Malaysia’s first Islamic tech venture capital (VC) firm is giving itself until the end of the 2019 to raise RM100 million (US$24.19 million) but is keen on making its first investments before the final quarter.
Having secured RM25 million (US$6.05 million) for its debut VC fund, Ficus Fund 1, and expecting to double that amount over the next few weeks, the Kuala Lumpur-based firm has built a deal pipeline in excess of 10 companies, including those operating in the Islamic financial services area. Ficus Venture Capital’s strategic approach to focus exclusively on Islamic tech companies comes as no surprise as two of its five-founders team hail from the Islamic finance industry.
“We like Shariah compliant start-ups as most of them, especially the ones that serve the Muslim community, will have a big captive market in ASEAN considering the huge number of Muslims, about 242 million which make up roughly 42% of the total population in ASEAN,” explained co-founder Baiza Bain, who previously was attached to Malaysian Shariah consulting firm Amanie Advisors, US-based Islamic financial services firm Guidance Financial Group as well as Islamic Financial Data Services in the UK. Baiza is joined by another veteran Islamic finance professional, Abdullah Hidayat Mohamad, who has over a decade experience in the industry at a strategic level with institutions such as the Islamic Corporation for Development of Private Sector and Permodalan Nasional, where he was instrumental in the setting up of its Islamic finance function.
Targeting sophisticated investors with a relatively high tolerance for risk (annual hurdle rate of 22%), Ficus Venture Capital has already obtained the buy-ins of investors in Malaysia and Japan for its first fund, which carries an ASEAN theme.
“In the ASEAN region, venture capital is a fairly new alternative investment segment with high return potential. We believe that venture capital will be the key to the future of the development of the ASEAN technology ecosystem. In order to achieve this objective, the support from all different stakeholders, including the government, family offices and high-net-worth individuals, is extremely important. These investors are able to provide the necessary risk capital required in order to fund the ASEAN tech start-ups,” Baiza told IFN Fintech.
The goal is to build a portfolio of at least 30 start-ups from across Malaysia, Singapore, Indonesia, Thailand and the Philippines, with positions taken from the seed stage through to Series C and pre-IPO, meaning investments ranging from US$100,000 to US$5 million. It has identified 10 verticals of interest: fintech, blockchain, big data, biotech, e-commerce, artificial intelligence, edutech, agritech, animation and securitech.