YY GOSHTI: CHALLENGES OF INCUBATING STARTUPS IN BANGLADESH

YY GOSHTI:
CHALLENGES OF
INCUBATING STARTUPS
IN BANGLADESH
CASE STUDY FOR COURSE L301: INTERNATIONAL BUSINESS ENVIRONMENT

Submitted to
Mahmud Habib Zaman
Adjunct Faculty
Institute of Business Administration
University of Dhaka

Submitted by
Farhan Uddin Ahmed
Roll: ZR-10
Section: B
BBA-26
Institute of Business Administration
University of Dhaka

Date of Submission: October 1, 2020

 YY GOSHTI: CHALLENGES OF INCUBATING STARTUPS IN BANGLADESH

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YY GOSHTI: CHALLENGES OF INCUBATING STARTUPS IN BANGLADESH

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Name: Tanzeem Noor

Position: Programs Lead

Organization/Company: YY Ventures Limited1

Organization Email: tanzeem@yy.ventures ; frontdesk@yygoshti.com

Contact Number: +8801685002192

Signature:

Date: 28/09/2020

28/09/2020l
YY Ventures Limited
9th Floor Grameen Telecom Bhaban, Zoo Road, Dhaka 1216

1
Prior May 2019, YY Goshti used to provide three services to social businesses: Incubation, Co-working space, and
digital marketing services. Since May 2019, YY Goshti was restructured with a parent company YY Ventures and
three subsidiaries each providing the one of the aforementioned services- YY Goshti (Incubation Program), Impact
Hub (Coworking Space), and Jam Roll (Digital Marketing Services)
 YY GOSHTI: CHALLENGES OF INCUBATING STARTUPS IN BANGLADESH

Table of Contents
Synopsis .......................................................................................................................................... 1
Introduction ..................................................................................................................................... 1
Overview of the Global Startup Ecosystem .................................................................................... 2
Startup Ecosystem in Bangladesh ................................................................................................... 3
Overview of YY Goshti .................................................................................................................. 5
About YY Goshti’s Incubator Program ...................................................................................... 5
The launch of YY Goshti ............................................................................................................ 7
Initial challenges ............................................................................................................................. 8
Key takeaways ................................................................................................................................ 8
References ....................................................................................................................................... 9
 YY GOSHTI: CHALLENGES OF INCUBATING STARTUPS IN BANGLADESH

Synopsis
The case highlights the growth of the startup ecosystem in Bangladesh, particularly those of
incubators. The company highlighted is YY Goshti- a social business incubator. The problems
faced by startups include funding, finding the right team, and networking. Ecosystem players like
incubators try to solve these issues. This case looks at the initial struggles of a startup as
experienced in the eyes of YY Goshti.

Introduction
YY Goshti is a Bangladeshi startup that provides social businesses the necessary capital and
resources in order for them to transform into viable ventures that will make lasting impact on the
communities. It is Bangladesh’s first independent social business incubator.

Figure 1: Logo of YY Goshti

Founded by Shazeeb M Khairul Islam in 2016, today it is one of the prominent business incubators
in the country. It focuses on social businesses, inspired by the work and words of Nobel Laureate
Professor Dr. Muhammad Yunus (more on this later). Thus, the name YY is added which is an
abbreviation of the phrase, “Yunus + Youth”. “Goshti” is Bangla for “Family”- all incubatees and
partners are considered as family members.
Incubators are part of the startup ecosystem. The startup ecosystem is a network of organizations
that help businesses flourish. As you will read in the following text, a startup ecosystem consists
of various organizations all of which help enterprises to grow and succeed.
Starting a business often has its own challenges. So has YY Goshti. In its incipient, it had problems
related to funding, developing sustainable startups, and developing a network.

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 YY GOSHTI: CHALLENGES OF INCUBATING STARTUPS IN BANGLADESH

Overview of the Global Startup Ecosystem

The global startup economy remains large, creating nearly USD 3 trillion in value, a figure on par
with the GDP of a G7 economy. (Startup Genome, 2020) Venture capital investments2 on startups
amounted to almost USD 300 billion around the world in 2019. (Rowley, 2020)
A startup ecosystem is made of individuals, startups in their various phases and various types of
organizations (physical and/or virtual), working together and acting as a system. These
organizations can be further divided into categories: universities, funding organizations, support
organizations (like incubators3, accelerators4, co-working spaces etc.), research organizations,
service provider organizations (like legal, financial services etc.) and large corporations. Different
organizations typically concentrate on
specific functions of the ecosystem
and/or startups at their particular
phase(s). (Startup Ecosystem
Whitepaper, 2013)
People from these different functions
are connected together through events,
activities, locations and interactions. As
startup ecosystems are generally
defined by the network of such
interactions among individuals,
institutions and their environment, they
can come in many types but are usually
better known as startup ecosystems of
specific cities. Although some think
that due to technology, the entire globe
can be considered as one big network of
Figure 2: Global Startup Ecosystem/ Source: Startup Ecosystem
startup ecosystems. (Startup Ecosystem Whitepaper, 2013
Whitepaper, 2013)
Silicon Valley, New York City, and London remains the world’s top 3 startup ecosystems as
ranked by Startup Genome. In recent years, however, the organization reported that ecosystems in
the Asia-Pacific region are growing with cities like Tokyo, Seoul, and Shenzhen leading the way.
Countries in the region like Australia, China, and India are seeing multiple cities emerging as new
ecosystems and thus contributing the overall rise of the region’s growth as a top startup ecosystem
hub.

2
Venture capital is a form of private equity and a type of financing that investors provide to startup companies and
small businesses that are believed to have long-term growth potential.
3
A business incubator is an organization that helps entrepreneurs flesh out business ideas.
4
A business accelerator is a program that gives developing companies access to mentorship, investors and other
support that help them become stable, self-sufficient businesses

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 YY GOSHTI: CHALLENGES OF INCUBATING STARTUPS IN BANGLADESH

Startup Ecosystem in Bangladesh

With over USD 200 million in foreign investments from big-name global investors and venture
capitals, the Bangladesh Startup Ecosystem is at a turning point. The development of active Angel
Investment Networks, Impact Investing, local and international accelerators / incubators has
propelled more than 1,000 active startups, creating more than 1.5 million jobs, including startup
products and services as part of the daily life of the country. (ul Haque et al., 2020)

Figure 3: Bangladesh Startup Ecosystem Development (edited) /Source: LightCastle Partners

LightCastle Partners, a business management consultancy based in the capital, identifies Dhaka,
Chattogram, and Sylhet as growing startup ecosystems in the country. The consultancy identifies
the following factors contributing to the growth of the ecosystems:
• Rising economy: Tech adaptable young population 62%+ under 35 years, 164 million
people (8th largest in the world) with high density (1200 people/Sq Km). Middle class
growing at 10% per annum to reach 34 million by 2025, 98% mobile phone connection,
62% internet penetration, 102 million+ people on the internet with 94 million mobile
internet penetration.

• Right demographic mix: Each year, the nation produces 5,000 + IT graduates, producing
a large community of entrepreneurs focused on solving key issues. The median age of the
nation, 27.9 years, means that more young people are willing to take risks and pursue
innovations. With restricted job opportunities due to the lack of large-scale
industrialization (except for RMG / Textile, which is still more labor-intensive than
automation), young STEM graduates are looking towards ICT-enabled businesses and
start-ups. Also, NRBs (Non-Resident Bangladeshis) are bringing in both investment capital
and technology transfer.

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 YY GOSHTI: CHALLENGES OF INCUBATING STARTUPS IN BANGLADESH

• Government support: The National ICT Strategy was deployed by the Government of
Bangladesh in 2009 to become Digital Bangladesh by 2021. In order to develop the local
startup ecosystem, government policies and initiatives from the ICT Ministry, such as
IDEA Project and Startup Bangladesh Limited with 100 crore BDT (USD 11.5 million)
funds, are carried out. In addition, to support technology firms, the government is setting
up 28 + Hi-Tech Parks, including infrastructure support such as data centers. Small-cap
stock exchange guidelines have also been approved by B-SEC (Bangladesh Securities and
Exchange Commission), which is a major step towards providing start-up exits for
investors.
Despite the rise, Bangladesh Startup Ecosystem ranks far behind in comparison to its peers.
Bangladesh ranks at 98 out of 100 countries in the ranking of global ecosystems by Startup Blink.
At USD 0.12 billion, funding as part of GDP remains below 1 percent. (ul Haque et al., 2020).
Although the nation rose to 168th in the worldwide ease of doing business rankings in 2020 from
176th in 2019, Bangladesh lags significantly behind other South Asian economies. (The World
Bank Group, 2019)
In order to understand the serious bottlenecks facing founders in running a business in Bangladesh,
LightCastle Partners carried out on 100 + start-up company founders in early 2020. The results
indicate that the start-up founders' top concerns were either seeking the right talent or access to
financing, followed by cash flow management, government support, and legal / regulatory affairs.

Figure 4: Startup Difficulty Index/ Source: LightCastle Partners

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 YY GOSHTI: CHALLENGES OF INCUBATING STARTUPS IN BANGLADESH

Overview of YY Goshti
YY Goshti is Bangladesh's first independent social business5 incubator. Formed in 2016, it has so
far supported 36 social businesses that have created more than a thousand jobs and improved the
lives of over 80,000 Bangladeshis.
Through a period of incubation as incubatees, social entrepreneurs and businesses are provided
with tools and resources to develop their business and impact. The four-month incubation program
is developed by social business leaders and investors to assist social entrepreneurs at an early stage
with the funding required to launch their minimum viable product and raise the seed capital needed.

About YY Goshti’s Incubator Program

YY Goshti’s incubator program provides the following support to its incubatees:
• Training on different aspects on launching a business
• Mentorship from business leaders and different entrepreneurs
• Pre-seed investment of up to BDT 1.5 million
• Network with national and international investors and angel6 networks
• Office Space
• Digital marketing, accounting, and legal support
Anyone who has identified a solution to a social problem and are looking forward to forming a
startup can join the incubator program. Interested entrepreneurs first participate in a bootcamp
where human-centered design thinking, strategy, social business model canvas, fundraising
techniques and other relevant topics are explored.
Each entrepreneur goes back to their area after the boot camp and works on their ideas for over a
month. They try to see whether or not there is a demand for their goods and services during this
month. After the one-month validation phase, YY Goshti plans a pitch camp and provides
instruction on investment pitching to the entrepreneurs. The latter become incubates after the pitch
camp round.

5
A social enterprise or social business is defined as a business that has specific social objectives that serve its primary
purpose. It seeks to maximize profits while maximizing benefits to society and the environment.
6
An angel investor (also known as a private investor, seed investor or angel funder) is a high net worth individual
who provides financial backing for small startups or entrepreneurs, typically in exchange for ownership equity in the
company.

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YY GOSHTI: CHALLENGES OF INCUBATING STARTUPS IN BANGLADESH

Figure 5: YY Goshti Incubator Program 2018/Source: YY Goshti

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 YY GOSHTI: CHALLENGES OF INCUBATING STARTUPS IN BANGLADESH

The launch of YY Goshti

The incubator is the brainchild of Shazeeb M Khairul Islam. Born in Chandpur as a son to a
businessman, he moved to the capital along with his family when he was ten years old. Attending
the University of Dhaka, he became involved with volunteering and extracurricular activities. It
was during these volunteering activities, Shazeeb realized most of these works were unsustainable
in nature and had limited scope for inclusive participation. At the same time, he attended an event
titled “Social Business Day” hosted by the founder of Grameen Bank and Nobel Laureate
Professor Dr. Muhammad Yunus. The speech given by Dr. Yunus on the event had a profound
impact on Shazeeb and he subsequently formed Social Business Youth Alliance Global (SBYA
Global) in 2014.
SBYA Global is a platform where youths everywhere can participate and learn about Social
Business. Started as a post on Facebook by
Shazeeb, the platform helped create interest on
social business among youths. The platform
also launched a business idea competition called
Social Business Champ. Although the
competition generated great ideas from youths
across 18 countries, Shazeeb was concerned
about something else- There were brilliant
business ideas but very few of them
materialized in real life.
While being concerned with the lack of
implementation of social business ideas,
Shazeeb attended a conference on social
business in Berlin in late 2015. There he met
Hans Reitz, co-founder of Grameen Creative
Lab and Kate Robertson, co-founder of One
Young World. Shazeeb. At this time, he Figure 6: Shazeeb MSource: Khairul Islam, the founder of YY Goshti/
Future Startup
thought of a platform that would provide ideas
to turn into viable social businesses. He shared the idea with Reitz and Robertson. Initially, he
wanted to start after 5 years so that he will have the experience and network. But it was Robertson
who convinced him to start now: “If you start it tonight then you would have around 7 years of
experience with this platform along with a full-fledged incubator in your country in 7
years.”(Tashnim, 2017)
Robertson’s words encouraged Shazeeb a lot. After returning to Dhaka, he approached to two of
his old colleagues- Shah Waseef Azim and Namista Tabassum. He shared his idea of a social
business incubator with them and they both agreed readily. They prepared a document and shared
it with Shazeeb’s mentor Dr. Yunus. Dr. Yunus, after asking a few questions, told Shazeeb to go
ahead if his heart wants so. This gave him encouragement and the three later went to M.K. Aaref
of EMK Center. Aaref provided them with grants, network, media, PR and a free space. YY Goshti
finally came into being in 2016 in a launch in front of the media at the EMK center.

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 YY GOSHTI: CHALLENGES OF INCUBATING STARTUPS IN BANGLADESH

Initial challenges
To help spread the message of YY Goshti, Shazeeb and his team used the large community
developed by his previous venture SBYA Global. The network of SBYA Global helped YY Goshti
to reach to universities and adjacent local areas.
The first incubator batch of YY Goshti had 5 startups. Out of these five, one of them survived.
Known as Avijatrik, the surviving incubatee went on to become one of the few travel companies
in Bangladesh working on sustainabile tourism. Since its inception in 2015, it has served more
than 10,000 travellers. It went on to win Grameenphone Accelerator Program and Youth Co-Lab,
sponsored by UNDP and the Citi Foundation.
The fate of the rest inactive four incubatees helped YY Goshti learn an important lesson. It found
out that the inactive incubatees had entrepreneurs having another venture or a full-time job. The
finding made it set the criteria for selecting the right entrepreneurs: people who are really into
building their social business, have entrepreneurial mindset and doing it not only for making
money and also for impact. (Tashnim, 2017)
YY Goshti also struggled with finding funds to support its incubatees. Various policy regulations
prevent foreigner from investing in both commercial and social enterprises. YY Goshti also
realized it made the mistake of thinking that it needs all the money at once- a business can start
small. So, it started laying out a logical plan infront of investors and asked them for small amounts
of money in periods, not a single sum in one day. Such requests for small funds helped investors
become convinced of YY Goshti’s work and the incubator was successful in building a network
of investors.
Cost of doing business is very high in cities like Dhaka. As a result, it becomes difficult for social
businesses to support themselves. To solve this problem, YY Goshti provides creative service to
social businesses at a reduced cost. For example, if it costs businesses BDT 50,000 to build a
decent website from an expert, YY Goshti can do almost similar work for just about BDT 25,000.
In recent years, YY Goshti has partnered with a number of organizations related to growth and
impact investment. Partnerships include the Agribusiness Booster Bangladesh, invests in the
agricultural sector, and The Blue Gold Initiative, a partnership between the Netherlands
Government and Bangladesh, which works in the South West of Bangladesh. YY Goshti works
with some of its partners in a pro-bono arrangement that often forces it to sacrifice work delivery
and schedule, and sometimes the meaning of the work is also undermined.

Key takeaways
• There is still room to grow for the startup ecosystem of Bangladesh
• Finding funding for startups is difficult in Bangladesh.
• Having the right team and network is important for building a startup

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References
Rowley, J. (2020). The Q4/EOY 2019 Global VC Report: A Strong End To A Good, But Not
Fantastic, Year. Retrieved 22 September 2020, from https://news.crunchbase.com/news/the-q4-
eoy-2019-global-vc-report-a-strong-end-to-a-good-but-not-fantastic-year/
Startup Genome. (2020). The Global Startup Ecosystem Report GSER 2020. Startup Genome
LLC. Retrieved from https://startupgenome.com/reports/gser2020
Tashnim, M. (2017). YY Goshti and Incubating Social Business In Bangladesh: An Interview With
Shazeeb M Khairul Islam, Founder and CEO, YY Goshti - Future Startup. Retrieved 25 September
2020, from https://futurestartup.com/2017/11/06/yy-goshti-incubating-social-business-
bangladesh-interview-shazeeb-m-khairul-islam-founder-ceo-yy-goshti/
The World Bank Group. (2019). Doing Business 2020: Bangladesh Improves Business Climate,
but More Remains to Be Done. Retrieved from https://www.worldbank.org/en/news/press-
release/2019/10/24/Bangladesh-improves-business-climate-but-more-remains-to-be-done
ul Haque, M., Mourshed, I., Huda, R., Islam, B., Rozario, S., & Alam, K. (2020). Bangladesh
Startup Ecosystem: The Untapped Digital Goldmine of Asia. Dhaka: LightCastle Partners.
Retrieved from https://www.lightcastlebd.com/insights/2020/09/12/bangladesh-startup-
ecosystem-the-untapped-digital-goldmine-of-asia