Transcript of a conversation with Tanveer Ali about investing in Bangladesh’s startup ecosystem. Ali discusses reasons to invest (large population, mobile internet growth), the need for long-term commitment from investors and founders, cultural attitudes toward failure, common founder weaknesses (ego, lack of focus), and why hands-on investor involvement can be necessary in early-stage Bangladeshi startups.
Chapters
Tanvir, you like, you have a very interesting like career and also like education wise. So you are already like running Olympic for in Bangladesh already. And I know like you are investing internationally already so because I know you because we invested together in one of the companies, Silicon Valley. So like before like I started investing in Bangladesh in 2013 with like Dukdugi and the startup weekend in that time. So you guys, you started probably investing in GNR at the beginning with Nash. So like after in that period like I end up spending investing is almost like 8 to 10 companies already in last 3, 4 years you guys also invested a lot. Like I was really like inspired to see like in 2016 especially you invested in a lot of new companies in Bangladesh. Especially like the way you invested in Pathao and like in the game development company you are investing. So what like when you had access to invest in anywhere in the world, like in Bay Area, you also have good access in Europe. So what made you to choose to invest in Bangladesh this heavily?
I think there's a lot of things that contribute to that. Bangladesh's population size is one of them. 160 million people is a very interesting opportunity, especially for a country that's just now really being introduced to mobile Internet. And obviously as we can see where E commerce is still at such an early stage and online consumer culture is still very premature. There are significant opportunities also in countries where you have very large populations and you have things like significant amounts of traffic and logistical issues, the opportunity to solve very difficult problems such as traffic are really unique opportunities. And that's why companies like Pathao are really exciting to us. But you know, Bangladesh is a kind country that's very early on in the ecosystem and you know, while there are significant opportunities, there's still obviously a lot of, a lot of risks with that and there are a lot of things that you have to be cognizant of while or when you do invest in in Bangladesh.
Investing in Bangladesh is very different than investing in anywhere in the world. Like I never invested in Africa so I don't have like a idea like how that market work. But in Bangladesh is very different. The way the our like education level for our entrepreneurs, like the way they understand the legal systems and everything is actually very different. Then the next phase is like it's very important to understand the ecosystem for an investor because like if we are not patience, if we do not have the dream, big dream that we are actually investing in, it could actually completely jeopardize the whole ecosystem. So how do you see the startup does after they get the investment, like how the next phase of growth happens.
So I think, just as Swahimbai was saying, there tends to be a culture of this being a sprint rather than a marathon, not just for the startup entrepreneurs, but also for the investors in these sorts of businesses, similar to what they've seen in their own. And I think that that's more detrimental to this ecosystem than anything else. You know, this is very much a marathon. You know, Silicon Valley, globally, typically seven to eight years is the amount of time it really takes to see some sort of result on your startup investment. Whether that's success, whether that's ipo, whether that's liquidation, change of control. This really is a much longer term investment opportunity in an ecosystem like this, very similar to anywhere else in the world. And I think that for us to see success here, we have to see that investment in the long term, obviously by the investors, but also by the founders. You know, the founders really have to have conviction in their ideas. You know, the biggest issue, the biggest concern I see is that entrepreneurs come to me with five different business ideas saying, I'm working on this, this, this and this. You know, they're lacking focus and, you know, and there's so many problems with that. But, but the most important problem is that if they don't have conviction in their idea, how can they expect investors to have conviction in them? You know, and to take that one step further, you know, they're, they're, they're doing two or three things on the side. And I think, you know, if they're not willing to invest 100% of effort and energy into this, it's very difficult to convince others to put money into them because at the end of the day, you're investing in the entrepreneur, they.
Will go to maybe plan B.
Sure, right. You know, and you know, and you really want to invest in someone who has no other choice but to succeed.
What do you feel like? I understand and I value this gesture of like investing like full time and like seeing that long term, like what could happen in long term. But what do you feel like how our ecosystem, like how our founders are feeling about that? Like, do you see, like people really understand about the long term vision?
I think that some are starting to get it, but I think that there's a lot of problems with the, with the, I guess some of the cultural issues here in the sense that we stigmatize failure too much. And you know, in most parts of the world, even in Silicon Valley, you know, we embrace it, you Know, we don't call it failure, we call it an iteration. You know, they even have conferences on failure called failcon, you know, that embrace failure. But here, you know, we stigmatize failure so much and that scares people and you know, they think, okay, I'd rather keep my, you know, my salary job rather than take this risk, fail and then be embarrassed and be an embarrassment to my family. And so until we make that change and until we convince entrepreneurs that it's okay to try and fail, we're not going to be able to have significant advancements in the ecosystem.
The way you see our ecosystem is growing right now. Like what are the main things? Like you try to actually look when you are seeing like new business opportunities, when you are actually meeting someone who is actually coming up with a new business, what are the main things you want to actually see and what are the main like lackings you see all the time?
The biggest thing is ego. Most entrepreneurs unfortunately think their business is worth far more than it's actually worth.
And that's overvaluating themselves.
Oh yeah, overvalue themselves, overvalue their business and you know, product market fit and you know, and understanding market sizes is great, but unless you can actually execute on that and actually deliver on that, it's difficult for people to be convinced because Bangladesh has got very, very high risk too, you know, and, and so what, you look for risk adjusted returns and so when you look for those, you have to get significant discounts to valuation to justify it. And you know, when you see a startup founder that has no experience that says, oh, my company is worth 100 crore taka, you know, and I have 55,000 taka in revenue this month. It's difficult for you to take them seriously. And so ego is a big concern here, you know, and I think that, you know, if we can get a larger number of more rational entrepreneurs, I think that would really help the ecosystem.
And like, do you see like our ecosystem is actually growing? Like, how do you compare our like whole ecosystem like three years back and right now?
Yeah, you know, I think what's important to understand is I think the ecosystem is growing. I think that there are some really cool companies out here. What's, what's really nice to see and to be honest with you, is there are, there are companies in Bangladesh that are doing amazing things. These are companies that you or I, or even as a matter of fact basis have never heard of before. But they're just doing amazing things and solving, solving complex problems that we've never heard of because the ones that are too busy working don't have time for.
This sort of stuff in terms of like, idea and like idea coming into like real business. So Arif was actually, at the beginning was saying, like, sometimes we actually value the idea more, especially to the founders. They think like their idea is very unique and we should actually pay for his idea. So we all know like, it's all about execution, right? Idea is nothing if you can't actually execute.
I mean, ideas are a dime a dozen, right? You know, I mean, that's the expression, like everyone's got an idea. And I can assure you that most ideas that I've heard, I've probably heard a dozen times, not just in Bangladesh, but around the world. And it's not unique to me, it's unique to everyone. You know, I mean, these ideas to solve problems are so common, but it's about how you execute to essentially solve those very complex problems.
Another, like, interesting thing, I want to actually talk in detail. If we. If you have time, like 3 of your main investment, like GnR, then like Chaldal and also the Patao, you don't just invest money, you also invest your time. Because I know like you are CFO in official title for gnr, right? And you are also like heavily involved at the beginning, for childhood. I don't know, like how you are involved right now. And for Patao, there's actually high growth. So like, why you need to get involved that much? Like, when I invest in any Silicon Valley company, I don't need to actually get involved. If I'm in the board, maybe I just have to attend the board meeting. So, like, why is this, like, why you are doing this for?
I think sometimes, to be very frank with you, you don't have a choice. I think that, you know, if we're going to, if we're going to make an investment, sometimes you require a higher degree of hand holding. And I think you also want to help companies grow and provide resources that are transferable. You know, we've invested globally and so the skills that, you know or the lessons that we've learned are transferable. And if we can transfer those over to, you know, those best practices over to the, to the companies in Bangladesh and the founders can take advantage of that. So we can expedite growth or expedite the product build. Why not? I think sometimes it really helps build a better company.
