Bhutan’s burgeoning entrepreneurial ecosystem is catching the eye of international venture capital (VC) firms, signaling a promising future for local startups. However, the enthusiasm is tempered by significant regulatory challenges that entrepreneurs hope the government will soon address.
At the recent Bhutan Innovation Forum (BIF), approximately 20 international VC firms gathered to explore investment opportunities within Bhutan. Despite the growing interest, Bhutanese business leaders voiced concerns over the absence of clear guidelines to facilitate such investments, potentially stalling the momentum needed for startups to thrive on a global scale.
Venture capital, a critical source of private equity financing, plays a pivotal role in nurturing startups and small businesses with high-growth potential. Typically funded by investors, banks, and financial institutions, VC provides the necessary capital for companies aiming to expand and compete internationally. This form of financing holds particular promise for Bhutan’s emerging market, yet it brings its own set of challenges that require thoughtful policy interventions.
Sonam Chophel, founder of CSI Market and Druksell, emphasized the need for Bhutanese startups to enhance their global competitiveness to attract VC funding. “VC firms are looking for businesses that can scale regionally and internationally, while also maintaining a genuine connection to Bhutan’s unique identity,” Chophel explained. He highlighted that ventures aligned with Bhutan’s core values, such as sustainability and green initiatives, are especially appealing to investors. Projects like the Gelephu Mindfulness City exemplify the type of innovative and value-driven initiatives that attract VC interest.
Chophel further noted that while VC firms recognize Bhutan’s potential, local startups must clearly demonstrate their capabilities and market prospects. “A robust business model with global market potential is essential,” he stated. To transform Bhutan into a more attractive investment destination, he called for policy enhancements that streamline investor entry processes and ensure the security of their investments. “Post-investment incentives and a conducive business environment will be critical in determining investor success,” he added.
Rikesh Gurung, founder and chairman of Green Road, echoed these sentiments, pointing out that the lack of established VC guidelines has been a significant deterrent for potential investors. “Investors are keen to understand policies related to bankruptcy regulations and incentives, but the absence of a clear framework makes it difficult for them to commit,” Gurung remarked. He has previously advocated for the development of comprehensive VC guidelines, a proposal that remains pending formal adoption.
During the forum, government officials acknowledged these concerns and assured attendees that efforts are underway to formulate a robust VC framework. This initiative aims to provide the necessary regulatory clarity to support and attract international investments.
Despite the interest from global investors, some Bhutanese entrepreneurs expressed doubts about the readiness of local startups to meet the demands of VC funding. Chophel pointed out that many Bhutanese ventures are currently tailored to the local market, limiting their scalability. “To attract VC investment, startups need to adopt a global outlook. Technology-driven businesses, in particular, have the potential to scale rapidly and address challenges beyond Bhutan’s borders,” he advised.
Chophel concluded by urging startups to focus on innovative solutions that offer significant impact and extend their reach internationally. “By developing technology and business models that solve real-world problems, Bhutanese startups can unlock their full potential and attract the necessary venture capital to grow,” he affirmed.
As Bhutan continues to foster its startup ecosystem, the establishment of clear and supportive VC guidelines will be crucial in harnessing international investment and driving sustainable economic growth.
