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Venture capital for future growth of Bangladesh

Venture capital is also a way in which the private and public sectors can construct an institution that systematically creates business network for the new firms and industries
Masihul Huq Chowdhury
Venture capital for future growth of Bangladesh

Bangladesh is making so much improvement in the information and communication sector. ICT Division is continuously providing its support to bring innovation and modernization in different aspects of national life. ICT Division has also constantly supported the startup ecosystem in the country. ICT sector of Bangladesh is focused on turning Bangladesh into an innovation-driven nation. The Government has undertaken a pioneering initiative titled Innovation, Design & Entrepreneurship Academy that is iDEA under the revolutionary Startup Bangladesh initiative.” ICT Division has launched a site Startup Bangladesh recently. The aim is to create a national entrepreneurship platform to enable Bangladesh to innovate faster, create new opportunities, develop technical skills, and help realise the vision of Digital Bangladesh. With our population growing, globalisation rapidly changing the international business climate and sometimes making it uncertain, a culture of innovation can provide its own energy for Bangladesh by affording us opportunities for the young entrepreneurs. The government now aims to build up a venture capitalist ecosystem. Venture capital investments spur innovation, create employment, and make a significant contribution to economic growth. By initiating Startup Bangladesh, ICT Division wants to make sure that the young entrepreneurs can accelerate the pace of innovation and lead the economy to a self-sustained path to growth. With this in mind Startup Bangladesh aims to pursue the following goals: 1. Create an accelerator and its accompanying ecosystem of entrepreneurs, investors, mentors, advisors to promote Bangladesh as a global hub for tech entrepreneurship. 2. Actively collaborate with entrepreneurs, industry, academia, financial institutions, and government to stimulate innovation. 3. Create the appropriate business, operational and regulatory frameworks to support bold dreams.

Georges Doriot, the "father of venture capitalism" (and former assistant dean of Harvard Business School), founded INSEAD in 1957. Along with Ralph Flanders and former President of MIT Karl Crompton, Doriot founded ARDC in 1946 to encourage private-sector investment in businesses run by soldiers returning from World War II. ARDC became the first institutional private-equity investment firm to raise capital from sources other than wealthy families, although it had several notable investment successes as well. ARDC is credited with the first trick when its 1957 investment of $70,000 in Digital Equipment Corporation (DEC) would be valued at over $355 million after the company's initial public offering in 1968 (representing a return of over 1200 times on its investment and an annualised rate of return  of 101%). Venture Capital is a type of private equity a form of financing that is provided by firms or funds to small, early stage  that are deemed to have high growth potential, or which have demonstrated high growth (in terms of number of employees, annual revenue, or both). Venture capital firms or funds invest in these early-stage companies in exchange for equity, or an ownership stake, in the companies they invest in. Venture capitalists take on the risk of financing risky start-ups in the hopes that some of the firms they support will become successful. The start-ups are usually based on an innovative technology or bu and they are usually from the high technology  industries, such as information technology( IT), social media  or biotechnology.

The typical venture capital investment occurs after an initial "seed funding" round. The first round of institutional venture capital to fund growth is called the Series A round. Venture capitalists provide this financing in the interest of generating a return through an eventual "exit" event, such as the company selling shares to the public for the first time in an Initial Public Offering (IPO) or doing a merger and acquisition (also known as a "trade sale") of the company.

In addition to angel investing, equity crowdfunding and other seed funding  options, venture capital is attractive for new companies with limited operating history that are too small to raise capital  in the public markets and have not reached the point where they are able to secure a bank loan  or complete a debt offering . In exchange for the high risk  that venture capitalists assume by investing in smaller and early-stage companies, venture capitalists usually get significant control over company decisions, in addition to a significant portion of the companies' ownership (and consequently value). Start-ups like Uber, Airbnb, Flipkart, ReviewAdda, Xiaomi & Didi Chuxing are highly valued startups, where venture capitalists contribute more than financing to these early-stage firms; they also often provide strategic advice to the firm's executives on its business models and marketing strategies.

Venture capital is also a way in which the private and public sectors can construct an institution that systematically creates business network  for the new firms and industries, so that they can progress and develop. This institution helps identify promising new firms and provide them with finance, technical expertise, mentoring, marketing "know-how", and business models. Once integrated into the business network, these firms are more likely to succeed, as they become "nodes" in the search networks for designing and building products in their domain. However, venture capitalists' decisions are often biased, exhibiting for instance overconfidence and illusion of control, much like entrepreneurial decisions in general.

A venture may be defined as a project prospective converted into a process with an adequate assumed risk and investment. With few exceptions, private equity in the first half of the 20th century was the domain of wealthy individuals and families. The Wallenbergs, Vanderbilts, Whitneys, Rockefellers, and Warburgs were notable investors in private companies in the first half of the century. In 1938, Laurance Rockefeller  helped finance the creation of both Eastern Air Lines  and Douglas Aircraft and the Rockefeller family had vast holdings in a variety of companies. Before the Second World War, money orders (originally known as "development capital") remained primarily the domain of wealthy individuals and families. Only after 1945 did "true" private equity investments begin to emerge, notably with the founding of the first two venture capital firms in 1946: American Research and Development Corporation (ARDC) and J.H. Whitney and Company.

One of the first steps toward a professionally managed venture capital industry was the passage of the Small Business Investment Act 1958. The 1958 Act officially allowed the U.S. Small Business Administration Act(SBA) to license private "Small Business Investment Companies" (SBICs) to help the financing and management of the small entrepreneurial businesses in the United States.During the 1950s, putting a venture capital deal together may have required the help of two or three other organizations to compete the transaction. It was a business that was growing very rapidly, and as the business grew, the transactions grew exponentially.During the 1960s and 1970s, venture capital firms focused their investment activity primarily on starting and expanding companies. More often than not, these companies were exploiting breakthroughs in electronic, medical, or data-processing technology. As a result, venture capital came to be almost synonymous with technology finance. An early West Coast venture capital company was Draper and Johnson Investment Company, formed in 1962[13] by William Henry Draper III and Franklin P. Johnson, Jr. In 1965, Sutter Hill Ventures acquired the portfolio of Draper and Johnson as a founding action. Bill Draper and Paul Wythes were the founders, and Pitch Johnson formed Asset Management Company at that time. By the end of the 1980s, venture capital returns were relatively low, particularly in comparison with their emerging leveraged buy out cousins, due in part to the competition for hot startups, excess supply of IPOs and the inexperience of many venture capital fund managers. Growth in the venture capital industry remained limited throughout the 1980s and the first half of the 1990s, increasing from $3 billion in 1983 to just over $4 billion more than a decade later in 1994. As investors chase yields by investing in high growth emerging markets, private equity firm Leopard Capital is looking beyond traditional economic powerhouses like China and India, to less talked about frontier markets including Myanmar, Bangladesh and Cambodia based on their future growth potential.

,” In Bangladesh, the potential lies in traditionally “Indian-dominated” sectors such as textiles, pharmaceuticals, technology and outsourcing, he said. “We have a chance to ‘relive’ the now foregone India play.” According to Clayton, the best ways to invest in Bangladesh are via the stock market, the Dhaka Stock Exchange, which slumped over 35 percent in 2011, or private equity funds. Leopard Capital is currently putting together a $100 million fund for Bangladesh. The country requires substantial investment in the start up ventures for infrastructure, health, distribution, drinking water apart from digital services. To unleash the full potential, the country needs massive investments in start up venture to envisage growth agenda for public and private sector and also projects designed under Public Private Partnership.

The writer, a banker by profession, has worked both in local and overseas market with various foreign and local banks in different positions.

Bangladesh is making so much improvement in the information and communication sector. ICT Division is continuously providing its support to bring innovation and modernization in different aspects of national life. ICT Division has also constantly supported the startup ecosystem in the country. ICT sector of Bangladesh is focused on turning Bangladesh into an innovation-driven nation. The Government has undertaken a pioneering initiative titled Innovation, Design & Entrepreneurship Academy that is iDEA under the revolutionary Startup Bangladesh initiative.” ICT Division has launched a site Startup Bangladesh recently. The aim is to create a national entrepreneurship platform to enable Bangladesh to innovate faster, create new opportunities, develop technical skills, and help realise the vision of Digital Bangladesh. With our population growing, globalisation rapidly changing the international business climate and sometimes making it uncertain, a culture of innovation can provide its own energy for Bangladesh by affording us opportunities for the young entrepreneurs. The government now aims to build up a venture capitalist ecosystem. Venture capital investments spur innovation, create employment, and make a significant contribution to economic growth. By initiating Startup Bangladesh, ICT Division wants to make sure that the young entrepreneurs can accelerate the pace of innovation and lead the economy to a self-sustained path to growth. With this in mind Startup Bangladesh aims to pursue the following goals: 1. Create an accelerator and its accompanying ecosystem of entrepreneurs, investors, mentors, advisors to promote Bangladesh as a global hub for tech entrepreneurship. 2. Actively collaborate with entrepreneurs, industry, academia, financial institutions, and government to stimulate innovation. 3. Create the appropriate business, operational and regulatory frameworks to support bold dreams.

 

Georges Doriot, the "father of venture capitalism" (and former assistant dean of Harvard Business School), founded INSEAD in 1957. Along with Ralph Flanders and former President of MIT Karl Crompton, Doriot founded ARDC in 1946 to encourage private-sector investment in businesses run by soldiers returning from World War II. ARDC became the first institutional private-equity investment firm to raise capital from sources other than wealthy families, although it had several notable investment successes as well. ARDC is credited with the first trick when its 1957 investment of $70,000 in Digital Equipment Corporation (DEC) would be valued at over $355 million after the company's initial public offering in 1968 (representing a return of over 1200 times on its investment and an annualised rate of return  of 101%). Venture Capital is a type of private equity a form of financing that is provided by firms or funds to small, early stage  that are deemed to have high growth potential, or which have demonstrated high growth (in terms of number of employees, annual revenue, or both). Venture capital firms or funds invest in these early-stage companies in exchange for equity, or an ownership stake, in the companies they invest in. Venture capitalists take on the risk of financing risky start-ups in the hopes that some of the firms they support will become successful. The start-ups are usually based on an innovative technology or bu and they are usually from the high technology  industries, such as information technology( IT), social media  or biotechnology. 

The typical venture capital investment occurs after an initial "seed funding" round. The first round of institutional venture capital to fund growth is called the Series A round. Venture capitalists provide this financing in the interest of generating a return through an eventual "exit" event, such as the company selling shares to the public for the first time in an Initial Public Offering (IPO) or doing a merger and acquisition (also known as a "trade sale") of the company.

In addition to angel investing, equity crowdfunding and other seed funding  options, venture capital is attractive for new companies with limited operating history that are too small to raise capital  in the public markets and have not reached the point where they are able to secure a bank loan  or complete a debt offering . In exchange for the high risk  that venture capitalists assume by investing in smaller and early-stage companies, venture capitalists usually get significant control over company decisions, in addition to a significant portion of the companies' ownership (and consequently value). Start-ups like Uber, Airbnb, Flipkart, ReviewAdda, Xiaomi & Didi Chuxing are highly valued startups, where venture capitalists contribute more than financing to these early-stage firms; they also often provide strategic advice to the firm's executives on its business models and marketing strategies.

Venture capital is also a way in which the private and public sectors can construct an institution that systematically creates business network  for the new firms and industries, so that they can progress and develop. This institution helps identify promising new firms and provide them with finance, technical expertise, mentoring, marketing "know-how", and business models. Once integrated into the business network, these firms are more likely to succeed, as they become "nodes" in the search networks for designing and building products in their domain. However, venture capitalists' decisions are often biased, exhibiting for instance overconfidence and illusion of control, much like entrepreneurial decisions in general.

A venture may be defined as a project prospective converted into a process with an adequate assumed risk and investment. With few exceptions, private equity in the first half of the 20th century was the domain of wealthy individuals and families. The Wallenbergs, Vanderbilts, Whitneys, Rockefellers, and Warburgs were notable investors in private companies in the first half of the century. In 1938, Laurance Rockefeller  helped finance the creation of both Eastern Air Lines  and Douglas Aircraft and the Rockefeller family had vast holdings in a variety of companies. Before the Second World War, money orders (originally known as "development capital") remained primarily the domain of wealthy individuals and families. Only after 1945 did "true" private equity investments begin to emerge, notably with the founding of the first two venture capital firms in 1946: American Research and Development Corporation (ARDC) and J.H. Whitney and Company. 

One of the first steps toward a professionally managed venture capital industry was the passage of the Small Business Investment Act 1958. The 1958 Act officially allowed the U.S. Small Business Administration Act(SBA) to license private "Small Business Investment Companies" (SBICs) to help the financing and management of the small entrepreneurial businesses in the United States.During the 1950s, putting a venture capital deal together may have required the help of two or three other organizations to compete the transaction. It was a business that was growing very rapidly, and as the business grew, the transactions grew exponentially.During the 1960s and 1970s, venture capital firms focused their investment activity primarily on starting and expanding companies. More often than not, these companies were exploiting breakthroughs in electronic, medical, or data-processing technology. As a result, venture capital came to be almost synonymous with technology finance. An early West Coast venture capital company was Draper and Johnson Investment Company, formed in 1962[13] by William Henry Draper III and Franklin P. Johnson, Jr. In 1965, Sutter Hill Ventures acquired the portfolio of Draper and Johnson as a founding action. Bill Draper and Paul Wythes were the founders, and Pitch Johnson formed Asset Management Company at that time. By the end of the 1980s, venture capital returns were relatively low, particularly in comparison with their emerging leveraged buy out cousins, due in part to the competition for hot startups, excess supply of IPOs and the inexperience of many venture capital fund managers. Growth in the venture capital industry remained limited throughout the 1980s and the first half of the 1990s, increasing from $3 billion in 1983 to just over $4 billion more than a decade later in 1994. As investors chase yields by investing in high growth emerging markets, private equity firm Leopard Capital is looking beyond traditional economic powerhouses like China and India, to less talked about frontier markets including Myanmar, Bangladesh and Cambodia based on their future growth potential.

,” In Bangladesh, the potential lies in traditionally “Indian-dominated” sectors such as textiles, pharmaceuticals, technology and outsourcing, he said. “We have a chance to ‘relive’ the now foregone India play.” According to Clayton, the best ways to invest in Bangladesh are via the stock market, the Dhaka Stock Exchange, which slumped over 35 percent in 2011, or private equity funds. Leopard Capital is currently putting together a $100 million fund for Bangladesh. The country requires substantial investment in the start up ventures for infrastructure, health, distribution, drinking water apart from digital services. To unleash the full potential, the country needs massive investments in start up venture to envisage growth agenda for public and private sector and also projects designed under Public Private Partnership.

The writer, a banker by profession, has worked both in local and overseas market with various foreign and local banks in different positions

Bangladesh is making so much improvement in the information and communication sector. ICT Division is continuously providing its support to bring innovation and modernization in different aspects of national life. ICT Division has also constantly supported the startup ecosystem in the country. ICT sector of Bangladesh is focused on turning Bangladesh into an innovation-driven nation. The Government has undertaken a pioneering initiative titled Innovation, Design & Entrepreneurship Academy that is iDEA under the revolutionary Startup Bangladesh initiative.” ICT Division has launched a site Startup Bangladesh recently. The aim is to create a national entrepreneurship platform to enable Bangladesh to innovate faster, create new opportunities, develop technical skills, and help realise the vision of Digital Bangladesh. With our population growing, globalisation rapidly changing the international business climate and sometimes making it uncertain, a culture of innovation can provide its own energy for Bangladesh by affording us opportunities for the young entrepreneurs. The government now aims to build up a venture capitalist ecosystem. Venture capital investments spur innovation, create employment, and make a significant contribution to economic growth. By initiating Startup Bangladesh, ICT Division wants to make sure that the young entrepreneurs can accelerate the pace of innovation and lead the economy to a self-sustained path to growth. With this in mind Startup Bangladesh aims to pursue the following goals: 1. Create an accelerator and its accompanying ecosystem of entrepreneurs, investors, mentors, advisors to promote Bangladesh as a global hub for tech entrepreneurship. 2. Actively collaborate with entrepreneurs, industry, academia, financial institutions, and government to stimulate innovation. 3. Create the appropriate business, operational and regulatory frameworks to support bold dreams. Georges Doriot, the "father of venture capitalism" (and former assistant dean of Harvard Business School), founded INSEAD in 1957. Along with Ralph Flanders and former President of MIT Karl Crompton, Doriot founded ARDC in 1946 to encourage private-sector investment in businesses run by soldiers returning from World War II. ARDC became the first institutional private-equity investment firm to raise capital from sources other than wealthy families, although it had several notable investment successes as well. ARDC is credited with the first trick when its 1957 investment of $70,000 in Digital Equipment Corporation (DEC) would be valued at over $355 million after the company's initial public offering in 1968 (representing a return of over 1200 times on its investment and an annualised rate of return of 101%). Venture Capital is a type of private equity a form of financing that is provided by firms or funds to small, early stage that are deemed to have high growth potential, or which have demonstrated high growth (in terms of number of employees, annual revenue, or both). Venture capital firms or funds invest in these early-stage companies in exchange for equity, or an ownership stake, in the companies they invest in. Venture capitalists take on the risk of financing risky start-ups in the hopes that some of the firms they support will become successful. The start-ups are usually based on an innovative technology or bu and they are usually from the high technology industries, such as information technology( IT), social media or biotechnology. The typical venture capital investment occurs after an initial "seed funding" round. The first round of institutional venture capital to fund growth is called the Series A round. Venture capitalists provide this financing in the interest of generating a return through an eventual "exit" event, such as the company selling shares to the public for the first time in an Initial Public Offering (IPO) or doing a merger and acquisition (also known as a "trade sale") of the company. In addition to angel investing, equity crowdfunding and other seed funding options, venture capital is attractive for new companies with limited operating history that are too small to raise capital in the public markets and have not reached the point where they are able to secure a bank loan or complete a debt offering . In exchange for the high risk that venture capitalists assume by investing in smaller and early-stage companies, venture capitalists usually get significant control over company decisions, in addition to a significant portion of the companies' ownership (and consequently value). Start-ups like Uber, Airbnb, Flipkart, ReviewAdda, Xiaomi & Didi Chuxing are highly valued startups, where venture capitalists contribute more than financing to these early-stage firms; they also often provide strategic advice to the firm's executives on its business models and marketing strategies. Venture capital is also a way in which the private and public sectors can construct an institution that systematically creates business network for the new firms and industries, so that they can progress and develop. This institution helps identify promising new firms and provide them with finance, technical expertise, mentoring, marketing "know-how", and business models. Once integrated into the business network, these firms are more likely to succeed, as they become "nodes" in the search networks for designing and building products in their domain. However, venture capitalists' decisions are often biased, exhibiting for instance overconfidence and illusion of control, much like entrepreneurial decisions in general. A venture may be defined as a project prospective converted into a process with an adequate assumed risk and investment. With few exceptions, private equity in the first half of the 20th century was the domain of wealthy individuals and families. The Wallenbergs, Vanderbilts, Whitneys, Rockefellers, and Warburgs were notable investors in private companies in the first half of the century. In 1938, Laurance Rockefeller helped finance the creation of both Eastern Air Lines and Douglas Aircraft and the Rockefeller family had vast holdings in a variety of companies. Before the Second World War, money orders (originally known as "development capital") remained primarily the domain of wealthy individuals and families. Only after 1945 did "true" private equity investments begin to emerge, notably with the founding of the first two venture capital firms in 1946: American Research and Development Corporation (ARDC) and J.H. Whitney and Company. One of the first steps toward a professionally managed venture capital industry was the passage of the Small Business Investment Act 1958. The 1958 Act officially allowed the U.S. Small Business Administration Act(SBA) to license private "Small Business Investment Companies" (SBICs) to help the financing and management of the small entrepreneurial businesses in the United States.During the 1950s, putting a venture capital deal together may have required the help of two or three other organizations to compete the transaction. It was a business that was growing very rapidly, and as the business grew, the transactions grew exponentially.During the 1960s and 1970s, venture capital firms focused their investment activity primarily on starting and expanding companies. More often than not, these companies were exploiting breakthroughs in electronic, medical, or data-processing technology. As a result, venture capital came to be almost synonymous with technology finance. An early West Coast venture capital company was Draper and Johnson Investment Company, formed in 1962[13] by William Henry Draper III and Franklin P. Johnson, Jr. In 1965, Sutter Hill Ventures acquired the portfolio of Draper and Johnson as a founding action. Bill Draper and Paul Wythes were the founders, and Pitch Johnson formed Asset Management Company at that time. By the end of the 1980s, venture capital returns were relatively low, particularly in comparison with their emerging leveraged buy out cousins, due in part to the competition for hot startups, excess supply of IPOs and the inexperience of many venture capital fund managers. Growth in the venture capital industry remained limited throughout the 1980s and the first half of the 1990s, increasing from $3 billion in 1983 to just over $4 billion more than a decade later in 1994. As investors chase yields by investing in high growth emerging markets, private equity firm Leopard Capital is looking beyond traditional economic powerhouses like China and India, to less talked about frontier markets including Myanmar, Bangladesh and Cambodia based on their future growth potential. ,” In Bangladesh, the potential lies in traditionally “Indian-dominated” sectors such as textiles, pharmaceuticals, technology and outsourcing, he said. “We have a chance to ‘relive’ the now foregone India play.” According to Clayton, the best ways to invest in Bangladesh are via the stock market, the Dhaka Stock Exchange, which slumped over 35 percent in 2011, or private equity funds. Leopard Capital is currently putting together a $100 million fund for Bangladesh. The country requires substantial investment in the start up ventures for infrastructure, health, distribution, drinking water apart from digital services. To unleash the full potential, the country needs massive investments in start up venture to envisage growth agenda for public and private sector and also projects designed under Public Private Partnership. The writer, a banker by profession, has worked both in local and overseas market with various foreign and local banks in different positions

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Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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