IMAGE: IMPACT HUB KATHMANDU
WHEN ALIBABA bought Daraz in 2018 it was buying five countries at once: Bangladesh, Pakistan, Sri Lanka, Myanmar and Nepal, with some 460m people among them. Nepal’s own contribution to the first wave of consumer startups was smaller and ended less happily. Tootle, the country’s first motorbike ride-hailing app, built a habit and then lost market share to Pathao, a Bangladeshi company with deeper pockets. One entrepreneur quoted in a Nepali business magazine argued that Pathao and Daraz would not have come to Nepal had Tootle and Sastodeal not shown that the demand existed. The pioneers cleared the ground; the foreigners harvested it.
The maths explains why. Nepal has about 29.6m people and a gross domestic product of some $49bn this year (an IMF forecast), or about $1,660 a head. A consumer app that depends on those households competes for a slim stream of spending, and its best exit tends to be a sale to a larger foreign firm. In 2020 Amun Thapa, a founder, complained to a newspaper that Nepal had no exits nor proper funding. Some founders have since sold part of their stakes, but the reality he described has not changed much.
Capital is also the wrong shape. One newspaper editorial in June noted that the government had paid about Rs1.88bn in subsidised loans to nearly 1,500 entrepreneurs over three fiscal years, and estimated that 99% of the ventures closed within a year. Entrepreneurs told the paper that earlier policy had favoured small shops and restaurants over firms that could grow, and that Nepal needs venture capital and private equity funds. A loan at a low rate is a fair help for a bakery. It does not suit a company that expects to lose money for three years before it earns any.
The money has been made elsewhere. The Nepal Association for Software and IT Services (NAS-IT) estimated in February that IT service exports reached about $1bn (Rs145bn) in 2025, up from $515m in a 2022 study by the Institute for Integrated Development Studies, a think tank. The work is unglamorous: software development, outsourcing, healthcare data analysis for American firms and home-loan processing for Australian ones. More than 100 companies export formally and employ over 80,000 people, according to the Nepal Chamber of Industries IT Council. At Rs145bn, the sector earns some 6% of the Rs2.36trn that migrants sent home in 2025-26.
The customers pay in foreign currency and the staff are paid in rupees. Over the past fiscal year the rupee slid from 137.0 to 153.72 to the dollar, so each dollar of invoices bought about 12% more rupees of wages than it had twelve months earlier. A ride-hailing firm earns rupees and pays for its phones, fuel and imported parts in a currency that was getting weaker. Such a firm also has to win a market share before it can earn a margin, whereas an outsourcing firm needs only a client.
The official numbers lag far behind the claims. The Nepal Rastra Bank recorded Rs12.41bn ($92m) of IT exports in the first seven months of 2024-25. NRB officials pointed out that foreign clients often label payments as remittances, which hides them from the export figures; the industry argues that the true total is far larger. Pandey, NAS-IT’s president, called $1bn a best estimate, adding that the formal survey would be ready by the end of the year. Services firms, moreover, seldom turn into the kind of company venture investors want to own: they sell hours of labour and their clients can find cheaper hours in India or Africa. The government has set a target of Rs300bn a year, which would double the current estimate.
None of this requires anyone to abandon the first generation in person. Its founders hold the contacts, some of the capital and the memory of how foreign rivals took their markets. The abandonment concerns the template: a local consumer app, financed by loans, sold to a regional buyer. If NAS-IT’s survey confirms the $1bn, Nepal’s most successful technology sector will turn out to be one that has no app to download. ■
