Opportunities & Challenges for Startups in Nepal 2022

The startup journey is not an easy one, but it doesn’t have to be any harder than it already is. Unfortunately, it is so in the case of Nepal. Startups are a crucial requisite for Nepal’s economic development. There are several Opportunities & Challenges for Startups in Nepal. Over the last decade, there has been a significant growth of startups in Nepal. This is excellent news for a developing country like Nepal. However, there are countless challenges and obstacles in the path of every startup. For example, lack of venture capitalists, financial assistance, a weak workforce, poor infrastructures, poor facilities, unjust laws, unjust policies, bureaucracy, and so on.

Though there are countless challenges in the journey of every startup, research and surveys have revealed that in Nepal, there are six key factors that cause significant challenges in the path of every startup. The Challenges for Startups in Nepal are listed below:


Not every startup is financially ready from the start. This is the initial challenge that most startups face. Startups require strong capital, funding, loan, or investments to initiate their business. For numerous reasons, startups in Nepal have found it challenging to obtain loans/funding from banks and venture capitalists. In a nutshell, the banks in Nepal don’t take risks for startups and only a few startups approach venture capitalists for funding because seeking funding from a venture capitalist is a tough process.

Many Nepalese startups fail to meet the basic compliance requirements imposed by banks to be eligible for a loan grant. In some circumstances, a startup must be properly established and have been in operation for a few years before being eligible for a loan. Such compliances and formalities have made it extremely challenging for startups to obtain financing. The majority of startups lack the skill and ability to gain the confidence of venture capitalists. Also, Nepal lacks proactive and risk-taking venture capitalists. This is why finance is one of the prevailing challenges that the majority of startups face.

Human Resource

People are either the greatest asset or greatest liability. This is especially true for new businesses. Human resource in the initial phase of a business plays an important role. Due to various constraints such as weak finance, lack of time, poor mentorship, etc. It is challenging to get employees’ trust and loyalty.  Employees hop jobs in pursuit of a better salary. Some have very low motivation; some get into workplace conflicts; these issues cause huge challenges for startups to function efficiently.

Hence, it is paramount to set a good organizational culture, as well as to groom existing employees to help them develop necessary skills. At the same time, it is also crucial to hire competent employees with the proper mindset because every startup benefits from an employee with the right mindset. Everyone, whether an employee or a CEO, must cultivate an entrepreneurial mindset. Know more about the entrepreneurial mindset.

Law & Policies

This is the most disappointing part. In Nepal, visionary startups face undue burdens and excruciating challenges due to unjust laws and policies. Our laws and policies are very vague and unclear. Having clear policies and guidelines in place would help startups run their businesses more efficiently. According to research and surveys, legal ambiguities and vague laws have imposed a greater challenge on newly registered businesses than on businesses that have been established for a long period.

During the registration process, many startups have to deal with corrupt bureaucrats. These bureaucrats cause undue challenges and frustrate many startups. Nepal is also well known for imposing high taxes. For startups in their beginning phases, no tax policy for a certain number of years or policies that promote companies during their early stages would be helpful. This would assist entrepreneurs in developing their entrepreneurial endeavors.

Guidance & Mentorship

Proper guidance & mentorship is the backbone of every startup. Proper guidance and mentorship can help a startup to turn its vision into reality.  Due to the absence of such guidance, many startups face challenges that could have been avoided. From developing a business idea through registration to operation, guidance and mentorship play an important role in every startup. Though in recent times the trend of mentorship and information exchange has risen still there are numerous startups out there who are in dire need of guidance.

The Contemporary Market

Startups generally come up with excellent ideas, but when it comes to putting those ideas into action, they often fail. There are many startups in Nepal that have something to sell but they fail in the market. The lack of marketing knowledge and market knowledge creates challenges. Poor market analysis is the cause of this problem. Startups often come up with brilliant ideas but when it comes to implementing those ideas they fail.

Family & Social Perceptions

Most Nepalese parents do not want their children to pursue an entrepreneurial journey or start a business. Most parents prefer that their children choose a more traditional career path like doctor and engineer. Lack of family support and social perceptions lowers the self-esteem of many entrepreneurs. Generally, people who peruse unconventional paths are criticized by society.

There is a societal stigma associated with pursuing entrepreneurship or starting a startup, which is typically associated with failure to pursue proper government jobs. Such a belief is deeply embedded in Nepalese society. hence, the entire societal culture poses significant challenges. This is something that discourages and affects every startup. Many get negatively affected, some may even consider quitting. Family and social perceptions regarding startups are heartbreaking in the context of Nepal. Hence, it is very important to stay strong and focus on what lies ahead in the entrepreneurial journey.

What are the opportunities for startups in Nepal?

Along with the challenges, there are ample opportunities as well. Recently due to the Covid-19 spread people have been digitally equipped. Ecommerce businesses are flourishing like never before. The opportunities in the e-commerce sector are growing. Anyone who has the vision and mindset can take advantage of this opportunity.

Nepal is considered a virgin market, we don’t have a lot of Nepali businesses. Our market is occupied by foreign products. While many see this as a problem, I believe visionary entrepreneurs should take this as an opportunity to come up with something of their own. Likewise, there are countless opportunities for those who are willing.

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