A presenter speaking to a room full of people as part of a startup accelerator programme in Dhaka, Bangladesh. Photo provided by authors.
Empowering startups in Bangladesh through accelerator programmes
A recent experimental study with Startup Dhaka reveals that providing firms with access to mentorship, networking, and business training has mixed results. It improves engagement with mentors, investment readiness, and expectations about employment growth, but makes no significant difference to firms’ revenues, investments, and debts in the short run.
Startups are powerful engines of economic growth, job creation, and innovation, particularly in developing economies, where entrepreneurship plays a vital role in driving progress.
However, early-stage firms in countries like Bangladesh face significant challenges, including limited access to capital, weak business networks, and gaps in managerial skills. Accelerator programmes have gained popularity as a means to bridge these gaps, but their effectiveness in low- and middle-income countries remains underexplored.
To address this gap, researchers funded by the International Growth Centre (IGC) under the SGB Evidence Fund collaborated with Startup Dhaka, a key player in Bangladesh's entrepreneurial ecosystem, to assess whether a light-touch accelerator programme could effectively support startups at an early stage in their growth trajectory.
The state of startups in Bangladesh: How the accelerator programme can help
We looked at 181 information and communication technology (ICT) firms in Bangladesh. The average firm in this sample is 3.6 years old, with 2.3 founders and 9.4 workers. At baseline, 85% of firms reported offering viable products, 69% had generated any revenue, and 44% had recorded a profit.
However, financial and investor access remained limited – only 9% had taken on debt, just over one-third had investor interest, and 30% had a mentor they could rely on for advice.
Additionally, many firms lacked the basic business practices necessary to attract investors. Less than half maintained balance sheets or cash-flow statements, only 30% had access to legal or accounting services, and just 8% underwent external audits.
Firms identified business strategy, financial management, investment acquisition, and networking as their top priorities for improvement. These findings underscore the financial and operational constraints faced by startups, which shaped the support they sought from Startup Dhaka.
Startup Dhaka’s four-week accelerator programme is a comprehensive platform that offers a rich blend of mentorship, networking, and intensive training on essential business modules like market analysis, financial planning, and strategic business model pitching.
We conducted a randomised controlled trial with 181 firms to assess the causal impact of programme participation. The treatment group received full access to training, mentorship, and networking, while the control group received only online learning materials without any personalised engagement.
Audience at a startup accelerator programme in Dhaka, Bangladesh. Photos provided by authors.
Did the accelerator programme improve firm performance in the short run?
We surveyed 132 of the 181 firms (73%) around six months after programme completion. This allows us to examine the short-term impacts of the intervention on firm performance. Our evaluation of Startup Dhaka yielded mixed but promising results while the programme significantly improved firms’ profitability and investment readiness, it had limited short-term effects on revenue growth and overall funding secured.
Our findings discussed below, are preliminary, and given the small sample with further attrition, we caution readers to take them with appropriate caution:
1. Improved investment readiness and fundraising efforts
One of the accelerator’s core objectives was to enhance firms’ ability to attract investment. In line with that, we find that the programme increased the likelihood that treated firms secured some form of investment or won external competitive grants.
However, despite these gains, there was no significant increase in firms actively pitching to investors or the amount of funding secured within six months of the programme. This suggests that while the intervention enhanced firms’ preparedness to engage with investors, actually securing funding might require more sustained effort.
2. More engagement with mentors, but limited peer learning
Mentorship and access to peer firms are both important components of many accelerator programmes, which provide entrepreneurs with access to advisors to guide them through business challenges and connect them with peers to learn from.
We find that treated firms were more likely to engage with their mentors, specifically in areas related to legal and marketing topics. However, these firms had no differential engagement either with the number of peers or the topics discussed.