Pitching Shariah compliant projects to VCs
Pitching your startup to venture capital (VC) investors can be a challenging endeavor. Pitching your Islamic startup can be even more arduous. As a Shariah compliant tech entrepreneur, one is competing with many conventional peers. It is a well-accepted fact that most tech businesses are Shariah compliant by nature — yes, indeed, the largest Shariah compliant company in the world is Apple with its US$ 2.9 trillion in capitalization. Having reviewed over 50 Islamic tech pitches in the last year, I wanted to provide some recommendations to the aspiring business stars:
1. Be in the right sector
VC investors look for businesses with high potential for growth. In Islamic tech universe the high growth companies are likely to represent the following sectors — payment and remittance, Islamic investments and crowdfunding. Crypto sector is popular but not quite ready for the VC funding due to the ongoing Shariah compliance controversy.
2. Look for the right investors
Islamic VC firms are still a rare breed. But there is no reason to despair — most global VC firms as well as VC companies from the GCC, Malaysia and Indonesia are prepared to consider Islamic tech businesses as candidates for funding. I always use an example of the greatest (in my humble opinion) Indonesian fintech Alami Sharia that already went through a number of financing rounds — all of them funded by conventional investors.
3. Focus of the market
Too many Islamic startups believe that their niche is relatively empty, and thus confidently state that entire Ummah of 1.6 billion eager potential customers IS their target market. ”Thank you! Next, please…”. The closest to a truly global Islamic fintech, Wahed Invest is taking over the world just one market at the time (despite some recent setbacks).
It is hard to imagine a product or a service that universally appeals to a mass underbanked market in Indonesia and some overbanked markets in the GCC countries.
4. Your team
Having practicing Muslims running the company is a definite plus, but adding non-Muslims to the team has great diversity benefits. Afterall, Shariah compliant businesses are inclusive, and so, the moral grounds of Islamic way have almost universal appeal.
5. Good advisors
The world of Islamic tech is growing day by day. A reputable advisor can make proper introductions and promote your project among the guys with big purses. LinkedIn is an excellent source of such connections. According to the Startups Magazine, a direct introduction to an investor makes a company 13 times more likely to secure an investment, as opposed to “cold calling”.
6. Do you need a Shariah advisor?
It depends. Many guidelines suitable for Islamic tech business are easily available online. So, spending your money on Shariah compliance should not be a priority for an emerging entity.
Pitching your startup is never easy. But the rewards of doing it correctly are enormous.