'We are not yet in the Blossoming Phase of Startups'

It has been 15 years since startups began emerging in Nepal, and the ecosystem is now entering what can be called the “2.0 phase”. Initially, startup culture was confined to elite schools and Nepalis who had studied or worked abroad. These individuals would discuss entrepreneurship among themselves and pursue ventures quietly. Gradually, the culture spread to urban areas, growing slowly through word of mouth.

The first phase of Startup Nepal (1.0) demonstrated that starting a business did not require huge capital or inherited property. Phase 2.0 has shown that entrepreneurs can begin small and then seek external funding as their ventures expand.

Globally, the dot-com bubble occurred in the 1990s and early 2000s. In Nepal, adoption of dot-com business models began only after 2010. Companies like Foodmandu.com, SastoDeal.com, Kaymu.com, and eSewa.com.np emerged during this period. This era proved that viable businesses could be built on digital platforms. It also sparked conversations around venture capital, mentoring, investment and startup culture, laying the groundwork for Nepal’s current entrepreneurial ecosystem.

Nepal was roughly a decade behind in embracing both dot-com models and startup culture. From 2015 to 2020, however, the ecosystem progressed at a good pace—these were relatively strong years for startups.

Nepal is a small market, and historically, a large portion of sales came through PR-based promotions. With PR-driven demand, a business could easily achieve a turnover of around Rs 10 million. Sustaining operations was not difficult because marketing ensured consistent demand. However, such demand often catered to “wants” rather than “needs.”

When crises like COVID-19 struck, consumer behavior shifted dramatically. People began purchasing only essential goods and services, reducing demand for non-essential products. Many startups that had primarily served “wants” could not survive this shift and failed. Generational changes also play a key role in shaping demand. Consumer preferences evolve over time, and understanding them requires insight into each generation. For example, today people prefer shopping at departmental stores rather than small local shops and youths increasingly rely on digital banking instead of cash transactions. The rise of services like ride-sharing reflects broader lifestyle changes and expectations. These trends show how evolving preferences create both opportunities and challenges for entrepreneurs in Nepal.

We are not yet in the blossoming phase of startups. Some companies thrived during Startup Nepal 1.0, and we have now reached 2.0. However, there is a noticeable lack of truly innovative new companies emerging. While the launch of Shark Tank Nepal has sparked renewed interest among youth, it has been only a few months, and it is too early to see a sustained wave of entrepreneurship.

The ecosystem remains largely donor-driven. Organized angel investing is still in its infancy. The Nepal Business Angels Circle has recently formed, and the Nepal Angels Network is under development. These initiatives indicate growing interest in private investment, but the number of active angels in Nepal remains limited. This is a critical moment to nurture both investment culture and startup activity.

Entrepreneurship itself cannot be fully taught. However, structured courses can significantly strengthen the ecosystem. Programs that include case studies, networks and experiential learning create an environment that encourages and supports entrepreneurial activity.

Regarding private equity and venture capital (PE/VC), regulations are there, but most companies are not yet operating under a typical venture capital structure. Most licensed funds in Nepal are private equity funds which prioritize stability and invest in businesses that offer a relatively quick exit. While private equity takes some risks, it generally avoids high-risk ventures. Venture capital, on the other hand, is designed to fund higher-risk, innovative startups—a segment that remains underdeveloped in Nepal.

This opinion article was originally published in September 2025 issue of New Business Age Magazine.