Dechen Dolkar 

While international Venture Capital (VC) firms are showing growing interest in investing in Bhutan’s startups, the absence of clear VC guidelines is posing a significant hurdle.

Bhutanese entrepreneurs expressed their concerns over the lack of a framework to facilitate VC investments at the recent Bhutan Innovation Forum, where some 20 international VC firms participated.

Venture capital, a form of private equity financing, provides essential funding for startups and small businesses with long-term growth potential. Typically, these funds come from investors, investment banks, and financial institutions.

While this form of financing is promising, especially for Bhutan’s emerging entrepreneurial ecosystem, it also presents challenges that need to be addressed through appropriate policy measures.

Sonam Chophel, the founder of CSI Market and Druksell, said that there is a need for Bhutanese startups to be globally competitive to attract VC investment. “VC firms are interested in businesses that can scale up regionally and globally. They are also looking for ideas that are authentic and genuinely tied to Bhutan’s identity,” he said.

He said that VC investors are particularly drawn to businesses aligning with Bhutan’s values, such as sustainability and green initiatives, especially in light of the country’s Gelephu Mindfulness City project.

He said that while VC firms see potential in Bhutan, Bhutanese startups must define what that potential truly entails. “Startups must have strong business models with global market potential,” he added.

Sonam Chophel said that policy improvements are necessary to make Bhutan a more attractive destination for investors. This includes streamlining the process for investors to enter Bhutan and ensuring the security of their investments. “After investing, the incentives and ease of doing business will determine the success of the investors,” he said.

He said that VC is relatively new to Bhutan and different from other investment forms. While traditional investors may look for steady growth, VC firms focus on high-growth potential businesses.  “VC is an equity business. It might uplift the startup ecosystem, but the startups need to scale up and strengthen to compete globally,” he said.

Rikesh Gurung, the founder and chairman of Green Road, said that while many VC firms are interested in investing in Bhutan, the lack of established VC guidelines has been a deterrent. “Investors have inquired about policies, such as bankruptcy regulations and incentives, but the lack of a clear framework has been a deterrent.”

He said that he had proposed developing VC guidelines to the government a long time back, but no formal framework has been established.

During the BIF, officials said that the government is framing the VC guideline and framework.

While there is interest from investors, some entrepreneurs have raised concerns about whether there are enough ready-to-invest startups in Bhutan.

Sonam Chophel said that the key issue is that most Bhutanese startups are currently focused on the local market. “Our startups need to be globally driven. Right now, only a few have real potential, and even they need to scale up,” he said. “If we have technology-driven businesses, they can be highly scalable.”

He added that startups should bring innovative solutions to address challenges and offer impactful ideas that extend beyond the local market.