Bangladesh's banking sector is set to make an unprecedented entry into venture financing as a Tk450 crore start-up investment fund backed by 39 commercial banks begins operations next week, marking a major shift from conventional lending towards equity-driven innovation financing.
The newly formed Bangladesh Start-up Investment Company (BSIC) is expected to formally launch operations on Tuesday, opening the door for direct institutional investment into high-growth start-ups across technology, innovation and emerging business sectors.
The initiative signals a structural transformation in Bangladesh's financial landscape, with banks moving beyond traditional credit operations to become shareholders in next-generation enterprises.
BSIC Chairman Masrur Arefin described the venture as a long-term strategic platform aimed at building sustainable innovation capital in Bangladesh.
"The company will provide capital as equity. It will not give loans. It will hold shares and oversee operations," he said, adding that the company's guiding slogan is "Capital for Next Generation".
Industry insiders say the Tk450 crore fund has been built from allocations accumulated under a central bank directive requiring banks to reserve one per cent of annual profits for start-up development.
By pooling contributions from 39 banks into a single institutional platform, the initiative has created one of the country's largest domestically backed innovation funds, capable of spreading risk while targeting scalable long-term returns.
Unlike traditional SME lending, the fund will focus entirely on equity investment, enabling start-ups to expand without the immediate burden of repayment obligations. Analysts say the model also creates a new earnings avenue for banks through future capital gains, aligning Bangladesh's banking industry more closely with global venture capital practices.
Market observers view the move as a potential turning point for Bangladesh's start-up ecosystem, which has long depended heavily on foreign investors and a small number of local venture capital firms.
The arrival of institutional bank-backed funding is expected to strengthen local ownership of innovation, reduce dependence on overseas capital and help retain promising businesses within the domestic economy.
Economists say the initiative could also accelerate financing for technology-driven enterprises, digital services, fintech, logistics, health-tech and export-oriented innovation sectors at a time when Bangladesh seeks to diversify its economic base beyond traditional industries.
However, experts caution that venture investment carries substantially higher risks than conventional banking.
They warn that successful execution will require professional fund management, rigorous due diligence, strong governance standards and carefully designed exit strategies to protect capital and ensure sustainable returns.
Despite the risks, the formation of Bangladesh Start-up Investment Company is widely being viewed as a landmark shift in financial intermediation.
With Tk450 crore in initial capital and backing from nearly the entire banking sector, the platform is positioning itself as a central vehicle for channelling institutional money into innovation - potentially reshaping how Bangladeshi start-ups are financed, scaled and globally positioned in the years ahead.
