Toward a Thriving Startup Economy

Sartups are the new buzz in Nepal’s business scene. But what does the country’s startup cosystem really look like? Here, re what it is, where it stands today, and what steps could take Nepal’s entrepreneurial future to the next level.

The Industrial Enterprise Regulation  of Nepal defines startup as a business that is under 10 years old and generates less than Rs 150 million in annual revenue. Entrepreneurs meeting these criteria can apply for a Startup Business Certificate through the Industrial Enterprise Development Institute (IEDI) or other authorized agencies. Startups and micro, small and medium enterprises (MSMEs) are often mistaken for the same thing, but they play very different roles. Understanding this distinction is key to introducing smarter policies and better resource allocation. While MSMEs serve as stable job creators and support local markets, startups act as innovation engines, driving economic transformation and introducing new technologies and business models.

The IEDI certification opens doors to exclusive benefits, including subsidized financing, mentorship programs, and potential tax incentives, giving startups the boost they need to scale and succeed in the evolving business landscape. In fiscal year 2024/25, the IEDI received 5,158  startup loan applications. Out of these, 183 ventures were shortlisted, and R 190.4 millionwas disbursed to 165 startups, with agriculture-led businesses taking the lead, echoing the country’s vision for rural self-reliance. This reinforces that Nepal’s startup funds often go to agriculture rather than tech, despite being intended for tech-driven or innovative businesses. The momentum continues into 2025/26, with applications climbing to 5,250  and 1,314  projects shortlisted in the first phase  for the Rs 1 billion startup fund. While only 3–5% of applicants have secured loans so far, the trend points to a promising shift in Nepal’s startup financing ecosystem. With continued refinement, Nepal could gradually draw lessons  from larger models like India’s Startup India Seed Fund, which
supported more than 1,900  startups with Rs 9.45 billion by 2023. Trends and Opportunities Strengthening cross-border partnerships and promoting knowledge exchange with neighboring countries like India can significantly enhance Nepal’s startup ecosystem. By tapping into the expertise of successful regional entrepreneurs, Nepal can accelerate innovation, sustainability, and long-term economic growth.

Mach24 Orbitals, a pioneering Nepali space-tech startup, represented Nepal at Startup Mahakumbh 2025 in New Delhi, one of South Asia’s largest startup events featuring over 3,000  startups and 1,000  investors, in April. Supported by Nepal Academy of Science and Technology (NAST) and the Space Research Centre, the company showcased its hybrid rocket demonstrator, highlighting innovations in affordable and accessible space  launch solutions for the Asia-Pacific region. Mohan Tamang, founder of Mach24 Orbitals, emphasized regional collaboration and Nepal’s growing role in the global space economy. The startup aims to launch Nepal’s first private orbital-class rocket by 2029,  marking a major step for the nation’s emerging  aerospace industry.

Nepal’s IT startup ecosystem is evolving, with an increasing  number of support systems emerging to guide aspiring entrepreneurs. Organizations like the Nepal Association for Software and IT Services Companies (NAS-IT) are offering mentorship, market insights, and strategic guidance, helping young founders navigate the ecosystem and scale their ventures successfully.

Nepal’s digital transformation is unlocking new opportunities for startups to innovate and scale. Fintech leaders  like eSewa and Khalti by IME are driving financial inclusion, while the country’s evolving financial sector is improving access to capital through venture funding, digital banking, and microfinance. With support from incubators, accelerators, and mentorship programs, startups such as Kheti are proving how financial innovation fuels growth and positions Nepal as an emerging  startup hub.

Entrepreneurship in Nepal is gaining strong momentum with initiatives like the Nepal Entrepreneurship Forum and the Nepal Innovation Center, which provide mentorship, training, and funding to aspiring founders. Adding to this growth wave, Shark Tank Nepal has reignited nationwide interest in startups, inspiring a new generation of entrepreneurs and putting innovative Nepali ventures in the spotlight. Of the 110 businesses featured on the show, 35 secured investments totaling Rs 400 million, gaining not only funding but also mentorship, strategic partnerships, and expanded networks. Many of these startups have scaled operations, entered international markets, or attracted further investment following their TV debut.

This is also shaping a new entrepreneurial mindset among Nepali youth, with education and business schools increasingly promoting risk-taking and innovation. It seems  the younger generation is now more focused on building companies and seizing opportunities, marking a significant shift from traditional career  aspirations and signaling a growing startup-driven economy in Nepal.

As Nepal’s startup ecosystem matures, the synergy between financial institutions, policymakers, and entrepreneurs is set to accelerate sustainable growth, inclusivity, and innovation, positioning the country as an emerging  hub for startups in South Asia.

Challenges Faced by Startups Startup failure rates are alarmingly high globally. Around 90% of startups do not survive long-term, with 10% failing in their first year and nearly 70% shutting down within two to five years. These  trends have persisted across industries for decades, underscoring the immense  challenges of sustaining new ventures. For Nepal, this highlights the urgent need for a comprehensive national  policy that goes beyond startup creation to focus on commercialization, long-term sustainability, and ecosystem resilience.

However, despite ongoing efforts since 2014–15, a study by the Policy Research Institute (PRI) reveals that Nepal continues to face deep-rooted structural barriers in channeling financial resources to startups. Key obstacles include unclear definitions, classifications, and policy guidelines for MSMEs and startups, issues that have limited the effectiveness of support programs. Startup definitions based on age and turnover overlook what truly matters—scalability and market disruption. High-potential ventures like black cardamom producers or Allo Nepal textile makers still fall into a regulatory grey area, as unclear criteria leave their eligibility dependent on subjective
official decisions.  This challenge is significant given that MSMEs make up about 90% of enterprises in developing countries, contribute 22% to Nepal’s GDP, and employ around 1.7 million people.  Startups, which form a vital segment of the MSME ecosystem, hold immense potential to drive innovation, job creation, and sustainable economic growth. All these call for clearer policies and stronger institutional support for the sector.

Nonetheless, without strengthening institutional infrastructure, ensuring  policy stability, and improving entrepreneurship education, even generous budget allocations will fall short of creating a thriving startup ecosystem. Lasting success will depend on investing  in people, partnerships, and policies that build a strong foundation for innovation and growth.

Success stories

Nepal’s startup ecosystem is producing globally impactful ventures. Adex International, a cloud services company,  was acquired by a US firm for $2.4  million (Rs. 337 million), showcasing Nepali tech startups’ appeal to international investors. Similarly, VEDA, an education technology platform, raised Rs 60 million on Shark Tank Nepal. It serves  over 1,300  schools across four countries, reaching three million users. Nepal Tea Collective has taken authentic Nepali tea to over 40 countries, combining quality and community-driven sourcing. Alongside household names like eSewa, Khalti by IME, and Foodmandu, these rising startups highlight the ability of Nepali entrepreneurs to innovate, scale, and succeed globally. Many other Nepali startups are also making their mark with innovation and impact.

Support ecosystem

Nepal has allocated Rs 730 million for startup loans at a concessional 3% interest rate in the 2025/26 budget. The scheme offers collateral-free loans ranging from Rs 200,000 to Rs 2 million, aimed at empowering skill development and business growth, especially among Gen Z entrepreneurs. This year’s policy marks a significant shift, as the startup loan program  now operates under a more formal structure with streamlined, standardized disbursement processes, addressing past issues of bureaucratic delays and inefficiencies that hindered timely access to funds.

However, providing loans alone doesn’t equate to real support. Previous  funding schemes often failed to create lasting impact because they lacked proper mentorship, guidance,  and networking opportunities. What young entrepreneurs truly need is comprehensive support, not just capital, as per Narottam Aryal, President of King’s College.

Several organizations and key players  have been driving the growth of Nepal’s startup ecosystem. Biruwa Ventures, Impact Hub, Entrepreneur Lab, and Idea Studio have championed youth entrepreneurship, while One to Watch, True North Associates, and Next Venture Corp offer alternative funding, mentorship, and strategic guidance to emerging  startups. Accelerator programs like Rockstart Impact, Enterprise Nepal Business Accelerator, and Next Launchpad, along with Otharo by King’s College have played a pivotal role in helping startups scale, innovate, and succeed in competitive markets. In the same way, the India-Nepal Startup Connect 2025 event, hosted by the Embassy of India in Kathmandu, served as a cross-border collaboration to strengthen Nepal’s startup ecosystem. With participation from Startup India, Department for Promotion of Industry and Internal Trade (DPIIT), Federation of Nepalese Chambers of Commerce & Industry (FNCCI), and Nepali innovators, the event showcased opportunities for partnership, investment, and digital integration. During the event, industry leaders  emphasized Nepal’s IT progress and the success of FonePay-UPI interoperability which has enabled over 400,000 merchant transactions since 2024. The initiative aims to empower Nepali startups to engage in Startup Mahakumbh 2025, fostering innovation across sectors like fintech, AI, agritech, and sustainability while building a stronger India-Nepal  startup network.

Beyond that, the International Centre for Integrated Mountain Development (ICIMOD) is driving Nepal’s startup growth by fostering collaboration between government, academia, and industry through the triple-helix model. Partnering with the Ministry of Industry, FNCCI, and other stakeholders, ICIMOD supports entrepreneurship and innovation via initiatives like Startup Nation 2030 and the National Startup Policy 2024. These efforts have led to plans for establishing incubation centers in all seven provinces, with a goal of creating 10,000 startups and 100,000 jobs by 2030. Under the HI-GRID project, supported by the Australian government, ICIMOD is already helping set up an incubation center in Madhesh Province which aims to strengthen Nepal’s inclusive and sustainable startup ecosystem.

Future Outlook

Nepal’s startup ecosystem is entering an exciting new phase. As more  aspiring founders take bold steps into entrepreneurship, the focus is shifting toward building strong mentorship networks that connect experienced business leaders  with emerging  startups. Educational institutions can accelerate this momentum by launching structured mentorship programs and promoting a culture of collaboration and knowledge exchange.

At the same time, expanding networking events, pitch competitions, and startup conferences beyond Kathmandu, like King’s College and Tyrosoft’s Babal Challenge, can help create a more inclusive and connected startup culture across the country.

Looking ahead, the next wave of growth will be fueled by stronger funding mechanisms, through angel investors, venture capital, and government-backed seed funds, supported by tax incentives and global partnerships. With increased access to capital, guidance,  and international expertise, Nepal’s startups are well-positioned to drive innovation, sustainability, and economic transformation nationwide.

Conclusion

To build a thriving startup ecosystem in Nepal, strong collaboration among universities, the government, and private businesses is essential. Beyond  simply providing funding, the focus must expand  to entrepreneurship education, mentorship, and practical incubation support. Universities should  serve as innovation hubs that connect research with real-world enterprise and encourage independent, creative thinking. With clear exit frameworks, intellectual property policies, and performance tracking, incubators can evolve into sustainable engines  of growth. Ultimately, the startup success will depend on cultivating  a culture of innovation, resilience, and collaboration to transform MSMEs into drivers of long-term economic growth.

(This opinin article was originally published in December 2025 issue of New Business Age magazine.)