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7 October, 2017 12:33:03 AM / LAST MODIFIED: 7 October, 2017 04:18:04 PM
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IT experts for stamp duty cut

venture capital funding for start-ups
Sharif Ahmed
IT experts for stamp duty cut

Venture capital is money invested in a risky business and can become the pivotal source of funding for start-ups and their potential growth, if the government and regulators ease some rules and waive stamp duty, say IT experts. Stamp duty is a tax that the buyer of a property or land costing above a certain sum has to pay.

The chairman of bdjobs, Fahim Mashroor, told The Independent that if the government waives 2 per cent of stamp duty to encourage venture financing, it would be considered a big amount to finance a start-up and its subsequent growth.

When asked about challenges, Fahim Mashroor said: “Banks don’t finance start-ups anywhere in the world. All the prominent and successful start-ups have raised funds themselves as well as through corporate firms.”

The amount needed to launch a start-up entirely depends on a firm’s dimension and condition, Mashroor told The Independent.

“When I started ajkerdeal, a Japanese firm financed us to start the business worth Tk 10 crore,” he said. Asked about the difficulties of launching a start-up, Fahim said: “Start-ups generally start with a tiny firm and eventually grows as the funding increases. It's indeed a long-term investment, which takes about seven to eight years. The income tax policy is not at all helpful to begin a start-up.”

Banks want collateral security, which is another hindrance, he noted.

According to e-Cab (e-commerce association of Bangladesh), Tk 1,000 crore worth of transactions are to be expected  in the e-commerce sector near future. So, venture capital investment is essential at this moment for the country’s e-commerce sector.

Talking about a 2 per cent waiver of stamp duty, e-CAB president Razib Ahmed said: “If the money raised by venture capital firms is Tk. 1,000 crore, they will have to pay 2 per cent of that, which amounts to Tk. 20 crore, to the government as stamp duty.”

He also said that Tk. 20 crore is a big amount that can be easily invested in 20 different IT start-ups.

“The proper valuation of a website is required to boost the e-commerce sector. The hindrance to financing an e-commerce site is the website valuation. With a proper valuation, we can get e-commerce funding from the government,” he said.

“Proper laws and institutions are needed for venture capital fund management.

A proper channel must be established to get venture capital funds,” he added.

He further said that foreign capital companies should come forward to build partnerships with local start-ups to ensure sustainable future growth.

According to a report called ‘Venture Capital: The Game Changer’, written by Shameem Ahsan, local companies like Priyo.com, BAGDOOM.com, Shohoz.com, Chaldal.com, Ajkerdeal.com, Chalo etc. can secure funding from international venture capital firms.

Silicon Valley-based Fenox Venture Capital has made some investments and plans to continue investing in Bangladesh.

 

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Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
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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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