninterested in investing in ICT sector. In the few instances when they did invest, I don’t think those have been really successful. The problem that I see is that if the venture capitalists come from the US or other developed countries then they are not really familiar with the culture of Bangladesh. So, they think within the frameworks of those developed countries. These VC firms think that they can invest in a small institution and make something very big out of it.
There is a strange culture in Bangladesh; namely, the concept that talent can be an asset is completely absent here. Since that concept is absent, there is no value for talent. There is no system in place to actually acknowledge talents. So, nobody wants to invest because they do not appreciate the value. For instance, I was involved with the EEF for a long time, since 2008. People told me ‘you could easily take out a loan of Tk 5 crore by submitting a project. You are on the board and you have a great reputation.’ But I told them that I would not do it. ‘Bijoy’ got evaluated to have a value of Tk 25 lakh. But the letters in Bijoy, in my estimation, have a value of Tk 50 crore. I will be giving half of the ownership and in return the value I will get is Tk 25 lakh. So, the truth is, intellectual property rights have yet to established any real value here. You will have noticed that starting from 2008, nobody wanted to take this funding against property of good value. So, that is a crisis.
Another aspect of this is that no one told startups to protect the rights of the codes they were writing. No one told them that they should copyright those, apply for patent and get a trademark. So, what ends up happening is that someone from the startup owners or a hired programmer just takes the source code and sever ties with the rest of the people. And you are left with no protection measures through which you can take action. So, we failed to create the right culture.
In my understanding the most dangerous aspect is the practice of trying to manifest an idea without evaluating risk, without any proper understanding of the potential market. Business initiatives require proper market research and surveys. You can’t just use common sense and hope to be successful. If you want to do business, then you need a proper business plan. If you ask the young people in our startups you will find that they never learned to make business plans. If you don’t know how to make a business plan, then you cannot be a businessman. We have serious lacking in this respect.
It has become a widely held conviction that if you can think of a concept and put together a presentation on it, then you have created a startup. The whole thing has developed into a PowerPoint culture and we are trying to create entrepreneurs through this. But this is not the way, and we will have to pay for the heedlessness. The people going through the routine will inevitably be frustrated. After that there is no way to pull them out of that frustration.
I think we need to address these dangerous flaws with utmost immediacy. If we can’t do that then startup will remain a nice slogan, a good subject on which people can give speeches and we will see frustrated young people leaving this sector to work elsewhere.