Mapping Nepal’s Entrepreneurial Landscape

Despite thousands of startups emerging during this period, only a handful succeeded. Yet even the failures taught Nepali youth that entrepreneurship does not require ancestral property or massive capital. With a good idea, combined with mentorship and investment from angels or venture capitalists, small ventures can grow into viable businesses.

“The lessons from this early period laid the foundation for what is now referred to as Startup Nepal 2.0. Building on the first wave of entrepreneurship, the 2.0 phase demonstrates that starting small and gradually seeking external funding is not only possible but effective. Startups like eSewa, Foodmandu and Tootle showed that scalable businesses could emerge from humble beginnings, fostering a more structured entrepreneurial mindset across the country,” said Kavi Raj Joshi, Founder and Director at Udhyami Innovations.

While the startup buzz of the 2010s has subsided, its legacy endures. That early phase showed young entrepreneurs that innovation, persistence and strategic funding can overcome traditional barriers to business. Today, Nepal’s entrepreneurial ecosystem is entering a new era: more informed, better connected and ready to support ventures that are not only commercially viable but also capable of reaching beyond domestic markets.

“Back in 2016–17, the private sector was investing heavily while the government and policymakers stayed inactive. Today, the roles have reversed—the private sector is exhausted, and the government is finally stepping in. That mismatch cost Nepal dearly,” Amigo Khadka, co-founder of Nepal Tea Collectives, said. “Had they worked together then, the startup ecosystem could have been much stronger. Still, things have changed and though the journey is difficult, Nepal is now entering a new phase of entrepreneurship.”

The new generation of entrepreneurs build on those early lessons, embracing technology and preparing for a future where their enterprises can compete 

regionally and globally. According to Sanjog Koirala, showrunner of Shark Tank Nepal, young people now dream bigger and view Nepal as a place to create world-class products that serve not just the local market but the world.

“Earlier, hustling meant grinding without access to resources—you learned everything the hard way. Today’s youth have an abundance of information and global exposure, which is fantastic, but it sometimes breeds impatience. The previous generation focused on building something sustainable over years; today, there’s a rush for quick wins and virality. But young people are dreaming big,” Koirala said. “Nepali youths are also creative, digitally savvy and fearless. They are not afraid to try new things or put themselves out there. Combine that with a deep understanding of local problems and the ability to adapt quickly, and you have the recipe for disruptive companies emerging from Nepal sooner than most people expect—across multiple sectors.”

Resilience and Renewal

For many aspiring entrepreneurs, the Covid-19 pandemic and the resulting economic slowdown were major setbacks. Purchasing power declined, demand shrank and many young businesses collapsed. The hardest hit were those catering to wants rather than needs—products and services people could easily cut back on during a crisis. When survival became the priority, essentials outweighed luxuries. For Nepal’s startup ecosystem, it was a tough but valuable lesson: businesses need resilience and relevance to withstand shocks.

Yet, the culture of entrepreneurship did not disappear. In fact, it is regaining momentum, thanks in part to Shark Tank Nepal. The platform has put entrepreneurs back in the spotlight, inspiring a new wave of risk-takers. Of the 110 enterprises featured on the show so far, 35 have secured investments totaling Rs 400 million. Beyond funding, these deals provide startups with mentorship, strategic partnerships and access to wider networks. Several have already expanded into international markets, accelerated revenue growth or attracted additional rounds of funding following their television debut.

The show has also helped shift the conversation. Once, “startup” was just a buzzword. Today, entrepreneurship itself has become the buzzword. Young people are actively discussing building companies, taking risks, and seizing opportunities with renewed enthusiasm. Education is playing a growing role in this revival. “Unfortunately, our education system has not traditionally promoted entrepreneurship. Yet, over the past 15 years, change has been visible. Slowly but surely, a new mindset is emerging among the younger generation. Unlike 15–20 years ago, when most youths aspired to become bankers, today many want to become entrepreneurs. There are now hundreds of business schools in Kathmandu,” said entrepreneur and mentor Suman Shakya.

While entrepreneurship cannot be fully taught, structured programs can make a significant difference. “Case studies, peer learning, networking and mentorship opportunities create an environment where ideas can be tested, refined and scaled. The growth of business schools, incubators, and accelerator programs in Nepal shows that this supportive infrastructure is gradually taking shape,” Joshi said.

Nirdesh Dwa, co-founder of Veda App, which secured an investment of Rs 60 million through Shark Tank Nepal, described the experience as transformative. “Until now, there had been no platform in Nepal to share entrepreneurial stories. For us, the show helped attract new clients and build a valuable network with the sharks. It proved that there is a market for entrepreneurship in Nepal, and those stories need to be told more widely,” he added.

Ashutosh Tiwari, founder of Safal Partners, said the number of entrepreneurs in Nepal is increasing steadily. “In the past, most were homegrown, but now a new trend has emerged: Nepali youths who study abroad are returning to start businesses in Nepal, bringing global exposure and fresh perspectives,” he added.

According to Joshi, while the pandemic forced many young businesses to close, it also accelerated the ecosystem’s maturity. “Entrepreneurs are now more aware of the need to balance innovation with sustainability. If the momentum continues, the next decade could belong to a new generation of Nepali startups,” said Joshi.

Anushka Shrestha, founder of Makkusé, said government officials have recently become more receptive to feedback. “For instance, officials at the Department of Food Technology and Quality Control (DFTQC) are now open to recommendations and are working to include many indigenous Nepali foods in their white book. Of course, there are still testing delays, but we see real progress,” she said, adding that while challenges remain, strong commitment can make doing business easier.

From Hype to Hard Work

For every celebrated success story, dozens of startups never make it past their first few years. One of the most common reasons is the lack of a clear business model. Many startups launch without a structured plan for generating consistent revenue or achieving profitability. In some cases, the idea is appealing, but the market is simply not ready. In others, founders burn out or give up too early, unable to endure the long grind required to sustain a company.

“Nepal’s IT entrepreneurial landscape is starting to shift, with more support systems emerging to guide aspiring founders. Organizations such as the Nepal Association for Software and IT Services Companies (NAS-IT) now provide mentorship and market insights, helping young people better understand the ecosystem. Still, a critical gap remains. Many enter entrepreneurship without adequate knowledge of how the market actually works. This lack of understanding and support is one of the biggest challenges to building a sustainable startup ecosystem in Nepal,” said Sonika Manandhar, Co-founder and CTO of Aeloi 

Technologies. External challenges further complicate matters in Nepal. Unfavorable policies and weak government support often make it difficult for startups to scale. Entrepreneurs also face hurdles in the country’s credit and payment systems, which can choke the financial runway they need. Delayed payments, limited access to credit, and the absence of venture-friendly financing mechanisms leave many startups vulnerable to early collapse.

Still, not all failures can be blamed on the environment. Many setbacks emanate from internal weaknesses within the companies themselves. A large number of startups operate without proper partnership agreements, leaving them exposed to disputes among founders. Roles and responsibilities are often unclear, creating inefficiencies. Weak accounting practices, poor marketing strategies and little attention to packaging or branding further undermine growth. These basic gaps prevent businesses from building trust with customers, partners and investors.

“There is also a misconception about entrepreneurship itself. To outsiders, startups look glamorous. Media coverage of overnight successes paints a picture of quick wealth and recognition. In reality, starting a business is a bold decision, but sustaining it is far more difficult. Founders must be prepared for months—or even years—of little to no income, long hours, and constant problem-solving. The journey is anything but easy,” said one startup entrepreneur.

Despite the risks, entrepreneurship in Nepal has gained real momentum. Role models have emerged, and public awareness is stronger than ever. Still, as entrepreneur and policy expert Ashutosh Tiwari points out, the ecosystem is not yet designed to nurture startups during their fragile early years.

“What most people do not see is how tough the journey really is. In the United States, if someone wants to write a book, publishers often provide an advance so the writer can focus solely on writing. In Nepal, it is the exact opposite—entrepreneurs must constantly struggle to sustain themselves while building their ventures. Without systemic support, many innovative ideas are lost before they can grow,” Tiwari explained.

For Koirala, execution is the hardest part of entrepreneurship. “The romanticized version of entrepreneurship hides the reality—it’s lonely, financially draining and full of uncertainty. Many youths give up because they lack the risk appetite or resilience to handle those lows. Dreaming is free, but execution costs sleepless nights and relentless persistence. On top of that, society rarely cherishes hard work; it only recognizes success,” he said. “Since entrepreneurship is full of invisible struggles, validation from friends, family and society is often absent. This lack of support drives many to abandon their ventures in search of better validation and opportunities abroad.”

Koirala added that many startups fail not because the ecosystem is weak, but because execution is weaker. “If you have a strong product-market fit and grit, you can build despite ecosystem gaps. In doing so, you actually help shape that ecosystem,” he explained.

Dwa said many businesses are failing not because the ecosystem is weak, but because of poor execution. “Too often, young entrepreneurs chase vague visions instead of focusing on a clear niche. Many try to copy existing ideas rather than innovate, and when challenges arise, they give up easily,” he said. “The mindset is the real problem. Entrepreneurship has become a fancy word—some pursue it for the tag, not the persistence it requires.”

On Veda’s journey, Dwa added: “One major challenge in Nepal is the lack of early-stage funding. Even with a strong idea, there are no readily available funds to get businesses off the ground. When we try to expand abroad, we face regulatory hurdles. The government says businesses can now go international, but there is still no clear legal framework. On top of that, our infrastructure costs are comparable to those abroad, but the payments we receive are much smaller, making growth even harder.”

From Seed to Scale

One of the most pressing challenges for startups in Nepal is the funding vacuum. While entrepreneurial energy has surged, financing mechanisms have not kept pace. As a result, many promising businesses fail to scale simply because they cannot access the right type of capital at the right time.

Nepal is still not a suitable market for private equity (PE) or venture capital (VC) in the conventional sense. These models work best in ecosystems that have already matured—where a steady pipeline of small and medium-sized enterprises (SMEs) is ready to absorb large investments and scale rapidly. In Nepal, however, most businesses are still in the early or growth stage. What the country urgently needs is an SME-focused fund offering ticket sizes between Rs 3 million and Rs 30 million. Such financing would bridge the critical gap between seed money and large-scale investments, nurturing startups through their most vulnerable phases.

At present, the structure of available funding is fragmented. Government schemes provide up to Rs 2.5 million—enough for micro-businesses but insufficient for ambitious growth. On the higher end, funds like Business Oxygen chip in with around Rs 5 million, while Dolma Impact Fund invests at much larger ticket sizes, starting at Rs 100 million. This leaves a glaring vacuum in the Rs 2.6 million to Rs 30 million range.

“For an entrepreneur seeking, say, Rs 20 million, there are few institutional options. They often have no choice but to turn to friends, family, or informal lenders. This not only limits their growth but also exposes them to significant personal and financial risk. The absence of middle-tier financing has quietly become one of the biggest reasons why startups collapse before they can gain momentum,” said Tiwari.

The slow rise of PE and VC funds in Nepal has brought some relief, expanding the space for alternative investments. Entrepreneurs who manage to reach a certain scale now have access to institutional funding, mentorship and strategic partnerships. Yet the phenomenon is still very new, and the pipeline of investable companies remains thin. According to Tiwari, Nepal was never ready for private equity and venture capital. “It is like expecting kindergarten children to suddenly attend university without preparing them through the necessary stages in between. PE/VC funds could have invested in already established but small-sized businesses, helping them grow, but they failed to create a pipeline. The ecosystem for venture capital has not been properly built in Nepal,” he added.

Without smart, mid-sized capital, many brilliant ideas will never leave the ground, experts warn. “During the 2010s, large private equity funds entered Nepal, seeking investments of $500,000 to 1 million or more. They overlooked smaller startups that needed only modest seed funding. While such big-ticket investments may make sense today, back in 2016 what startups needed most were small, early-stage funds. Had those been available, many companies could have grown steadily and been ready to absorb larger investments now,” said Khadka.

Defining Entrepreneurship

For a long time, Nepal struggled to clearly distinguish between startups and small and medium-sized enterprises (SMEs). The terms were often used interchangeably, creating confusion not just in public discourse but also in government policies. In reality, the two serve very different purposes within the entrepreneurial ecosystem.

Globally, a startup is understood as a young company that is innovative, tech-driven and scalable—an enterprise that experiments with new business models, creates disruptive products or services, and has the potential to grow rapidly, often beyond national borders. SMEs, on the other hand, are typically small to mid-sized businesses focused on stability, local markets and steady but with limited growth. In Nepal, however, this distinction has long been blurred. For years, government bodies referred to any early-stage business as a “startup,” even if it was simply another shop, restaurant or trading firm. While such businesses may be valuable to the economy, they do not necessarily fit the definition of a startup. As one expert put it: “Startup means innovation and tech-driven. But the government feels all newborn businesses are startups now, and this is a problem.” Recent policy changes have tried to set clearer boundaries. Under the new provisions, a business is no longer considered a startup if it is older than 10 years or if its annual turnover exceeds Rs 150 million. Startups are also required to commence operations within one year of registration, and their registration can be automatically revoked if they fail to meet these conditions.

“The startup scene in Nepal is undoubtedly challenging, but the blame cannot rest solely on the government, as efforts are being made. The real issue lies in policy implementation, which is often disrupted by political and administrative instability. One government may introduce a policy, but before it can be carried out, another takes over, leaving initiatives incomplete,” said Dr. Prativa Pandey, Founder and CEO of Herveda Botanicals. “What the government can—and should—do is support startups by removing unnecessary hurdles. For example, companies that export rather than import should be given incentives. Likewise, startups in manufacturing should receive targeted support to help them scale and sustain their businesses.”

To encourage entrepreneurship, the 2024/25 budget announced startup loans of up to Rs 2.5 million at an interest rate of 3%, with simplified procedures aimed at reducing barriers for young entrepreneurs. On paper, this looked promising. However, experts say the scheme was focused more on SMEs than startups, with a heavy emphasis on the agricultural sector. In practice, many beneficiaries are agro-businesses, not necessarily innovative or tech-driven startups.

Another challenge is the lack of mentoring support. While the government’s loan program includes a mentoring component, experts say it exists only on paper, with little practical guidance for entrepreneurs who need help building sustainable business models. For startups, which thrive on experimentation and risk-taking, mentoring and networks can often be more valuable than cheap loans.

According to Narottam Aryal, president of King’s College, the government has again started disbursing loans for youth entrepreneurship. “But I am not satisfied with this approach. Simply giving loans does not mean real support. Even in the past, such loan schemes existed, but without proper support systems, they failed to create lasting impact,” he said. “What youths need is guidance, mentorship, and networks—not just direct funding.”

The debate between SMEs and startups is not just a matter of semantics. Without clarity, resources meant for innovation risk being diluted into traditional businesses. Nepal needs policies that recognize the different roles both SMEs and startups play—SMEs as stable job creators and local market supporters, and startups as innovation engines with the potential to transform the economy.

“Funds meant for startups often end up going to SMEs. While SMEs are important, this means genuine startups are not being promoted. There should also be flexibility in collateral — for instance, intellectual property like software should be accepted — to give startups better access to capital,” said Dwa.

Chasing Grants, Losing Growth

Nepal has always had an entrepreneurial spirit. Traditional businesses—from trading to manufacturing—have flourished for generations without much formal support. However, with globalization and the rise of innovation-driven enterprises, the country’s entrepreneurial journey has increasingly become donor-dependent. Experts argue that this reliance on foreign aid, even in sectors like education, business and startups, has created distortions rather than solutions.

Today, even to start a program or develop a curriculum on entrepreneurship, the government often looks first to donors for funding. Startup-focused programs are frequently financed by international agencies such as the European Union and USAID. While such initiatives may provide short-term gains, stakeholders say they have weakened the government’s own role. “Entrepreneurship is our own forte. Instead of strengthening local capacity, we relied too heavily on external support,” one expert said.

According to Aryal, duplication of efforts is another challenge. “Donor-backed programs often replicate what the government or private sector is already doing, without creating an integrated ecosystem. For example, the government establishes incubation centers, private sector groups run their own versions and donors fund yet another set of similar initiatives. Instead of complementing one another, these actors end up competing and overlapping,” he said. “A healthy ecosystem requires synergy among all players—government, private sector, academia, donors, incubators and industry associations. Each has a unique role, and together they can create an enabling environment for entrepreneurs. Unfortunately, in Nepal, the opposite often happens. When colleges are criticized for weak programs, corporations step in with their own education initiatives. When incubators underperform, the government attempts to play the incubator’s role itself. Private sector organizations also duplicate activities, chasing donor funds rather than collaborating.”

Aryal called for an integrated fund where donors can contribute, if interested, to the overall development of the ecosystem. This lack of coordination prevents the entrepreneurial ecosystem from reaching its potential. Rather than building long-term, sustainable systems, programs become fragmented and unsustainable. Startups, instead of benefiting from a cohesive support structure, often face a confusing landscape of overlapping initiatives and inconsistent resources.

Experts believe that for entrepreneurship to truly thrive, alignment is key. Donors, government agencies and the private sector must stop working in silos and coordinate their efforts. Resources should be complementary, not competitive. Without such synergy, young entrepreneurs will continue to face avoidable hurdles, and Nepal’s ecosystem will remain donor-driven rather than self-sustaining.

“We keep celebrating that Nepali businesses are supported by donors. But that is a matter of shame for the government. It should act,” said one entrepreneur. “From government agencies to private sector bodies, even independent mentors, everyone seems to be chasing donor dollars. Instead of building a self-reliant system, programs are shaped to fit donor agendas.”

Bureaucracy vs Innovation

In Nepal, newly established businesses are treated no differently than long-standing enterprises—a practice experts say is unfair. Startups, often led by first-time entrepreneurs with limited resources, must navigate the same lengthy and complex procedures as legacy businesses with decades of experience.

“From registering at the Office of Company Registrar (OCR) to securing VAT compliance and obtaining ward-level approvals, the burden is equally heavy. With little guidance and no subsidies or exemptions, many young entrepreneurs unknowingly miss steps and are later fined. Rather than nurturing innovation, the system discourages risk-takers with bureaucratic hurdles right at the start,” said Koirala.

The challenges extend beyond founders themselves. Angel investors, for instance, must register as shareholders at the OCR when they invest, creating unnecessary burdens and risks. “If an angel invests Rs 1 million, their liability should reasonably be capped at that amount. Yet under current rules, if a promoter fails to pay VAT or other taxes, the angel investor can also be penalized. Such risks discourage genuine investors, leaving early-stage ventures with very few funding options,” explained Tiwari.

Banks, meanwhile, continue to demand collateral for loans. Because of this many young entrepreneurs are consequently forced to rely on personal and family networks for seed funding, Tiwari added.

Experts say fragmented governance compounds the problem. Entrepreneurship support is scattered across multiple ministries, each operating in silos with separate programs and

policies, leading to duplication of effort and wasted resources rather than a coordinated strategy to grow the ecosystem. “At present, different ministries operate independently, each running their own projects. What is needed is an integrated mechanism—a unified institution to coordinate policies, funding, and support for entrepreneurship. Without this, fragmentation will continue to slow progress,” said Aryal.

Nepal’s startup ecosystem is maturing. While failures are inevitable, lessons from early ventures, pandemic challenges and emerging funding mechanisms provide a stronger foundation for future growth. Success stories like Adex, VEDA and Nepal Tea Collective demonstrate what is possible when vision meets execution. With better funding structures, coordinated policies and mentorship support, Nepali startups have the potential not just to thrive locally, but to compete on the global stage. The message is clear: Nepali entrepreneurs are dreaming bigger, building smarter, and showing the world that innovation knows no borders.

The cover story of September 2025 issue of New Business Age magazine.