Dhaka Chamber of Commerce and Industry (DCCI) president Ashraf Ahmed on Wednesday said that private equity and venture capital need to be promoted in Bangladesh to drive the growth and expansion of small enterprises.

‘Building a knowledge driven economy is vital for Bangladesh’s future, and new ventures need a supporting ecosystem to thrive.  Funding, in the form of patient equity from venture capital firms, is critical for success. Financing of innovation is not within the expertise of banks, the traditional sources of financing,’ he said.

The DCCI president made these remarks during a discussion titled “Connecting Innovative SMEs and Startups with Private Equity & Venture Capital Firms for Bridging the Financing Gap,” held at the DCCI office in the capital, according to a press release.

Ashraf noted that banks primarily rely on the valuation of physical assets for lending, which is not an ideal approach for businesses focused on creating Intellectual Property (IP).

‘As entrepreneurs, both as investors in growth and raising funding for innovation, we should focus on overcoming our challenges, within existing regulatory constraints,’ he added.

Professor Mohammad Abdul Momen, former director, Institute of Business Administration (IBA), University of Dhaka, said that the sector needs a conducive policy regime to grow.

‘Many innovative startups are coming out which is a good sign and we need to nurture them to sustain from the very beginning for the sake of country’s overall economy,’ he said.

He also called upon the young innovators of Bangladesh to patent their innovations for future.

Mohammad Ashraf Hossain, Head of Compliance and Company Secretary, Maslin Capital Limited; Shawkat Hossain, CEO, Bangladesh Venture Capital Limited; Jasim Mohammad Miah, Investment Manager, X Angel Limited and M M Ehsan Nizamee, CEO, Finager Fintech also spoke on the occasion from the venture capital and equity funding firms’ perspective.

They mentioned that for access to finance there are shortages of caterers and hurdles in proper process of valuation of assets.

Moreover, secured investment and return of revenue are critical in this sector, they added.

They also said that venture capitals and private equity investors can be the best option of alternative financing other than banks for the potential SMEs and startups.

Tech companies are facing difficulties in the valuation audit process due to having their assets in intellectual form, they added.

A total of eight representatives from PE and VC firms participated in the event. Additionally, 14 startup companies and 26 SME companies took part in the event as well.

Members of the Board of Directors among others were present in the meeting.