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How to Find International Investors for Bangladeshi Startups

How to Find International Investors for Bangladeshi Startups

One study by CB Insights found that about 29 per cent of startups collapsed after running out of cash, showing just how important the money problem is for small and medium-sized businesses (SMBs) which suffices to show that access to working capital continues to be one of the biggest barriers to growth for many companies, particularly for new ventures trying to compete in a crowded market ecosystem.

 

However, venture capitalists, private equity companies and other investors are often able to spend their money on enterprises based outside their home countries. In Finland, for example, startups last year raised about $241 million from foreign investors, demonstrating just how hungry foreign investors can be for interested businesses.

 

Although several factors lead to the inability of a company to access funds, none rank higher than the stringent criteria set by most financial institutions for lending and investment. This, combined with the rising number of startups and SMBs coming up every other day, makes funding from traditional sources extremely difficult for business. Therefore, casting a wider net into the global marketplace also provides a greater chance of success for companies that still want to expand given the obstacles than remaining local.

So if you want to go global in financing, here are a couple of points to bear in mind.

 

 

 

 

 

Documentation and Compliance

Ensure that your company complies with the relevant jobs and benefits regulations, FDI and banking regulations and that your organizational structure complies with the regulations and regulations in your area.

Proper documentation also helps stay tradable for your company. A detailed overview of the market, pricing and financial model, organizational structure, company leadership, product overview and related documents will ensure the business is ready to go as soon as you have made the pitch.

Ensure that your company complies with the relevant jobs and benefits regulations, FDI and banking regulations and that your organizational structure complies with the regulations and regulations in your area.

 

 

 

Go for Emerging Opportunities

 

According to data published by Paydayr, for instance, about 13 million Americans have limited to no access to elements of the traditional banking system. However, that does not mean that the same people wouldn’t be involved in an investment opportunity, as long as it’s the right forum. New investment mechanisms such as ICOs allow investors to spend their money on companies outside their home countries, often without intermediaries, sometimes making investment more costly. They also allow companies to communicate with potential investors residing outside of conventional banking systems.

 

Technology is also changing how investors communicate with future companies. Initial coin offerings (ICOs) have helped startups raise billions of dollars in funding in recent years, far beyond the overall investment from conventional investment firms, such as VCs and private equity funds.

 

Do your homework on any chance that new technologies pose itself. Check out peer-to-peer blockchain-powered lending networks, AI-powered investment funds, and related resources to ensure your company doesn’t miss out on any resources to go global.

 

 

 

 

Fees and Charges

 

Use a finder, a company or person who typically helps businesses identify possible partners or investors. Though, although these also make it easier to secure funding, they may enforce exorbitant rates as “hunter fees.” Keep in mind that charging something over 10 percent will be deemed exorbitant for any amount of funding, so it always pays to be cautious.

 

 

You should also remember ongoing costs such as taxes and annual fees that will have to be charged by your investors before and after entering into an investment agreement with your company.

 

In addition, since you’re going to be dealing with multiple currencies from potential foreign buyers, making sure you know your way around the forex market is critical as well. Banks and many other financial institutions also add up to 3 per cent as a premium above the market rate for most currency pairs, costs that could inevitably see the company receive less funding.

 

 

 

Explore Networking Opportunities

 

Foreign investors have to contend with unfamiliar tax regimes and markets which make a risky venture for global investment. Therefore, it also helps to have an intermediary or common forum that will be used by both the company and potential foreign investors to help reduce some of those risks. International societies and activities have the right forum for risk reduction and trust building.

 

Look for local events and Conferences linking global investors with local SMBs and startups. Check out international accelerators such as 500 Entrepreneurs, and aspire to enter international trade organizations across continents.

 

 

 

 

Build Reliable Brand Image

 

 

Our entrepreneurs are struggling to obtain licenses for companies, intellectual property and other licenses and permits to do business. International investors are hesitant to invest in a company that lacks all legal documentation. International investors are also not willing to exit their investment without any hassle. Regional hubs like Singapore, China have huge funds to spend but we can’t persuade them to spend in our projects. One explanation could be lack of trust — is Bangladesh a safe place to invest? By providing examples of smooth foreign investment transactions we need to create a positive image of our country.

 

 

Some of our startups received global recognition, such as bkash, pathao, shohoz, Chaldaal, Ajker contract, etc. They got international support. Such companies represent the Bangladesh as ambassadors to the world. Perhaps more such examples will come up in the near future and play a crucial role in making Bangladesh a destination for foreign investment.

 

 

In the era of the Fourth Industrial Revolution, innovation and technical support are essential to foreign competitiveness. Startups will also be on everyone’s Priority List. Our government prioritizes it but all stages of policy making will represent this. We need to plan our ecosystem of venture capital to encourage foreign investment in every possible way. Our local investors still lack knowledge of the investments in the venture capital. Foreign investment should pass know-how and use examples of productive projects to motivate local investors.

 

The post is written by Rashik Riasat. He is a third year BBA Student in IBA, University of Dhaka.

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