Are Bangladeshi startups too dependent on Western models?

Oscar Ramos is currently the Managing Director at Orbit Startups and serves as a General Partner at SOSV, a prominent venture capital firm that offers funding to technology-focused startups.

Oscar has a decade of operational experience in Mainland China, having been engaged with both multinational corporations and innovative startups. After his education and early career in Spain, Oscar moved to China in early 2008. 

Since then, he has been actively engaged in innovation, product launches, go-to-market strategies, venture capital financing, and mergers and acquisitions for startups and multinational enterprises.

Oscar frequently goes to international conferences and shares his insights. 

Last month, he visited the Bangladesh Startup Summit 2023, where he engaged in discussions. In his speech at the summit, Oscar seemed to have qualms about the emerging market's stark imitation of Western business models. He also shared his perceptive observations about Bangladeshi startups during an interview with The Business Standard. 

Can you tell us how Bangladeshi startups draw inspiration from Western startup models?

In the startup arena, it is quite common for emerging markets to look towards the West, especially the United States, for guidance. Western startups enjoy advantages like higher funding availability, greater media exposure and more robust communication networks. Given the scale of the industry in the West, it's natural for emerging markets to consider these Western startups as benchmarks for their own endeavours.

While the influence is understandable, what are the challenges that may arise when one tries to apply Western startup models in Bangladesh?

The challenges stem from the varying dynamics of emerging markets. These markets have distinct features such as population demographics, average incomes, funding allocation patterns, and the state of infrastructure, both physical and digital. 

Moreover, some of the crucial enablers for online businesses that exist in the West might be absent in these regions.

While [certain] strategies work well in some contexts [such as in the West], they don't always seamlessly translate to emerging markets. The circumstances, such as income availability, priorities, and infrastructure status, are quite different in these regions. This makes the direct adoption of Western models challenging and potentially risky for investors.

What is your recommendation for successfully replicating the Western models in emerging markets?

The idiosyncrasies of emerging markets require adaptations in the business and startup landscape. To mitigate risks associated with entirely new business models, entrepreneurs often follow established models. This practice helps educate them and reduces the uncertainty linked with innovative concepts. 

In essence, it's akin to using a compass in the market, aligning with familiar practices to minimise risks. However, modifying the model to align with the local market and local consumer behaviour could be the way to go. 

Could you elaborate on the role of financial inclusion in the growth of tech startups?

Financial inclusion is a critical pillar for startups in general, particularly in the tech sector. It involves integrating individuals into the financial system and granting them access to banking services. For startups, access to financing is especially crucial.

Bangladesh has witnessed a significant transformation in this regard. Here micro-lending evolved into a self-sustaining and economically viable business model, marking a milestone for the country.

You mentioned the importance of online distribution channels meaning the mediums used by tech start-ups to conduct their businesses. Could you provide an example of how these channels might differ between developed and emerging markets?

In developed markets, businesses can heavily rely on digital platforms, especially desktop interfaces. However, in emerging markets like Bangladesh, users are not only mainly phone-based, most of them are phone-only. 

Also in some places, smartphone penetration might not be as comprehensive. This means that simply transitioning to digital might not serve the entire population. This disparity has led to the emergence of alternative distribution models that emphasise collective activities, such as group purchases, catering to a wider audience and solving accessibility challenges.

Lastly, how do you view Bangladesh's position in the global startup landscape, given its strengths and challenges?

Bangladesh excels in various sectors, with the Ready-Made Garments (RMG) industry standing out prominently. Also, there are ample opportunities for specialisation and growth.

Bangladesh holds a unique position in the global startup landscape. It's perceived both as a country with development challenges and a potential economic growth hub. 

Despite external development aid, the country has demonstrated stable economic growth and rising disposable income. While challenges exist, efforts to localise and integrate technology could prove transformative. With its population density, Bangladesh becomes an ideal ground to explore innovative models, addressing challenges like climate impact and enhancing inclusivity through technological efficiencies.