Nepal on the world’s tech map is more than just the Himalayas

When you think of Nepal, your imagination conjures up images of the snow-capped peaks of the Himalayas, the ancient temples of Kathmandu and the trekking trails leading to Everest Base Camp.¹That image is certainly true, but it hides another, equally exciting peak that a new generation of Nepalis is now conquering: the peak of tech entrepreneurship. Off the beaten track, in the offices and co-working spaces of Kathmandu, a quiet revolution is unfolding. A country long associated with an agrarian economy and tourism is rapidly transforming into one of South Asia’s most dynamic startup hubs.²

The numbers speak for themselves. If in 2015 there were only about 300 startups in Nepal, then by 2023 their number exceeded 1,500.⁴Nepal is ranked 5th in South Asia by StartupBlink’s startup ecosystem rankings, and its capital, Kathmandu, is among the top 1,000 cities in the world to start a business.⁵Information technology has become the leader in terms of the number of investment deals, attracting the attention of both local and international investors.⁶This rapid growth is a testament to the tremendous energy and entrepreneurial spirit that has gripped the country’s youth.

However, behind the impressive quantitative growth lies a troubling paradox. Despite the increase in startups, Nepal has slipped several places in the global rankings over the past year, ranking 107th in the world.⁵This fact points to a “maturity gap”: enthusiasm and the number of ideas outpace the development of the supporting infrastructure – accessible capital, progressive legislation and qualified personnel. The ecosystem is growing in breadth, but not yet in depth. Many projects fail to move from the idea stage to a sustainable business, and the path to the status of a “unicorn” – a technology company with a valuation of more than $1 billion – seems insurmountable.

This article is a deep dive into Nepal’s tech ecosystem. We explore where innovation is happening, how startups find (or don’t find) funding, and the role of incubators and accelerators. We’ll look at the stories of breakthrough successes and instructive failures to understand the barriers that are holding Nepal back from growing its first unicorn. And, most importantly, we’ll offer concrete steps that can help this young and ambitious ecosystem take a quantum leap and make a name for itself globally.

Landscape of Opportunities: Where Nepali Startups Are Born

The Nepali startup scene, despite its youth, already has clearly defined growth points. Analysis shows that the most successful and notable projects are concentrated in three key sectors: financial technologies (Fintech), educational technologies (Edtech) and software development (Software & Data).⁵This choice is not accidental. It reflects not a blind copying of global trends, but a deep understanding and desire to solve the pressing problems of Nepal itself.

Fintech has become a driver of innovation in response to the country’s low levels of financial inclusion. Traditional banking services are complex and inaccessible to large swathes of the population, especially in rural areas. Startups like market pioneer eSewa and its ambitious competitor Khalti have come up with a simple and elegant solution: digital wallets. They have enabled millions of Nepalis to pay bills, transfer money, and make purchases using their mobile phones, effectively creating a digital payments market from scratch.⁸

The Edtech sector is growing amid problems in the traditional education system. The lack of quality educational materials and qualified teachers is creating a huge demand for alternative educational platforms.¹⁰Projects like Programiz, which has become a globally successful site for programming lessons, demonstrate how Nepalese developers can create educational content that is in demand worldwide.⁵

Finally, the Software & Data sector, which includes business process outsourcing and custom software development, is thriving thanks to the global demand for IT services and Nepal’s pool of talented and relatively inexpensive specialists.³These companies bring valuable foreign exchange into the country and create jobs, forming the basis for technological development.

The current state of the ecosystem can be described as inward-looking. The most viable business models at the moment are those that adapt proven global concepts (digital wallets, ridesharing, food delivery, online courses) to the specific conditions of Nepal. Success here is determined not so much by technological uniqueness as by the ability to solve a specific local problem. This is not a sign of backwardness, but a natural stage of development. The path to success for a Nepalese startup today lies through a deep understanding of the pains and needs of its society. Before creating products for the whole world, Nepalese entrepreneurs learn to change life for the better in their own country.

Money for Growth: The Funding Labyrinth

The biggest obstacle for a Nepali startup to go from idea to scalable business is access to funding. Historically, Nepal has had a very conservative investment culture. Local investors and even banks prefer to invest in predictable and tangible assets, such as real estate or car loans, which serve as a hedge against inflation and do not carry high risks.¹¹Tech startups, with their uncertain prospects and long payback horizons, have long remained outside the purview of traditional capital. The banking system, unlike many other countries, has not become a source of support for innovative entrepreneurship.¹¹

However, in recent years, the situation has slowly started to change. A new generation of investors has emerged and the first private equity and venture capital (PE/VC) funds have been created that have recognized the potential of the tech sector. According to the Nepal Private Equity Association (NPEA), between 2012 and 2022, eight key funds have invested more than $66 million in 15 different sectors of the economy, with the IT sector being the absolute leader in terms of the number of deals.⁶This marks a tectonic shift in the investment landscape.

The government is also making strides towards entrepreneurs. The 2024/25 budget announced a government-run Startup Fund of 1 billion Nepali rupees (about $7.5 million) to support 10,000 new businesses and create 100,000 jobs.³Although the effectiveness of government initiatives remains questionable, the very fact that they have appeared is a positive signal.

Despite these shifts, the overall picture remains complex. Funding is available primarily to established companies that are showing steady growth, while pre-seed and seed-stage startups continue to face a severe shortage of capital.¹²

Interestingly, the bridge between conservative capital and risky technologies has become the so-called “impact funds.” Players like the Dolma Impact Fund and Business Oxygen (created with the support of the International Finance Corporation IFC, part of the World Bank Group) have a dual mandate: they seek not only financial returns, but also measurable social or environmental impact.¹⁴By investing in startups in healthcare, education or green energy, these funds are effectively “de-risking” the tech sector in the eyes of the local market. Their successful investments, such as the Dolma Impact Fund’s investment in the food delivery service Foodmandu¹⁷, prove that technology companies can be not only socially useful but also highly profitable. Thus, impact investing in Nepal is not just a niche, but a major catalyst that legitimizes venture capital investments and paves the way for the emergence of “purely commercial” funds in the future.

Below is a table of key investment players who are already shaping the future of Nepal’s IT industry.

This table serves as a practical guide for entrepreneurs, showing that despite all the difficulties, Nepal is already developing a pool of professional investors willing to invest in technology.

Incubators and accelerators: catalysts or missing link?

In parallel with the development of the investment market in Nepal, a supporting infrastructure in the form of business incubators and accelerators is also being actively formed. Organizations such as Idea Studio Nepal, King’s Incubator, Accelerator Nepal and Impact Hub Kathmandu have become an integral part of the ecosystem, offering young entrepreneurs mentorship, workspace, educational programs and access to a network of contacts.⁴Their programs, such as Accelerator Nepal’s TechX, which focuses on healthcare and education, or Idea Studio’s College Idea Hunt, which targets students, cover startups at all stages, from a raw idea to a scalable business.²²

However, a deeper analysis reveals a systemic problem: these structures operate in isolation from each other and, more importantly, from the academic environment. A report on the Nepalese ecosystem notes that universities are “non-reactive” and do little to engage in incubation and idea generation, despite claiming to be preparing future entrepreneurs.²⁴This leads to the fact that incubators and accelerators are forced to take on functions that are performed by universities in developed ecosystems: teaching the basics of business, financial planning and marketing.

In fact, many Nepalese incubators today are not so much “accelerators” for established teams, but rather “vocational schools” for aspiring entrepreneurs. They fill the gaps in formal education, which does not provide students with the necessary practical skills. This explains why most programs focus on the earliest, “idea” stage.⁴Instead of helping a business scale, they have to teach it the basics first.

Another problem is the lack of synergy. Instead of cooperating and specializing to create a single support chain, many players are “competing for the same end pie, rather than working together to make it bigger.”²⁴Everyone is trying to create their own startup funnel, which leads to a waste of resources and duplication of efforts.

Against this backdrop, the growing cooperation with the much more mature ecosystem of neighboring India looks particularly important and promising. The participation of Nepalese startups in India’s largest tech event, Startup Mahakumbh, as well as the signing of memorandums of understanding between Nepalese universities (Tribhuvan University, Kathmandu University) and the incubation center of the prestigious Indian Institute of Technology Madras (IIT Madras Pravartak) are steps in the right direction.²⁵India can provide Nepali startups with access to a huge market, a network of investors and, most importantly, best practices in building incubation programs and integrating science with business.

Simply increasing the number of incubators will not solve the problem. A qualitative change in approach is needed: the creation of incubation centersinsideuniversities on the IIT Madras model, embedding practical entrepreneurship courses into the curriculum, and encouraging collaboration among all the ecosystem participants. This is the only way to transform incubators from “compensators” for educational shortcomings into real catalysts for growth.

Heroes of Our Time: Success Stories That Inspire

Behind the dry numbers and analysis of systemic problems are living stories of people who, with their persistence and belief in an idea, are changing the face of Nepalese business. These success stories not only inspire a new generation of entrepreneurs, but also serve as the best proof that even in the most difficult conditions, it is possible to build a breakthrough business.

Case 1: Foodmandu – How to Feed the Nation and Build an Industry

The story of Foodmandu is a classic startup saga that began with a personal problem for its founder. Manohar Adhikari, a software engineer who was tired of the limited lunch options near his office, decided in 2010 to create a service that would deliver food from various restaurants in Kathmandu.¹⁷At that time, the idea of ​​ordering food online in Nepal seemed like science fiction.

The road to success was thorny. Adhikari faced total distrust: restaurateurs did not believe that anyone would order food online, and customers did not believe that they would actually receive something.¹⁷In the first few years, the company operated at a loss, receiving an average of only five orders a day.²⁷The situation was aggravated by external shocks: the devastating earthquake of 2015 and the subsequent economic blockade by India, which practically paralyzed business.¹⁷

Three factors were key to survival and subsequent growth. First, the founder’s incredible tenacity. Second, timely investment: the first round from True North Associates in 2016, then from Team Ventures in 2020, and a large $4 million round from Dolma Impact Fund in 2023.¹⁷This money allowed us to scale up operations and invest in technology. Third, technological evolution — the transition from a website to a user-friendly mobile app, launched in 2015, which coincided with the growth of smartphone penetration in the country.¹⁷

Today, Foodmandu is not just a delivery service, but a systemically important company. It did not simply occupy an empty niche, but created one from scratch. Foodmandu has taught thousands of restaurants to work in a digital format and accustomed hundreds of thousands of Nepalese to the convenience of online orders, changing the culture of consumption and giving impetus to the development of the entire digital and gig economy in the country.¹⁷

Case 2: eSewa and Khalti – Battle for the Digital Wallet

The story of Nepal’s digital payments market is one of two giants: pioneer eSewa and audacious challenger Khalti. Launched in 2009, eSewa spent more than a decade single-handedly building the market, battling low digital literacy and a lack of trust in online payments.⁸Their titanic efforts to create an agent network, connect banks and government services laid the foundation for the entire fintech industry in the country.

In 2017, Khalti entered this already prepared market. Founded by a team with a strong IT background (the parent company Janaki Technology was involved in outsourcing), Khalti adopted a more aggressive and modern tactic.²⁹A viral teaser ahead of the launch, a creative name (khalti means pocket in Nepali), aggressive marketing and social initiatives such as the digital literacy program for women, Smart Chhori, helped the startup quickly gain popularity.²⁹The recent announcement of Khalti’s merger with another major player, IME Pay, was a landmark move aimed at creating a powerful competitor to the dominant eSewa and reshaping the entire market.³¹

Other striking examples

Besides these giants, there are other companies whose stories are worth noting.Tootle, the first local ride-sharing service, proved the viability of the model in Kathmandu’s chaotic traffic, paving the way for the entry of larger international player Pathao.⁹

Sastodeal, one of the leading e-commerce platforms, has attracted investments from the Dolma Impact Fund and is actively developing the online trading market.¹⁸And an educational project

Our program became an example of a globally successful startup, creating one of the world’s most popular sites for learning programming.⁵

These stories have one thing in common. In an underdeveloped market, Nepal’s most successful startups are forced to be not just tech companies, but infrastructure projects. They create not only a product, but also demand for it, trust in it, and the entire ecosystem around it. This explains why their path to success often takes years, sometimes decades, and why their contribution to the country goes far beyond pure business.

Learning from Mistakes: Why Startups in Nepal Fail

Despite inspiring success stories, the reality is that the vast majority of Nepalese startups – up to 90% by some estimates – fail.¹⁸The reasons for this are varied and lie both in the internal problems of the companies themselves and in the systemic barriers that hinder the development of the entire ecosystem.

Internal reasons include weak business models, lack of management experience and inability to build financial planning.³However, external, structural barriers are much more serious and difficult to overcome.

Personnel shortage and virtual “export of talent”. This is perhaps the most pressing and fundamental problem. Thanks to globalization and the development of freelance platforms (Upwork, Fiverr, etc.), Nepalese IT specialists have gained access to the global labor market without leaving the country.³²The growing business process outsourcing (BPO) industry offers them salaries that are 2-3 times higher than what a local startup targeting the domestic market can afford.³²The result is a vicious cycle: the best and most experienced people go to work for foreign clients, leaving the “least capable talent” for Nepalese startups.³²This directly affects the quality of products, prevents them from attracting investments and, ultimately, dooms many projects to failure. The main competitor of a Nepalese startup is not a neighboring company, but a global outsourcing firm, and the fight is not for clients, but for the main resource – people.

Regulatory issues. Nepalese legislation is woefully behind the pace of technological development. There is still no clear legal definition of a “startup”, which creates legal uncertainty.³³Outdated laws directly hinder innovation: for example, transport laws prohibiting the use of private cars for commercial purposes have long been a headache for ride-sharing services.³³Bureaucratic hurdles, lengthy and complex registration processes and the lack of clear government policies on new technologies such as artificial intelligence or the Internet of Things create a hostile environment for entrepreneurship.¹³

“The Culture of Celebrity Entrepreneurship”. This problem is more mental, but it is no less destructive. Nepalese society, as well as politics, is strongly inclined to create idols. Some startup founders, succumbing to this temptation, focus on creating a personal brand, hype, and publicity at the expense of painstakingly building a sustainable business.³²They create “alternate realities” that crumble at the first encounter with real competition. For experienced employees who have survived the collapse of such “zombie startups”, working for a stable outsourcing company becomes a much more attractive alternative.

Stories of failure are less well known than success stories, but they are no less instructive. Projects like N’s Fresh Snack, Koolkat, or 11 Beep, once considered innovative, were forced to close due to an inability to achieve financial sustainability.¹⁸Their fate is a stark reminder that a good idea alone is not enough. Without access to talent, capital, and an adequate legal environment, even the most promising project is doomed.

The Way Forward: Concrete Steps to Building a Mature Ecosystem

An analysis of the problems of the Nepalese startup ecosystem would be incomplete without offering concrete, practical solutions. To move from quantitative growth to a qualitative leap, coordinated efforts are needed from the government, investors, educational institutions, and entrepreneurs themselves. Here are four key areas that can serve as a roadmap for building a mature and competitive ecosystem.

Solution 1: Regulatory reform – create a “green corridor” for innovation

The first priority is to create a favorable legal environment. Nepal needs a comprehensive “Startup Act” that would address several key issues:

• Clear definition: Introduce a legal definition of “startup”, “venture fund” and other key concepts to take them out of the “gray area”.
• Simplification of procedures: Simplify and reduce the cost of registration and reporting for young companies as much as possible, perhaps by introducing special tax holidays for them in the first years of operation.³⁴
• Regulatory sandboxes: Create special legal regimes (sandboxes) within which startups in the fields of fintech, artificial intelligence, the Internet of Things and other advanced areas could test their products and services without the risk of violating outdated legislation.³³This will allow innovation to develop and regulators to develop adequate rules based on practice.

Solution 2: Bridge between education and business – turn universities into idea factories

It is necessary to break the vicious circle in which universities are cut off from real business. The most effective way is to scale up the existing and proven successful model of cooperation with Indian technological institutes.²⁵

• Joint incubators: Create business incubators at leading Nepalese universities, managed jointly by representatives of universities, venture funds and successful entrepreneurs. This will ensure an influx of expertise and a connection with the market.
• Practical courses: Introduce mandatory practical courses in technological entrepreneurship, financial modeling and marketing into the curriculum, which will be taught not only by theorists, but also by practitioners from the industry.
• Stimulating research: Encourage applied research at universities and create mechanisms for the commercialization of scientific developments through start-ups.

Solution 3: Retaining Talent – ​​Make Working at Home Prestigious and Rewarding

Combating the “brain drain” to outsourcing requires a pragmatic and perhaps unorthodox approach. Instead of trying to ban or restrict outsourcing, which is impossible in the global digital economy, it should be used as a springboard.

• Support from IT service champions: The government and investors should specifically support the establishment and growth of several large, high-quality IT service companies in Nepal that serve the global market. Such companies will be able to pay competitive salaries, stopping the outflow of top talent abroad.
• Accumulation of capital and competencies: By working on complex international projects, Nepalese specialists will “upgrade” their skills, and companies will accumulate capital and, more importantly, world-class management experience.
• Creation of “exiters”: As the experience of many Eastern European countries and India shows, the next generation of strong product startups is often founded by people from successful service companies. Having accumulated experience and start-up capital, they begin to create their own global products. This path is longer, but it allows you to organically grow a strong and mature ecosystem.

Solution 4: Develop an investment culture – show that you can make money from startups

To attract conservative domestic capital to the tech sector, the perception needs to change. Venture capital needs to stop being seen as an exotic venture and become a legitimate asset class.

• Popularization of exits: Business media and industry associations such as NPEA need to shift their focus from stories about startup launches to stories about successful investment rounds and, most importantly, exits – company sales or going public. Successful exits are what show investors that their investments can bring real and high returns.
• Education for investors: Conducting seminars and trainings for potential business angels and family offices, explaining the mechanics of venture investments, startup evaluation methods and risk management techniques.
• Joint investments: Creation of state funds that would invest in startups jointly with private venture funds (the “fund of funds” model). This reduces risks for private investors and stimulates their activity.

These steps will take time and political will to implement, but they can lay the foundation for Nepal to become a true technology hub in South Asia.

Conclusion: Waiting for the first unicorn

So, can Nepal, a country with the highest mountains, grow its first tech unicorn? The answer is yes, but with an important caveat. It won’t happen tomorrow, and it won’t happen by blindly copying the models of Silicon Valley or other global hubs. Nepal’s path to tech Olympus will be unique and distinctive, dictated by its own challenges and opportunities.

The analysis shows that Nepal’s startup ecosystem has enormous potential: it is full of energy, entrepreneurial spirit, and young talent. However, its growth is constrained by fundamental systemic problems: lack of affordable capital, archaic regulation, a gap between education and business, and, most importantly, a severe talent shortage caused by competition from the global outsourcing market.

The path to the first unicorn lies not in trying to jump over these barriers, but in their consistent and systemic elimination. Nepal does not need to try to compete with India or the US in creating breakthrough global products right now. Its strategy for the coming years should be more pragmatic. First, it is a focus on solving large domestic infrastructure problems in areas such as logistics, energy, agritech and financial inclusion. This is where local startups have an undeniable advantage in understanding the market. Second, it is strategic integration into the global IT services market not as a threat, but as an opportunity to accumulate capital, competencies and management experience. And third, it is maximizing the benefits of close partnership with more mature regional ecosystems, primarily with India.

The first Nepalese unicorn will most likely appear not in the next 2-3 years, but within the next decade. It will not grow out of a hyped idea, but out of many years of work on building a complex infrastructure business that will solve one of the country’s big problems. And its appearance will not be the cause, but the consequence of building a mature, sustainable and original technology ecosystem. The assault on this peak has just begun, and although the path to the top is long and difficult, Nepalese entrepreneurs have every chance of conquering it.

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A publishing and analytical center specializing in the economy and business of Nepal. Our expertise includes: economic analysis, financial forecasts, market trends, and corporate strategies. All publications are based on an objective, data-driven approach and serve as a primary source of verified information for investors, executives, and entrepreneurs.

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