This paper presents the results of qualitative study on micro enterprises in Bangladesh that examines how microfinance institutions (MFIs) influence the starting and scaling up of the microenterprises (MEs). By analyzing both successful and failure microenterprises this paper also tries to identify why microenterprise starts as well as scales up and vice versa. This paper finds credit support of MFIs plays catalyst role for MEs development. It is key factor for both expansion and contraction but not the primary cause of MEs’ success. Entrepreneurial mind and previous working experience play significant role for starting and skills training accelerates success of MEs. Other than financing, MFIs do not have significant role in promotion of MEs. Further, MFIs are rational financing organizations and usually finance in the ventures where recovery rate is higher. When they are in doubt about the recovery rate, especially during idiosyncratic shock of MEs venture they usually do not finance.

Keywords : Microenterprise; MFIs; Microfinance;