Business-Analysis
Investment Opportunities in Bangladesh amid Pandemic
The second wave of the corona has already hit Bangladesh. This made a huge impact on the economy, but the situation is comparatively better than last year. The government has already withdrawn the lockdowns, and the economy is running again despite the high infection rate. So, if you have savings, you may think about further investments to multiply the net worth. Nevertheless, no investment is risk-free, and it is not possible to avoid 100% risk by investing with a deep analysis, but there are possibilities to reduce the capital. We have found some safe investment plans in this Covid-19 pandemic.
Should you Save or Invest During the Pandemic?
We all are in a critical situation. If this is considered, it is better to save money for now - which can help to serve our basic needs and help in difficult times. But it all depends on you. If you have enough savings, you may go for a small investment. Any investment decision where you are expecting future wealth, you should be careful before taking any decision. Since the economy is not stable yet, it would not be appropriate to make a large investment decision. If you are able to take more risk, then you can think of large investments by following the right strategy.
Read Investment Guide: How Bangladeshi Youths Can Invest money and Create Wealth?
However, most of us like to avoid the stock market in order to reduce the risk of financial matters and invest our money in various savings schemes. Different investment opportunities provide more capital protection than the stock market but are not able to give higher returns. So, at the moment, you should set aside some of your savings in case of an emergency.
Where to Invest? Decide Yourself
When we talk about investments, we keep aside the industrialists and big businessmen. They have their own money; they can easily take loans from banks and financial institutions. They can do business with it; they can also build a factory. But ordinary people with low incomes have a minimum idea of where to go and what to invest in. Hence, many do not understand and live in confusion. Following are the low-risk investment plans, and some have no risk at all.
Sanchayapatra
There are not many investment opportunities in Bangladesh! Those who do not want to take the risk or have no chance to take a risk, can buy sanchayapatra. Needless to say, Sanchayapatra is better than any conventional investment option in the market.
Read Saving vs. Investing Money: Know the Pros and Cons
At one time, the National Savings Department used to advertise in daily newspapers for the sale of sanchayapatra. The department has not been giving such advertisements for several years. Because people already know the benefits of it. There are currently four types of sanchayapatra in Bangladesh, 3 Monthly Interest bearing Sanchayapatra, 5 Years Sanchayapatra, Pensioner Sanchayapatra and Poribar Sanchayapatra.
The highest profits are made from Pensioner Sanchayapatra. The interest rate at the end of the term is 11.76 percent. However, not everyone can buy these savings certificates even if they get more profit. Only retired government employees can buy it.
At the end of the five-year term, the Poribar Sanchayapatra yields a profit of 11.52 percent. At the end of 5 Year Sanchayapatra, the interest rate is 11.28 percent. 3 Monthly Interest bearing Sanchayapatra are valid for three years. The interest rate on these savings certificates at the end of the term is 11.04 percent.
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Bank
Banks can be one of the best alternatives for investing in Sanchayapatra. Long-term investments, as well as Fixed Deposits (FDR), can also be made. Money can be kept every month too. All public and private banks can be the place of investment. By understanding, researching, and deeply judging, one can keep the money even in financial institutions (leasing). They pay more interest. In that case, of course, the idea of investing in low-risk or risky companies should be avoided.
There have been days when your money in the bank would have doubled in five to six years. However, no bank offers such opportunities anymore. The interest rate had also changed since April last year. The loan interest was fixed at 9 percent and deposit interest was fixed at 6 percent. However, some banks still double the money in 7 to 10 years, while some banks take 12 years.
If you keep FDR in the bank, the interest rate that the bank talks about on the first day of the contract usually does not change. Almost all banks have the opportunity to keep FDR.
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Post Office Savings
Once upon a time, there were three types of accounts - Post Office Savings Bank (General Account), Post Office Savings Bank (Term Account) and Post Office Savings Bank (Bonus Account) - where people could keep the money. The bonus account has been closed since 1992. The other two are still running.
One year ago, the interest rate on general accounts of the Post Office Savings Program was 7.5 percent, and the interest rate on 3-year accounts was 11.28 percent. Ordinary savers across the country were outraged when the general account interest rate was reduced to 5 percent in February last year and the term account interest rate to 6 percent. Later, the government maintained the interest rate as before.
The special feature of the two accounts is that Bangladeshi citizens of all classes and professions can put money into it. Nominees can be appointed, can be changed, and can be canceled for both post office savings accounts.
Read Seed Fund Raising for Startups: Things to Know About
Stock Market
The stock gives more profit than any investment. However, this investment must be long-term and must be understood. Moreover, good companies usually pay a 10 percent dividend at the end of the year. The factors to consider when investing in the stock market are the fundamentals of the company, earnings per share (EPS), price-to-earnings (PE) ratio, net asset value (NAV), an average of dividends, company debt and the country's economy, sometimes political situation.
The lower the price-to-earnings ratio of the company, the better it is for investment. Usually, a 10 to 15 PE ratio is better. More than that is a little risky. However, investments can be made if the company has the potential to increase revenue. Because if the income increases, the PE ratio will decrease.
Investing on Lands
Excluding all, if anyone thinks that land is the money. In that case, the investor can buy the land. Land prices usually go up year by year. Sometimes, depending on the land's condition, the value doesn't increase. So, you have to understand the value of the land before making a buying decision. Many people buy low land and fill it with soil but sell it at a higher price. But be careful before buying land. Check the documents, check and select again and again.
Read 7 Local Startups Get Tk 150m Funds from Startup Bangladesh Limited
Disclaimer
The interest rates of Sanchayapatra and Post office savings are subjected to change depending on the decisions of the respective authorities. The stock prices of different companies may increase or decrease from time to time.
Real Estate Business in Bangladesh is booming again overcoming the brunt of Pandemic
Starting from March 2020, a series of lockdowns announced by the government to prevent the spread of coronavirus in Bangladesh has caused a collapse in the country's economy. It affected all kinds of large and small businesses. And real estate business is not a different case.
The housing industry or construction sector plays a big role in keeping the wheel of the country's economy moving. There are about 458 sectors closely involved in this industry. The current Covid-19 disaster has brought the housing industry to a halt like other sectors. In the first and second quarters of 2020, the entire housing sector has come to a halt due to the lockdown for more than a month.
Read:F-commerce in Bangladesh: Problems and Prospects
However, the demand for apartments has increased due to lower interest rates on bank deposits and home loans. Many are now interested to buy apartments than renting them.
Situation of the Real Estate Business in Bangladesh before Pandemic
To understand the actual situation, we will have to go back to 2012. The recession in the housing sector started in 2012. In the next year, the housing business took a terrible shape because of the political unrest.
During that time, many real estate companies were unable to find a client even after reducing the apartment prices. Furthermore, many buyers also canceled their bookings due to non-payment of installments. After that turbulent time, the real estate business situation was a bit better in 2016, but the crisis was yet to see an end.
Read:ToguMogu: One Stop Solution for Bangladeshi Parents
However, in the middle of 2018, it was announced to give home loans to government employees at 5 percent interest. The process of reducing the registration cost also started in 2019. As a result, the housing business was in a positive trend until Covid-19.
Present Situation of Real Estate Market in Bangladesh
Market observers say money is scarce for the common man. Medium businessmen and traders have also been affected by the corona. Even then, the demand in the housing sector is increasing. In this upward trend of demand, mainly government employees are in the driver's seat. They are buying flats and land using government loans and other facilities. Market observers say money is scarce for the general people.
Read Best Home Loans in Bangladesh to Build Your Dream Nest
Why does the Real Estate Industry See a Rise in Bangladesh?
Government employees have been given housing loan facilities up to Tk 70-75 lakh. This facility has played a big role in the expansion of land and flat business, as claimed by the companies in the real estate sector. In addition, the approval of non-tax income investment announced last year has also played an important role in this regard.
After the announcement of this opportunity, more than Tk 3,200 crore tax-free investments have come in the housing sector. In addition, measures such as 9% interest on home loans, reduction of land transfer tax rate from 2% to 1%, and reduction of stamp duty from 3% to 1.5% have also worked as a catalyst for the expansion of the sector.
Read Angel Investment 101: Is It the Right Track for Your Startup?
F-commerce in Bangladesh: Problems and Prospects
Bangladesh has increased a surge in digitization in every sphere. The increased connectivity has made access to smartphones and the internet more affordable and easier than ever. This has paved the path for different social media engagements like Facebook. The connected nature combined with a robust user base has given rise to the F-commerce ecosystem. So, where does Bangladesh stack up in the F-commerce scenario? What are the problems and prospects? We take a deeper look at this article.
What is F-commerce?
F-commerce is the short form of Facebook commerce. Globally there are 2.85 billion active Facebook users. That accounts for around one-third of the total population of the world. Almost a billion of them are regular users who log in at least twice every week. The increased user base has prompted the use of the platform as a business space which soon transitioned into small to medium scale businesses.
There are about 46 million active Facebook users in Bangladesh. The high user base has promptly encouraged small businesses to take up the platform as a marketplace. There are about 2000 dedicated eCommerce platforms in Bangladesh whereas there are over 300000 F-commerce pages doing business.
Read Potential of e-commerce hemmed in by bottlenecks
Due to lack of regulation, a large portion of the business goes unaccounted for. However, out of a total of 7000 crores BDT worth of eCommerce sales, F-commerce accounted for over 1000 crore BDT in sales. This is a testament that Bangladesh is slowly making the transition to the F-commerce revolution.
Problems facing F-commerce in Bangladesh
A high tariff on import
Most of the F-commerce platforms in Bangladesh are import-based resellers. Most of the products are sold on a pre-order basis or niche customer base. As a retail importer, they face high import tariffs which are driving the cost up at the customer level. This price is not regulated at all and different vendors sell the same product at a different price which is a detriment for the customer.
Logistics
Another prime problem facing F-commerce is the lack of logistical support. Unlike the large eCommerce platforms of Bangladesh, the F-commerce businesses don’t have a dedicated shipping mechanism. As a result, they are forced to rely on local couriers and delivery partners. The third-party shipping method further drives up the cost in the customer end in the form of delivery charges.
Read 8 Mistakes to Avoid in a New Ecommerce Startup in Bangladesh in 2021
No legal framework
There is no legal framework to regulate the F-commerce sites. There are over 300000 Bangladeshi pages on Facebook alone doing business in various niches. The different regulations and permission required to set up a business don’t apply as there is no regulatory authority overseeing the entire process. As a result, there is no limitation to price competency, product regulation, and customer end experience.
Lost revenue
The government is losing a huge amount of revenue in the form of tax from the F-commerce platform. With the absence of regulatory bodies, there isn’t even an appropriate estimation of the number of operating F-commerce pages. These pages are doing business of over 300 crores. The pandemic caused a paradigm shift in business conduction as more and more people are getting inclined to online shopping. There has been a reported increment of over 70% to 80% increment in sales across the board. However, the government doesn’t receive any form of GST or sales tax from these pages.
Read The SWAP story of Bangladesh's first reCommerce startup
ToguMogu: One Stop Solution for Bangladeshi Parents
When it comes to raising a child, worrying about parenting is inevitable. Should the newborn be tied to the chest with a cloth? What are the things to be aware of while breastfeeding? Which products are perfect for your baby? Doctors, older family members, friends, books, and the internet have a wide range of popular and modern advice about that stuff. Some advice may match with one another; sometimes, some parents may even get completely contradictory advice on the same subject. And, parents often have to be in a dilemma due to that confusion. Anika and Maruf, the founders of ToguMogu, had to face this kind of trouble when their first baby was born in 2016. To bring out the solution for new parents, they started ToguMogu.
What is ToguMogu?
ToguMogu.com is the first online platform in Bangladesh where you will get children's products as well as various parenting-related services.
It is mainly a service and product platform that offers a wide range of support for expecting, new, and young Bangladeshi parents who have children from 0-5 years old. The services include baby products, connecting with the doctors, capturing the memories with your baby, get education about parenting, counseling, and more. ToguMogu ensures healthier, happier mothers and kids. It works as a one-stop solution that brings all kinds of help and support for a new parent.
Read: Dangerous Android Apps That Can Steal Your Information
How did it all start?
Anika Rahman and Maruf, one of the co-founders of ToguMogu, had their first child born in 2016; they realize the obstacles to raising a child and think about how to reduce the costs for all new parents in society. So, without delay, Anika started the online platform ToguMogu.com.
After graduating from East-West University, Anika Rahman Mou, the chairman of the organization worked for Asia Tech, a well-known company in the country, for some time, and after retiring from her job, she concentrated on her family. Besides, she established ToguMogu with the aim of doing something good for society.
Next year, they thought of providing a technology-enabled solution for young parents all over Bangladesh. Initially, they were looking for a name that would make people curious and make them smile at the same time. Hence, selected ToguMogu, which was derived from "Togu, a tiger cub, and Mogu, a human child."
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In the beginning, they spent enough time to understand the needs and the pain point of the new parent, their target customer. Additionally, they also conducted some research on how parenting works in Bangladesh and how to combine technology with parenting.
In the beginning, ToguMogu was a content platform that provided authentic information. Later they gradually introduced other services such as e-commerce shops, doctor booking, caregiving, and photography one by one. Now they have a fully functional app for the smartphone in which parents can track the growth of their children while accessing other features.
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ToguMogu Features and Services
With ToguMogu, parents will have a 5-year long journey starting from the pregnancy period. During this time, ToguMogu will be there as a constant wellbeing partner though offering different services to make the parenting journey easier. Currently, they offer five different services. Read on to know the list of the services.
ToguMogu E-Shop
The e-shop provides expert-recommended products for newborns and makes life easier for new parents. The products are available for babies up to 5-year-old. Then they have a wide range of products which include food and nutrition, children's books, baby products, brand toys, learning toys, crafts and drawing items, and school stationery. Parents can choose from a variety of options from numerous brands while searching for products on the e-shop. They also started selling corona safety products for children and adults.
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Baby Pixels by ToguMogu
It is special concept-based photography for the baby and pregnant moms to keep the memories. ToguMogu offers different services for photography which include, pregnancy sessions, newborn sessions, baby & toddlers, birthday and outdoor sessions. Pregnancy sessions photography starts from Tk. 5,990, while the newborn photography starts from Tk. 8,990. Other types of photography also have the more or less same price range as the former.
Education Contents
ToguMogu has numerous articles on various aspects of pregnancy, parenting, birth, and early childhood developments. Expecting parents and new parents can get self-education from those contents and make themselves ready for the upcoming days. Besides, Bangla books and e-books on parenting are also available.
Read: Dating changed during the pandemic; apps are following suit
Parenting Services
Under the parenting service, ToguMogu offers parent and children counseling through Lifespring, which is a "leading professional child psychology and mental wellbeing service provider in Bangladesh." Further, you will also get the consultation service from the child specialist via Doctorola, a healthcare service provider. If you need nanny service, you can contact Amar Astha Ltd. through ToguMogu. Furthermore, parents can take parenting courses, and a child's creative courses are also available to develop your children's creativity.
Day Care & Pre-School
Parents will find a recommendation on daycare and pre-school or after-school services available around Bangladesh. This service will provide a list of the best suitable daycare based on the requirements and the performances. So, daycare and pre-school recommendations will be a great help for working parents.
Read Top health apps for online doctor consultation services in Bangladesh
Challenges ToguMogu Faced
All the co-founders have invested from their personal funds to set up the venture. So, ToguMogu has seen slow growth, which they are trying to cover up in recent days by seeking external investments.
Initially, they struggled with the deliveries in 2017-18 as they did not have a mature logistics service. Occasionally, co-founders had to work on deliveries initially. Since the co-founders left their job to create a trusted platform and they were new in the business world, they thrive to improve the service. So, they had to make a continuous investment from their own fund. And until 2020, they did not even think of raising the external fund. So, they have seen steady growth.
ToguMogu started pitching about their venture in 2020 and managed to raise an angel round of investment in late 2020. ToguMogu now aims to solve all kinds of problems of all parents, mothers, and children in the country through the platform.
Read Best Food Delivery Apps in Bangladesh in 2021
Key Challenges to Start E-Commerce Business in Bangladesh
Bangladesh has made significant development on the path of digitalization in recent years. However, the internet penetration rate is still low compared to the developed countries. As a result, in Bangladesh, an eCommerce business faces a lot of challenges even before its inception. In addition to internet access, other bureaucratic and resource-related challenges are a constant headache for many eCommerce startups. Let's take a deeper look at them.
The state of eCommerce in Bangladesh
Up until 2006, the state of eCommerce in Bangladesh was almost non-existent. The handful of eCommerce sites were exclusively used by the upper-class people with businesses being strictly niche-based. With rapid digitization, the number of eCommerce sites saw a rapid jump of over 70% in 2007, and the growth trajectory has been upward ever since.
At present, there are about 2000 independent eCommerce sites in the country with another 50000 being F-commerce based. Combinedly they are delivering over 30000 products every day. However, the majority of the transaction is limited to Dhaka, Chittagong, and Gazipur only.
The limitation is seen in the transactional aspect as well. There are about 5 million debit cards and 1 million credit cards in circulation. Out of these only, 1% of the people use them for POS transactions. Rest is limited to ATM usage only. This prompts the issue of lack of online transactions, which is one of the key pillars of the eCommerce ecosystem.
Read:Product Shipping: Tips to find the perfect delivery partner for online business
Key challenges of eCommerce platforms in Bangladesh
Product Sourcing
Leading international e-commerce platforms like Amazon, eBay, and Rakuten are not available in Bangladesh. Therefore, there is the challenge of product sourcing.
Depending on the customer choice, many eCommerce platforms resort to sourcing products through imports. The entire process and customs together increase the price of the product significantly. As a result, there is a lack of demand in the first place.
Local dropshipping can be a good option in this regard. However, maintaining product quality and brand reputation becomes a significant challenge with dropshipping.
Read:Common Challenges faced by Startups in 2021
Finding the right customer base
The first and foremost issue faced by any eCommerce startup is choosing the niche. It is almost impossible to incorporate everything under a single domain unless you are one of the big players.
That being said, there is also a lack of market data. What kind of product are customers interested to buy online? What products sell more? And which niche has the largest online transacting customer base? All of these essential data aren’t readily available.
While on average, people under 30 prefer to shop online, that also presents the unique challenge of tailoring the product to their needs. Categorizing a customer base while the majority of the country is interested in offline shopping is a key challenge.
Read:Seed Fund Raising for Startups: Things to Know About
Low conversion rate
One of the positive aspects of eCommerce is that there is no geographical boundary to your customer base. Anybody from anywhere can view your products and if you have an international shipping option can even become a customer.
On average a successful eCommerce looks at about 1% to 2% conversion rate of the total hits on a product. However, it's not even 0.2% in the case of Bangladesh.
The dire situation can be attributed to a lack of potential lead generation and poor conversion measures. While the local target market itself is small, there is also a general disinterest in buying products online. As a result, eCommerce sites are failing to generate and convert leads.
Product Shipping: Tips to find the perfect delivery partner for online business
Online businesses like eCommerce and F-commerce have been on the rise for quite some time now. Customers get access to all sorts of products from different eCommerce and F-commerce sites and services. They have become fast, reliable, and hassle-free shopping for many. While it’s all positives on the customer end, an eCommerce platform faces some critical issues to dispense the customer queries. The most notable one being product delivery service. Let's look at what you should consider before choosing a product delivery service for your eCommerce or F-commerce platform.
The necessity of a good product delivery service
Even though online shopping has been on the rise, the advent of Covid-19 has accelerated the process by manifold. Social distancing and lockdowns across the globe have shifted the interest of the customer from physical shopping to online ones. As a result, the number of eCommerce platforms has surged rapidly.
From clothes, toys, gifts to daily essentials, there seems to be a bunch of eCommerce and/or F-commerce platforms for every type of product imaginable. However, the growth of an online business needs to correspond to its service. As much as the customer is concerned about the product, there is also the expectation of fast delivery, reliable service, and an easy return policy.
READ: Common Challenges faced by Startups in 2021
All of these are related to product delivery services. An eCommerce platform needs to be careful while choosing a delivery partner as its one of the main aspects of customer service and satisfaction. Here are some of the things you should check upfront.
How to choose a delivery partner for your online business
Product and customer base
It's not easy to address this question as eCommerce and/or F-commerce platforms hardly sell one type of product. However, it's easy to understand the genre of product you are selling. It can be electronic items, perishables, food items, or fragile items. There are different service options for each of these products.
There is also the aspect of whether your client is local or foreign-based? Do you want to include an express delivery option? Many eCommerce businesses follow the drop-shipping model where products are delivered on a pre-order basis. In that case, you need o to consider the delivery service for importing as well.
READ The Emerging Logistics Tech Startups, Courier, Delivery Services in Bangladesh
Ease of Service
An eCommerce and/or F-commerce platform is grossly reliable in the delivery service to ensure total satisfying service to its customer. As a business owner, you need to check whether there is ease of communication between you and the delivery agency. This is ensured through a robust client service mechanism of the delivery service agencies. You need to also check for the frequency of product pick up as it's closely related to the product delivery time.
Areas Covered
There is no limitation to the client base when it comes to an eCommerce platform. Your customers can be local, regional, or even international. To ensure maximum client range, you can incorporate international shipping too.
For that, you need to ensure whether the delivery service has international shipping options. Even if your business is in its early stage, it's always better to stay future-proofed for any kind of scaling needs. You need to carefully check the additional price for regional shipping. The rate tends to fluctuate depending on the agents you choose. The idea should be to find a balance between cost and coverage.
READ: Seed Fund Raising for Startups: Things to Know About
Speed
This is probably the most important factor when it comes to choosing a delivery service for your business. regardless of how good a product is, a customer is always concerned about how fast the product will reach them. Before signing up with a delivery service, try and check their average delivery time and customer satisfaction rate. Depending on your budget and the time, you will find multiple choices. The target should be to choose a reliable service whose words match with their action.
Product Handling
If you look at the reviews of some eCommerce and/or F-commerce sites, there are often instances where the customer complains of product mismanagement. Some may complain about broken products, torn packaging, and sometimes shipping to the wrong address.
A good way to avoid these is to check for online reviews regarding the delivery service. Because in the end, the customer won’t care what damaged their product. It’s your reputation that’s on the line here.
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Experience in business
There’s a saying that experience begets everything. The same holds for people in the delivery service sector. The more experienced a delivery business is, the more chances the service will be on point. You can also check for their service history. If they have experience of working with a similar business like yours, it can help you in the transition to working together.
Service flexibility
Often there might arise a requirement for a product to be returned. There are instances where you might have to take a product back. The ease of transition in the process makes it hassle-free for the customer and also shows the commitment of the platform.
As a result, you need to have a delivery service that is flexible in product delivery and product return.
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Tracking capability
We already talked about how the product gets lost or damaged in the shipping process. So it's important to have a delivery service that will provide you with tracking capability. You need to be able to track the product.
Sometimes, the product might need to get shipped to a foreign country or a regional area. Sometimes it might be days before the product gets delivered. In that case, you might need to be able to update your customer about their products. The best way for that would be to check whether the delivery service provides a tracking service for the product.
Price
Lastly, you should be concerned about the price. At the end of the day, you are a business and it's always about profit maximization. The idea here is to find a balance between service quality and price. Sometimes, services will offer you a discount based on the volume of products delivered through them. Either way, you should consider several services before signing up with one.
READ: 7 Local Startups Get Tk 150m Funds from Startup Bangladesh Limited
Bottom Line
Fast and efficient delivery is one of the key requirenets for the survival of any online business. There are a lot of factors that you should consider before choosing a delivery service for your eCommerce or F-commerce business. We tried to outline the important aspects which often act as the deciding factor. We hope that our discussion will help to find the best shipping company for your online business.
Common Challenges faced by Startups in 2021
With over 150 million startups in the world, the space for standing out in a specific market is becoming more and more saturated every day. About 137,000 startups are being found daily in the world today. This begs the question of whether it really is a smooth sail all around for startups? Do all of them go on to become multi-million-dollar ventures? Surely not. In reality, a startup faces several challenges that can become daunting to overcome. In this article, we will talk about such common challenges faced by startups.
What is a startup?
According to Investopedia, a startup is a company in its first stage of development or operations. These companies are founded by entrepreneurs who want to introduce a product or service in the market based on its demand.
The initial phase of the product or service requires several trials and errors associated with R&D, marketing, business model, and cost of operation. As a result, these companies work as a high-cost- limited revenue venture in their initial stage. To compensate for the high cost, there are different stages of fundraising to ensure smooth business operations.
Read: Seed Fund Raising for Startups: Things to Know About
Top 7 common business challenges faced by the startup founders
High competition
The high number of startup competition across the globe means there are lesser and lesser opportunities for emerging startups. Most markets are already saturated. In addition to competing with existing startups, there is also competition from multi-industry conglomerates.
Whether it’s a B2B or B2C, every startup faces high competition in every phase including seed fundraising and market cap generation. As a result, they are forced to be more aggressive in the market and their strategies.
Read Angel Investment 101: Is It the Right Track for Your Startup?
Lack of Consistency
Every business venture bears a strategic goal with expectations and startups are no different. A positive growth curve shouldn’t give a false sense of expectations. It's important to set realistic goals in the initial phase of any startup.
The initial growth won't be consistent if there is no sustainability. And this is where most startups fail. They fail to maintain consistency in their effort to ensure sustainability. There is no room for complacency and consistent effort is the only deciding factor.
Read: The 7 Most Promising Tech Startups in Bangladesh
Lack of Planning
A startup needs to have a business plan which would outline the expectable and inputs. While most startups have a business plan they often don’t include all the key areas. Many first-time entrepreneurs think that they will plan things as the business progresses but that’s a wrong move.
Key details like R&D, skilled staff, sales, funding should all get equal priority while planning. While faced with an issue, the target shouldn’t be damage control, rather there should be an appropriate plan of action to tackle every issue.
Read The Emerging Logistics Tech Startups, Courier, Delivery Services in Bangladesh
The players
A startup needs manpower. You need to have a working team to run your business top to bottom. Whether it’s your employees or investors, you need to be careful about who you hire and who you get as your investor. Communication, team playing, and skills are important factors to be considered when it comes to hiring candidates. Hiring the right people can be a tricky task considering the sheer number of eligible candidates out there.
What you can do however is thoroughly assess their skillset and mentality. Cross-check whether these are the exact skills you are looking for and whether this can be a long-term partnership. Having an industry-related investor can be a huge advantage in this regard. They might be better qualified in assisting with the hiring process.
Read Digital Healthcare Startups in Bangladesh: An Overview
Financial Factors
Startups are high-cost low revenue ventures in their initial days. Needless to say, the adjustment in this disparity comes from the investors. If you compare seed funding with venture funds, the amount might be small but it still tends to be a large sum. So naturally, there arises the need for financial management.
A startup constantly requires the investment of money until it reaches the growth and scaling phase. Many startups fail to make it to this stage because of a lack of management and cash burnout. In addition to having a business plan, it's important to have a strong financial model as well. Considering the limited resources and fierce competition, financial management is a crucial make-or-break aspect.
Read:7 Local Startups Get Tk 150m Funds from Startup Bangladesh Limited
Scaling up
Suppose your startup has done everything right up until the growth phase. You can expect the customer base to increase rapidly with increased demand for the product or service. This naturally calls for scaling up. However, scaling up isn’t just about adding a few more employees.
You need to consider a lot of factors as you scale up. You need to formulate a strong HRD, look after your supply chain and product sourcing. In addition to that, there is the aspect of widening the distribution channel and revenue management.
Without proper handling, all of these might become too much to keep track of and the business would crumble even before taking off properly.
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Time management
A startup isn’t a one-man thing. As a business grows, there will be a lot of decision-making needs that are honestly impossible for a single person to micromanage. However, many entrepreneurs think that micromanaging is the only way to ensure organizational growth. A micromanager often overlooks key decisions while focusing on lesser important ones. As a result, business growth is hampered.
As startups build teams, it's important to delegate tasks to the team. This not only enables a business to be more proficient, but the time utilization will help a business edge out its growth.
Read: The SWAP story of Bangladesh's first re-Commerce startup
Bottom Line
So far we have discussed some of the most common startup business challenges. While there might be a boom in startups in the world, managing these startups are no easy task. As an entrepreneur, you’ll have to put in a lot of effort. The room for mistakes and complacency is next to zero. Many startups fall victim to these common mistakes we outlined above. A startup should definitely focus on its priorities and end goals all the while preparing to face challenges head-on.
Seed Fund Raising for Startups: Things to Know About
Getting a startup off the floor isn’t easy. Most of the time it starts with an idea. But working with an idea and putting it into work requires funds. The question is where will you get the initial fund? This is where seed funding comes in. In this article, we will look into the details of seed funding and everything you need to secure one for your startup.
What is seed funding?
Seed funding is essentially the first cash inflow in a startup in its initial phase. A startup has several stages. The initial phase is idea generation. Based on the idea, the startup moves into the market viable product. Subsequently, the product or service sees expansion, growth, and maturity phase. While a business can easily get large-scale investment from the expansion phase, there are significant R&D and market compatibility investments that require funding.
Read The 7 Most Promising Tech Startups in Bangladesh
These investments come in the form of seed funding. A seed investor is also known as an angel investor. To know more about angel investment, you can read our comprehensive guide here.
Seed funding is unique because there is no practical proof that the startup will be profitable or scale-able. An angel investor will invest based on the uniqueness of the idea and their experience as an investor.
Almost all the large-scale startups of today had seed backup. The initial money needed to bring the startup to profitability is well beyond the means of its founders. Seed money not only ensures maintenance of business process but also makes sure there are multiple trial and error run for your product and service.
Read:7 Local Startups Get Tk 150m Funds from Startup Bangladesh Limited
Considering the market competition and overall success rate of startups in the world, it's understandable why a startup would not be a single shot thing. Rather it’s about having a tried and tested model to achieve the ultimate goal. Seed fund allows you to try out and test different approaches which would’ve otherwise been impossible.
Things to know before getting seed Funding
The basic groundwork
An angel investor or seed funding is done at the earliest stage of a startup. Most startups that apply for seed fund doesn’t even have a market viable product. To get seed funds, you need to clearly outline your idea. The entire process is nothing but making a potential investor see your vision with the startup.
During the basic groundwork, you need to show potential investors whether the product or service has market demand or not. How will it undercut your competitor? What’s the chance that people will adapt to the product rapidly and how does it solve an existing problem? This simple market research will act as the groundwork for the seed fund approach.
Read The SWAP story of Bangladesh's first re-Commerce startup
Develop Connections
Whether the startup will get the attention of a potential investor depends largely on the word-of-mouth spread of your business. Networking and connection building are equally important to having an impeccable pitch deck. Developing networking and connections will help you come in contact with potential investors and give your startup better exposure in the startup community.
What is the ideal seed amount?
Many startups make the mistake of overestimating their business. As a result, most of them fail to secure funding. Before diving into the details of how much is actually the right amount, you need to understand that there are multiple types of investment.
Read An Overview of Shuttle: A Promising Mass Transit Startup in Bangladesh
There is discounted cash flow which generates a steady inflow of investment rather than a lump sum. There is the market comparable method where the pattern of investment on a similar startup is followed. Then comes the venture capital method where an exit strategy is worked out before investment.
Regardless of the investment, you’re choosing, it’s important to have a proper valuation of your business. Every startup has several investment cycles before it hits the maturity phase. Seed funding valuation is generally less as there is no proven market strategy associated with the product.
Read: The Emerging Logistics Tech Startups, Courier, Delivery Services in Bangladesh
The essential documents
An investor would always look for how organized a startup is. And the first step of organizing starts with the preparation of all the important documents. The documents include a business plan, executive summary, presentation deck, elevator pitch, and the NDA. All these documents are necessary when it comes to securing investment. The more organized you are, the easier it becomes to present your ideas professionally.
Set milestones
Every established business has its own set of strategic and organizational goals. As a startup, you should have your own goals and milestones as well. This is one of the reasons why a strategic business plan is so important when it comes to startups. Your investors will be looking for results from their investments. You need to outline a clear set of milestones to showcase the growth trajectory of your startup. As long as you stick to the milestones, it will help your business grow uniformly and attract investors as well.
Read Truck Lagbe: Story of a Successful Digital Trucking Startup in Bangladesh
Always be ready to scale
We mentioned the cycle a startup goes through in its initial days. Truth is, the seed period of any startup is short-lived. A startup with proper planning and business model will soon be ready to scale. It always starts with a sudden boom in sales or service requests. If you aren’t ready to serve every client proficiently, you stand to lose your reputation in the process.
The increased demand will initiate increased service requirements. So be ready to scale your business with part of the seed funding in the initial stage.
Read Arogga: The Bangladeshi Medicine Delivery Startup Which Raised $200k
Understand what you’ll give up
Seed investments aren’t different from traditional investments considering you will give up a part of your stakes to get the funding. There will be multiple stages of fundraising so you have to be careful how much you are staking out in the seed stage. This will also impact how much control you hold over the startup in its growth phase.
Bottom Line
Seed funding is a necessary and intricate part of any startup. However, many startups die out in their initial phase due to a lack of funding. In this article, we tried to focus on the core aspects that will help you ensure seed funding and control over your startup.
Read: Digital Healthcare Startups in Bangladesh: An Overview
7 Local Startups Get Tk 150m Funds from Startup Bangladesh Limited
There are many examples around us where the dream of becoming an entrepreneur is shattered due to a lack of capital despite all the wonderful ideas. While the first-world countries have all the opportunities and support to launch a startup, Bangladesh doesn't have a favorable condition to begin a startup. However, still, some enthusiastic minds took their step and became successful. To accelerate their initiative, government-owned Venture Capital Company Startup Bangladesh Limited started their journey.
The Journey of Startup Bangladesh LTD
The cabinet has approved a state-owned venture capital company called Startup Bangladesh Limited in August 2019. According to the government's Information and Communication Technology Divisions (ICT), the Prime Minister gave policy approval to the company at a regular meeting. Once the company is established, it will be able to invest a maximum of Tk. 1 crore in the seed stage and a maximum of Tk. 5 crores in the growth-guided startup round in terms of startup valuation.
Read: The Emerging Logistics Tech Startups, Courier, Delivery Services in Bangladesh
According to a written statement from the Department of Information and Communication Technology, Startup Bangladesh Limited will play a key role in creating a sustainable startup ecosystem in Bangladesh as the first state-owned venture capital company and will take the government's vision-2021 one step further.
The aim of the company is to encourage foreign direct investment in the country by transforming the innovative ideas of startups in Bangladesh into business, as well as to eliminate unemployment, create employment and economic development for the country as a whole. ICT Minister Zunaid Ahmed Polok mentioned in the cabinet meeting that the company needs to be formed to provide funding, mentoring, co-working space, legal aid, etc., to startups. In 2019-2020 budget, the government had allocated Tk. 100 crore for the startup sector.
The journey started with the capital of Tk. 500 crore. This year, startup Bangladesh Limited will provide Tk 100 crore to 50 entrepreneurs. The funds will be spent on creating young entrepreneurs, innovating technologies, advances, new workplaces, and socioeconomic change.
Read: Digital Healthcare Startups in Bangladesh: An Overview
The announcement came at the signing ceremony of an agreement to celebrate the 50th anniversary of independence as well as the first series of startups to invest in Bangladesh. With this, the new campaign titled 'ShotoBorshe Shoto Asha' of Startup Bangladesh Limited officially started its journey on March 31, 2021. The campaign was officially announced by ICT minister Zunaid Ahmed Palak. Deputy Minister for Education Mohibul Hasan Chowdhury was the special guest.
The company gave Tk. 15 crores to 7 Bangladeshi startups this year. The seven companies are Pathao Limited, Sheba XYZ, Chaldal.com, Intelligence Machine, Dhaka Cast, Eduhive, and Moner Bondhu. This fund will enable them to improve the quality of their products or services, increase productivity, market and improve supply-chain management.
This time Startup Bangladesh Limited is investing only in established and successful ventures. But the company will also invest in the new entrants too, especially the students. Students need to be introduced to such startups; then they will be able to do something on their own without running after the job.
Read Angel Investment 101: Is It the Right Track for Your Startup?
Seven Bangladeshi Startups to Get Investments from Startup Bangladesh LTD
Following are the details of the 7 Bangladeshi who are getting Tk.15 crore.
Pathao
Bangladeshi ride-sharing company Pathao is going to get more investment and this time from the government-owned venture capital company. However, the exact amount is not published yet, but they will get a significant amount for sure. This is not the first time that Pathao received an investment. Previously the company raised investment from the secondary market in 2018 from Clearstone.
Earlier, Gojek, an Indonesian ride-sharing company, made a big investment in Pathao. Gojek invested $2 million in 2017.
In 2015, Pathao started its journey as a courier service and later brought ride-sharing services through the mobile app. At first, bikes were added, and then car or car services were added. After receiving the investment, the company adds food delivery and payment services to their services. But Pathao Pay as a payment service was stopped later as it did not get approval from Bangladesh Bank.
Pathao has expanded its ride-sharing service to Dhaka, Chittagong, and Sylhet in the country. It has also launched a ride-sharing service in Nepal.
Read:The 7 Most Promising Tech Startups in Bangladesh
Sheba XYZ
Seva XYZ is an online service-based marketplace in Bangladesh. There are many services in the service app, including air conditioning service, electric and home appliance, plumbing and sanitary, furniture making and repair, wall painting, house cleaning. The organization has worked on a personal and small scale for so many days. Recently, they have started providing services to the corporate sector by increasing the scope of their activities.
Sheba XYZ got funding from Startup Bangladesh Limited. Nevertheless, the company also raised an overall $1 million previously. The company needed at least two million more dollars to run the operations at home and abroad. Hence, the investment from the government-owned venture capital company will surely boost Sheba XYZ to expand its business.
Read The SWAP story of Bangladesh's first reCommerce startup
Motorcycle Loans in Bangladesh: Turning Your Two-wheeler Dream into Reality
Whether riding as a hobby or as a daily commuter, motorcycles have long been popular in Bangladesh. But a proper two-wheeler will set you back a considerable amount of money which is often out of reach for many. But should that stop you from getting one? Not at all. In fact, several banks offer loans for your two-wheeler. So which banks in Bangladesh are the best for motorcycle loans? And what should you consider before getting one? Let's find out.
Factors to consider before taking a motorbike loan
Interest rate
Interest rate is the main universal factor to compare between loans. Almost all the banks of Bangladesh have a unified interest scheme against their motorcycle loans. However, some banks charge more for some added perks.
Loan security
Loan security is another important factor. Loans of significant amounts require some form of security before they are disbursed. While it generally doesn’t apply to motorcycle loans as the amount is significantly less. However, there might be exceptions and so you have to be careful before signing up.
Read: Angel Investment 101: Is It the Right Track for Your Startup?
Loan inclusions
Most motorcycle loans don’t cover the entire cost of the bike. Usually, it’s a percentage of the price and associated costs. The percentage amount differs from bank to bank. As a loan seeker, you would want a loan that will cover the entire cost of the cycle or a close amount. However, that might come with higher interest rates.
Early termination
Check whether your loan offers an early termination policy. There might be situations where you would want to pay off extra or the remaining amount in a lump sum before the maturity period. While many banks allow an early termination policy, it may come with added costs. So, it's important to consider whether you’ll be paying off your loan before maturity.
Loan fees
Loan fees are charged as processing fees or loan maintenance fees. Most banks in Bangladesh don’t charge a loan maintenance fee. However, there are banks that charge loan processing fees. Typically, it’s a lump sum or a small percentage of the loan. But this is also something to keep in consideration before choosing a loan scheme.
Read Best Car Loans in Bangladesh to Grab Your Dream Car
Best Banks for motorcycle loans in Bangladesh
Eastern Bank Two-Wheeler Loan
Eastern bank is one of the premier private banks of Bangladesh known for its competitive and exceptional customer service. The bank has a two-wheeler loan scheme which has several perks.
EBL offers loans ranging from 50000 BDT to 4 Lac BDT which is one of the highest in Bangladesh. However, you will get 70% of the actual price of the bike as a loan. The registration will be a joint one and you will need to have a minimum income of 25000 BDT to be eligible for this loan. There is a 0.5% processing fee and 0.5 % early settlement fee added to the loan.
The standard 9% interest rate is applicable for the two-wheeler loan. You will also need to have first-party insurance while registering the bike. EBL two-wheeler loan can be a great choice considering the low eligibility criteria as well as provision for early settlement. For more information, visit the official site here.
Read:Student Loans in Bangladesh: Banks Offering Education Loans for Higher Studies