Is Islamic venture capital going corporate?
Emergence of corporate venture capital (CVC), is no longer emerging but an accelerating trend. Many corporate players want to secure their future simply by “buying” startups and developing companies. This strategy is more cost effective that funding their own Research & Development for years to come. For many startups being invested by a CVC is beneficial as well — corporate venture capitalists usually have a longer investment horizon, and the “exit” question gets partially solved.
We have been living for years with the likes of Aramco Ventures, Google Ventures, Baidu Capital and Amazon Industrial Innovation Funds. Still, the latest launch of NATO’s US$1 billion Innovation Fund left many industry professionals flabbergasted. Who will be making the investment decisions — the ministers of defense? And why the US declined to participate in the fund?
One of the factors that impeded the growth of Islamic tech was the perceived lack of clear “exit strategies”. Most Shariah compliant project were fintechs, and Islamic banks and financial institutions had rather been slow in seeing the value in Islamic fintech acquisitions. In the GCC things are starting to change — Saudi Vision 2030, Qatar’s 3rd National Development Strategy and the UAE’s “Operation 300 billion” will reduce the reliance of local economies on oil, and will foster development of digital finance, renewable energy, biotechnology, “green” hydrogen and high-tech agriculture projects.
Funded with abundant wealth, corporate giants such as Aramco, Ma’aden, SABIC, ENOC, Masdar and the entire NEOM project will drive the new economies of the GCC and create a “brain-drain” effect for outsider tech companies. Well, and most tech startups are Shariah compliant by definition.
Interestingly enough, the former deficit of tech professionals was suddenly solved… by the Russia-Ukrainian was and subsequent emigration of tech-savvy youth from both countries.
In the meantime, there had been some exciting developments in the Islamic VC market.
In Egypt Islamic fintech Agel has raised an undisclosed seven-figure pre-seed funding from investors to help the company secure a non-banking financial institution license, fund product development and grow its domestic geographical footprint. The seed round was led by Plus Venture Capital, Seedstars International Ventures and Flat6labs, with SEEDRA Ventures and Banque Misr participating.
In Malaysia RHB Islamic International Asset Management has launched the RBH i-Sustainable Future Technology Fund. The fund will provide investors access to Shariah compliant technology companies with a sustainable and responsible focus.
In Saudi Arabia the US investor Plug and Play Tech Center (an early investor in Dropbox and PayPal) is seeking to raise US$100 million to fund Saudi startups. The VC firm is talking to Jada, a fund of funds established by Saudi Arabia’s Public Investment Fund.
And also in Saudi Arabia, Saudi Venture Capital invested US$30 million in Shorooq Partner’s new US$150 million Bedaya Fund II, which will invest in the GCC startups in fintech, software and digital assets.
