I t has been over 10 years since Nepal formally introduced its startup fund, subsequently backed by policies aimed at promoting startups and fostering an ecosystem. Over this period, several startups have made considerable headway and created a significant economic impact through the use of disruptive technologies, despite prevailing capital constraints.
Startups like Foodmandu, eSewa, Fusemachines, CloudFactory, Upaya, Sajilo Sewa, and Ambition Guru are prime examples of those that emerged over the last decade and continue to reach new heights. E-commerce, logistics, edtech, and IT/AI innovations have been evolving globally. Tech companies have become the richest firms in the world, as innovative ideas and disruptive technologies redefine enterprises, markets, and consumer behaviour.
The market capitalisation of tech giants often comes as a surprise, with leaders like Google ($4.29 trillion), NVIDIA ($5.57 trillion), and Meta ($1.84 trillion). These global powerhouses were once mere startups themselves. Renowned global figures like Eric Schmidt of Google, Phil Knight of Nike, and Mark Zuckerberg of Facebook all rose from the startup world. Meta Platforms and numerous other global companies emerged from ecosystems where talent, capital, research, entrepreneurship, and risk-taking effectively converged.
Silicon Valley became a global startup hub not simply because it produced talented entrepreneurs, but because an enabling ecosystem allowed new ideas to access finance, technology, markets, and networks, enabling them to scale rapidly.
Many countries around the
world are actively promoting startups. For instance, neighbouring India launched ‘Startup India’, a flagship government initiative intended to catalyse startup culture and build a strong, inclusive ecosystem for innovation and entrepreneurship. Startup India operates as an entrepreneurial ecosystem connecting startups with investors, incubators, mentors, and government agencies to share resources, funding, and guidance. Consequently, over a hundred startups in India have achieved unicorn status (startups valued at
$1 billion or more).
Policy Foundations and Ecosystem Building
Initially, the fiscal budget of 2014/15, presented by erstwhile Finance Minister Dr. Ram Sharan Mahat, envisioned promoting startups by granting seed funds to those with innovative ideas who were eager to launch their own ventures.
At the outset, the government announced a startup fund of Rs. 500 million and urged the private sector alongside the diaspora community to expand the fund, helping support talented individuals who lacked the financing to implement their ideas. Later, aligning with government policies, Nepal Rastra Bank backed startup growth through subsidised credit schemes.
In subsequent years, the government continued to grant early-stage capital to startups selected through competitions. This also enabled venture capital firms, incubators, and accelerators to collaborate with startups as a cohesive ecosystem.
Stakeholders, including banks and private sector umbrella bodies, prioritised the promotion
of startups. However, over the past decade, Nepal has not been able to develop a sufficiently favourable environment for tech-related startups to grow into future unicorns.
Nepal introduced the National Startup Enterprise Policy in 2023. Additionally, the Fift eenth Periodic Plan (2019/20 – 2023/24) emphasised providing young entrepreneurs in the startup space with the necessary technology, knowledge, and skills to launch their ventures, while ensuring financial access through concessional loans. The policy envisions all three tiers of government, alongside the private sector, supporting youth equipped with innovative knowledge, skills, and capabilities by offering both capital and technological assistance. Through these measures, Nepal’s tech-savvy youth, armed with innovative ideas, ambition, and technological talent, can harness emerging opportunities. Ultimately, a strong ecosystem remains crucial to transforming these ideas into scalable enterprises.
Early-stage funding, venture capital, angel investment, impact investment, mentoring, and access to regional and global markets remain limited. However, Nepal has attracted several equity funds and venture capitals by introducing laws governing private equity and venture capital (PE/VC). PE/VCs are firms that manage pooled funds
POLICYMAKERS, IDEATORS, INCUBATORS, ACCELERATORS, AND INVESTORS CAN LEARN KEY INSIGHTS FROM SETBACKS WHILE REPLICATING EFFECTIVE PRACTICES FROM SUCCESSFUL VENTURES.
from various investors to invest in high-potential startups. There are over a dozen active PE/VCs licensed by the Securities Board of Nepal (SEBON), including Dolma Impact Fund and Business Oxygen (BO2), alongside domestic players like Kriti Ventures, Team Ventures, True North Associates, Aadhyanta Fund Management, and NIBL Equity Partners, among others.
The government has acknowledged the need to provide necessary knowledge, skills, and technological support to entrepreneurs looking to launch startup-based enterprises or scale existing ones, while also enhancing financial access and building a startup-friendly environment. The policy is reportedly addressing existing regulatory gaps to promote startups.
To nurture innovative and creative ideas, several incubators and mentoring service providers have emerged. Organisations such as Nepal Communitere, Idea Studio, and One to Watch offer mentorship and seed support. Dr. Tshering Lama, Co-founder and Executive Chairperson of Idea Studio Nepal, noted that they have incubated 919 ideas to date, with 207 currently operating as active businesses representing a total portfolio valuation of around Rs. 1,510 million.
Preeti Adhikari, founder of the Great Nepali Diaspora and General Partner at Momo VC, a U.S.-based early-stage venture capital fund, emphasised
EARLY-STAGE FUNDING, VENTURE CAPITAL, IMPACT INVESTMENT, MENTORING, AND ACCESS TO REGIONAL AND GLOBAL MARKETS REMAIN LIMITED.
Learning from Startup Successes and Failures
Pukar Malla Member, National Planning
Commission
NEPAL’S STARTUP SUCCESSES and failures offer valuable insights into the gaps in its entrepreneurial ecosystem. Learning from both can help identify weaknesses in access to finance, mentorship, market linkages and policy support. These lessons are essential to building a robust and functional ecosystem that enables startups to innovate, scale up and contribute to the national economy.
Startups need more than money
Preeti Adhikari Founder, Great Nepali Diaspora
and General Partner Momo Venture Capital
STARTUP FOUNDERS NEED MORE than just capital; they need a supportive ecosystem that enables them to innovate, overcome challenges and scale their businesses. Access to funding is important, but equally critical is the availability of experienced mentors, industry experts and strategic advisers who can guide founders through the complexities of building and growing a business. Recognising this need, we have built a community of more than 2,000 experts across diverse domains who can share their knowledge, experience and networks with early-stage startups. Through this ecosystem, we aim to connect founders with the right expertise, practical guidance and strategic support to help them refine their business models, strengthen their operations, navigate market challenges and scale sustainably. Our belief is that when capital is complemented by mentorship, knowledge and meaningful connections, startups are better positioned to grow, create jobs and generate lasting economic value.
that startup founders need a supportive environment alongside capital. They require a network of mentors and advisors. To address
this, they have built a community of over 2,000 experts across various domains to help early- stage startups scale and grow.
PRIVATE EQUITY (PE) AND VENTURE capital (VC) play an important role in identifying promising businesses and helping them realise their growth potential. In Nepal, PE/VC firms have been investing in projects based on their potential to scale up, reflecting the importance of business viability, scalability and long-term growth prospects in investment decisions. However, entrepreneurial talent and innovative ideas should not be held back simply because founders lack access to adequate capital.
Talent shouldn’t be constrained by capital
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Nepal needs an investment ecosystem that recognises entrepreneurial potential, encourages innovation and connects promising founders with appropriate sources of finance. The objective should be to ensure that viable business ideas are assessed on their merits and growth prospects, rather than being limited by the founders’ financial capacity. Unlocking this potential can help create competitive enterprises, generate employment and contribute to a more dynamic and productive economy.
Dr. Gopal Prasad Bhatta
Chairman, Securities Board
of Nepal
Equity Capital: fuelling growth and shaping Nepal’s financial future
Ritu Pradhan Co-Head, NIBL Equity Partners
EQUITY FUND PROVIDERS PLAY a vital role in unlocking the growth potential of businesses by providing the capital and strategic support needed to scale up operations, strengthen competitiveness and create sustainable impact. Beyond financing, they can help businesses access expertise, networks and new opportunities, enabling them to pursue ambitious growth plans. By investing in firms with strong potential, equity fund providers contribute not only to individual business success but also to broader economic development. We are proud to contribute to the firm’s ambitious vision and support the next chapter of Nepal’s financial sector development, fostering an investment ecosystem that promotes innovation, sustainable growth and long-term value creation.
Tech Disruption, Scaling and Real-World Impact
Startups possess significant potential to scale up, and scaling
up is crucial for any early-stage venture. Over time, several tech-related startups in Nepal have scaled up considerably.
Consequently, the Startup Enterprise Policy has emphasised aligning early-stage startups with technology. Technological advancement has, in fact, disrupted traditional economic setups, enabling various new business operational models and even banks and financial institutions have emerged in digital form. Virtual banks were virtually unimaginable a decade ago. Sanjib Subba, founder of Kathmandu FinteK, noted that traditional brick-and-mortar banks will gradually transition from “brick” (physical buildings) to “click” (digital banking).
The platform economy and the creator economy (or orange economy) have flourished over the past decade. This includes food delivery platforms, ride-hailing services, EdTech platforms, e-commerce, logistics, and booking services for airline tickets and hotel reservations.
“PE/VCs in Nepal have been investing in projects based on their scale-up potential. Talented individuals should not be constrained by a lack of capital,” said Dr. Gopal Prasad Bhatta, Chairman of the Securities Board of Nepal (SEBON).
The scalability of early- stage startups is critical for developing large enterprises in the country over the long run, as building a startup ecosystem fosters the growth of the SMILE curve. The SMILE curve is a business and economic concept demonstrating that the highest value in a product’s value chain is added at the beginning and the end, whereas the middle manufacturing phase adds the least value. According to Suyash Khanal, Executive Director of Garment Association Nepal, rather than focusing solely on production/manufacturing and distribution, high value can
be captured through concept development/R&D, branding, design, marketing, and after-sales services.
Nepal has experienced both the success and failure of startups. Notably, the country was a pioneer in ride-hailing services in South Asia. The Nepali ride-hailing startup Tootle gained widespread popularity in major cities during the fuel crisis of late 2015 and early 2016, when supply lines from India were disrupted. However, the app struggled to remain competitive due to technological flaws that compromised performance, such as frequent crashes, poor optimisation, inaccurate map locations, and a lack of basic user-friendly features, alongside regulatory hurdles, tax liabilities, and financial constraints.
Some early-stage startups have also managed to attract significant foreign investment. The German internet and technology incubator and venture capital firm Rocket Internet established a B2C (business-to-consumer) and C2C (consumer-to-consumer) e-commerce platform named Kaymu in 2013, which later merged with Daraz, Nepal’s largest e-commerce platform. Following the merger, the company was acquired by the Chinese tech giant Alibaba Group in 2018.
Sujeet Regmi, Co-founder and Head of Finance at Sajilo Sewa, shared that the network and mentorship provided by Idea Studio gave them the necessary impetus to transform their idea into a scalable business venture.
Hamro Patro, a multi-service app founded by Shankar Uprety in 2010, has become one of the most downloaded applications in Nepal. Uprety, a graduate of Boston University, has continually expanded the app’s offerings to include doctor appointments, news feeds, blogs, live radio
FUNDING HISTORY OF SOME STARTUPS IN NEPAL
Company Funding history
E-sewa Subsidiary of F1Soft Int’l Initially funded by GSMA Ecosystem Accelerator Innovation Fund (supported by the erstwhile UK Department for International Development – DFID)
Foodmandu True North Associates, Team ventures, Dolma Impact Fund II
Fusemachines Talent ecosystem for early career researchers Business Oxygen Private Limited (BO2)
Upaya Dolma Impact Fund II Nepal Infrastructures Investment Fund (NIIF)
Sajilo Sewa True North Associates (TNA) Investment (2022) Shark Tank Nepal Investment (2025)
Ambition Guru
Hamropatro
Cloudfactory Rockefeller Foundation Sovereign’s Capital, The Social Entrepreneurs Fund, and the Dolma Impact Fund, FTV capital
(Source: Company websites, balance sheets etc.)
streaming, and foreign exchange rates. What initially launched as a simple digital Nepali calendar has steadily integrated new features over the years.
Nepali entrepreneur Sixit Bhatta is credited with developing Tootle, a pioneering ride-hailing platform. However, due to the absence of a robust startup ecosystem, internal operational conflicts, and an increasingly competitive environment, the project struggled to sustain its momentum.
“Looking back, the experience with Tootle fills me with gratitude. When we started, Nepal had not yet experienced widespread digital transformation. Internet connectivity was limited, smartphone penetration was low, people were unfamiliar with map navigation, and digital payment services were only just emerging,” said Sixit Bhatta, founder of Tootle. “Innovation is
a continuous process, and every breakthrough carries stories of both success and failure. Even the Wright brothers built upon and improved earlier models like the Curtiss flyer.”
Nepal has witnessed both successes and setbacks in startup development, and both offer vital insights into addressing current gaps to build a sound, fully functional ecosystem, according to Pukar Malla, member of the National Planning Commission.
Financial Access and Concessional Loans
The government grant for early-stage startup development has played an instrumental role in bringing together various stakeholders. With numerous challenge funds in Nepal targeting early-stage startups and innovative ideas, alongside PE/ VCs investing in scaling them up, funding itself has not been
the primary issue for pursuing startups in the country.
Nepal Rastra Bank (NRB) introduced policies to provide concessional loans to startups, while also encouraging returnee migrants and women entrepreneurs to embrace business opportunities based on their innovative and creative ideas.
Additionally, the Startup Enterprise Loan Operation Procedure, 2081 (2024), offers loans of up to Rs. 2.5 million at a subsidised 3% interest rate with a five-year repayment period, utilising the enterprise or project itself as collateral. Under this scheme, entrepreneurs may submit only one proposal and must declare that they have not received concessional loans from other agencies.
According to Umesh Kumar Gupta, Executive Director of the Industrial Enterprise Development Institute (IEDI), proposals are evaluated by an expert panel based on specific criteria, including innovation, technological application, business plan quality, job creation potential, local resource utilisation, infrastructure availability, financial soundness, and management capacity. “Concessional loans will range from Rs. 500,000 to Rs. 2.5 million, with a maximum five- year repayment period,” he said. “Entrepreneurs with outstanding concessional loans from other sources will not be eligible.”
This initiative aims to provide favourable financing conditions to entrepreneurs equipped with modern knowledge, skills, and competencies to launch scalable startup ventures.
Regulatory Reforms and Capital Unlocking
Over the period, Nepal has introduced significant reforms
IEDI Startup Enterprise Loan
Administered via the Industrial Enterprise Development Institute (IEDI) and partner banks, providing up to Rs. 25 lakhs at a 3% interest rate with a repayment tenure of up to five years.
Eligibility Businesses registered in Nepal for under 10 years, with an annual turnover under Rs. 10 crores, focused on technology, innovation, agriculture, tourism, or local production.
Partner Banks
(Source: IEDI)
Commercial and development banks such as Nepal Bank, Rastriya Banijya Bank, Agricultural Development Bank, Nabil Bank, and global/ commercial institutions handle applications under government guidelines
in its PE/VC-related regulations. Government-owned non-banking financial institutions that mobilise vast amounts of capital, such as the Employees’ Provident Fund (EPF), Citizen Investment Trust (CIT), and Social Security Fund (SSF), which collectively manage over Rs. 900 billion in public savings, have been authorised to invest in private equity and venture capital. This move has provided PE/VC firms with a crucial window for sourcing domestic capital.
Additionally, Nepal’s fiscal budget for FY 2024/25 has insulated PE/VCs from the consequences of blacklisting by shielding nominee directors from liability or blacklisting triggered solely by a portfolio company’s default. Previously, under Nepal Rastra Bank blacklisting rules, if an investee firm defaulted on a commercial loan, every stakeholder, even a PE investor holding a minority stake below 15%, could face blacklisting or forced liquidations of existing investments.
Crowd funding
Nepali youth have also been utilising platforms like GoFundMe and Kickstarter to raise small donations from a large number of people. However, the
Innovation is a journey of learning, failure and progress
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Sixit Bhatta Founder, Tootle
LOOKING BACK, MY EXPERIENCE with Tootle fills me with gratitude. When we started, Nepal had not yet experienced the level of digital transformation we see today. Internet access was not widespread, smartphone penetration was still limited, people were unfamiliar with map navigation, and digital payment services had only just been introduced.
Innovation is a continuous process, and every invention carries its own story of successes and failures. Even the Wright brothers continued to learn and improve upon existing designs, including the Curtiss Flyer. The experience with Tootle taught me that innovation requires patience, adaptability and a willingness to learn from setbacks. Ultimately, every attempt to innovate contributes to the learning process and helps lay the foundation for future progress.
practice of crowdfunding for startups remains at a premature stage in Nepal.
Future Roadmap and Ecosystem Growth
Organisations such as the Nepalese Young Entrepreneurs’ Forum (NYEF) and CNIYEF have been advocating for a more enabling environment and encouraging young people to turn ideas into businesses. The private sector can play a pivotal role in developing a sound startup ecosystem in the country. Umbrella bodies of the private sector, especially the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), have actively advocated and provided a series of recommendations to the government leading up to the introduction of the National Startup Enterprise Policy, 2023.
Ideators’ efforts require stronger policy backing. Nepal now needs to transition from a startup-funding mindset to a startup-scaling strategy, according to Ajit Bikram Shah, Director and CEO of Lotus Holdings.
“This means creating a predictable regulatory regime, expanding venture capital and angel-investment networks, facilitating innovation finance, strengthening incubation and
mentoring, enabling easier market access, and deliberately connecting Nepali startups with regional and global value chains. The next decade should be the period in which Nepal transforms its young talent and entrepreneurial ideas into productive, innovative, and globally connected enterprises.”
Furthermore, exposure provided by platforms like Idea Studio and Shark Tank Nepal has been redefining how Nepali startups access funding, mentorship, and global reach.
The fundamental driving force behind startups remains technology and tech-enabled services. Technology, in fact, offers an opportunity to capitalise on potential where the sky is truly the limit.
“IT is the sole industry in which the entire world is navigating and pioneering technological advancement. Nepal is also competitively forging its own path in technology. Having fallen behind in other domains such as manufacturing and the export of goods and services, IT represents Nepal’s most promising sector for advancing alongside the rest of the world,” said Prashant Pokharel, Nepal Country Manager at CloudFactory. “The IT sector requires an enabling environment
From Startup funding to scaling up: Nepal’s next policy priority
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Ajit Bikram Shah Director and CEO, Lotus Holdings
INNOVATORS AND STARTUP FOUNDERS need stronger policy backing to turn their ideas into viable, scalable businesses. Nepal must now move from a startup-funding mindset to a startup-scaling strategy. This requires a predictable regulatory environment, expanded venture capital and angel-investment networks, accessible innovation finance, stronger incubation and mentoring services, and easier market access.
Deliberately connecting Nepali startups with regional and global value chains is equally important. The next decade should be about transforming Nepal’s young talent and entrepreneurial ideas into productive, innovative and globally connected enterprises.
like infrastructure investment, procedural simplification, and official facilitation. Talents and professionals are upbeat about the government’s commitment to promoting the IT industry. however, the success of these commitments hinges on effective implementation.”
The growth potential of startups depends on an enabling atmosphere and an ecosystem that allows them to thrive and drive significant progress in the country’s economy. Nepal has experienced both successes and failures in startup development, and both serve as valuable lessons. Policymakers, ideators, incubators, accelerators, and investors can learn key insights from setbacks while replicating effective practices from successful ventures.
