ILLUSTRATION: KATMANDU JOURNAL
SOMETIME IN May, StartupBlink — a Swiss-based research firm that maintains a global map of startup ecosystems — published its annual index and handed Nepal a headline that the country’s tech community has been repeating ever since.
Nepal is, by StartupBlink’s measure, the world’s fastest-growing “contender ecosystem”, with a year on year growth rate of 95.9 percent. The total value of Nepal’s startup ecosystem is put at $1.5 billion. Within days the government cited the figure, NAS-IT cited the figure, startups cited the figure and a Kathmandu Post editorial cited the figure before immediately noting that “the vast majority of startups close within a year of their formation due to a lack of a robust startup ecosystem”. Both are true. That is where the real issue lies.
What StartupBlink is measuring is a composite score built from the number of startups in its database; funding amounts it can track; and other indicators its algorithm weighs. Nepal’s score almost doubled because it started from a very small base. When an ecosystem is tiny, adding a handful of internationally well-known companies — Lamina Labs, the first Nepali startup funded by Y Combinator; Fusemachines, which listed on NASDAQ in 2025; the Khalti-IME Pay merger, which created the country’s most-funded fintech — moves the percentage dramatically. The same absolute improvement in the United States or India wouldn’t register.Rather than a flaw in the methodology, this is what percentage growth means when calculated from near-zero.
The underlying progress is real, though it looks different from the inside than from the StartupBlink dashboard. Tracxn counts 3,960 companies in Nepal that qualify broadly as startups; the total funding raised across all of them, historically, is $258 million.
That is a thin pool for an ecosystem that has been building for more than a decade and employs around 100,000 people in technology-adjacent roles. For comparison, a single Series B round for a mid-sized American fintech typically exceeds Nepal’s total historical startup funding. The $1 billion in annual IT exports that NAS-IT claims is an estimate, most of it earned by freelancers and IT service companies whose revenue flows through Payoneer and Wise rather than Nepali banks — which is why the Nepal Rastra Bank’s own data shows only a fraction of that in formal financial system statistics.
What has truly changed is the quality at the top of the distribution. Lamina Labs is not a rounding error. A Nepali-founded startup that gets into Y Combinator, closes a $3 million round within weeks and has its co-founders turning down investors rather than chasing them is evidence that the talent pool Nepal has been developing through remittances, US universities and decades of IT outsourcing has now reached the global frontier.
Fusemachines reaching NASDAQ — backed by Dolma Impact Fund — is evidence that patient capital plus Nepali AI expertise can produce exits of international standing. These are real outcomes, and they would not have happened without the ecosystem, however thin, that preceded them.
The counterweight is the closure rate and the gap. The 700 to 1,000 startups that form in Nepal a year mostly dissolve before they find product-market fit, because the seed capital that keeps early-stage companies alive while they iterate doesn’t exist at scale in Kathmandu.
The funding gap between Rs 5 million (the top of government seed programmes) and Rs 100 million (the bottom of Dolma Impact Fund’s ticket size) is where most Nepali startups live and most Nepali startups die. A 95.9 percent growth rate in a StartupBlink composite score does not close that.
The government’s response to the ranking has been what you might expect. Finance Minister Swarnim Wagle’s budget announcement included a Rs 730 million startup loan fund and plans for a Sovereign AI Computing Centre. NAS-IT used the ranking to strengthen its case for a 1 percent corporate tax rate on IT exports. The ranking will appear in investment promotion materials and parliamentary debates about the tech sector for at least two years.
Whether it produces changes (from more institutional VC to double taxation avoidance agreements with the US and UK and a stable regulatory environment for young companies) is a different question. Nepal is in fact in motion as a startup ecosystem. The 95.9 percent figure captures that motion accurately, within the limits of what it is measuring, from a starting point low enough to make the motion look faster than it feels from inside a Kathmandu co-working space where the Wi-Fi works and the capital does not. ■
