Due to COVID-19 pandemic, the startup businesses in the country are on the verge of collapse. Nearly 300 startups are in distress over the anticipation of more than BDT 450 crore loss as selling of products and services is at halt in the local market. Almost 1.5 lacs people are directly employed in these startups whose jobs are at risk. Moreover, about 7 lacs service providers who are associated with these startups are currently unable to provide their services. Many startups have export-oriented income which has drastically fallen by at least 80 percent recently.
In this critical situation, Venture Capital and Private Equity Association of Bangladesh (VCPEAB) organized a high priority meeting where it decided to raise the following six proposals to government in order to save its members and portfolio companies:
- To contribute a portion of employees’ salary of the startups from government grant for next 6 months (April-September).
- To provide the office rent from government grant for next 6 months (April-September) for the startups who are currently experiencing huge financial loss.
- During this crisis time, since government is making a numerous amount of digital contents such as online classroom, digital education, health and entertainment related online content etc., local startups should be hired in the facilitation of the content creation.
- Priority should be given to startups in government works and tenders so that startups’ business can stay operational and their local market can be expanded.
- To offer collateral-free loan at a minimum interest rate (2%) for VCPEAB members and their portfolio companies to help them meet their working capital requirement.
- To provide fund from the iDEA project of Startup Bangladesh to the fund of Alternate Investment Fund companies (as a fund of fund).
VCPEAB Chairman Shameem Ahsan said, “The vision of Digital Bangladesh given by our Honorable Prime Minister in 2008 and the plan to achieve this vision set forth by the Prime Minister’s ICT Advisor inspired thousands of young entrepreneurs to become a part of achieving this goal with their limited capital, parents’ pension and last savings, and the aid of investment money from angel investors and venture capitalists. These entrepreneurs have put their blood, sweat and tears to establish many innovative startups in the country in past 12 years. However, the COVID-19 pandemic is trembling the startup and venture capital ecosystem that we have built over the years and without government’s incentive and immediate action, it will collapse resulting in all the hard work of the entrepreneurs going in vain.”
The association’s General Secretary Shawkat Hossain said, “Implementation of these proposals will ensure continuous revenue and cashflow for the startups and their ventures can be saved from the existential threat posed by the ongoing crisis. When the situation achieves stability, venture capital and private equity firms will be able to raise fund from local and foreign investors to support the startups with financing or re-financing to keep their businesses running.”