Halal Tech and Halal Investment Opportunities Over the Next Decade

Halal technology has enormous growth potential over the next decade. However, in order to realize this potential, venture capitalists and institutional investors must fund halal technology firms. That was the considered opinion of both panelists on Day 2 of the Global Islamic Finance Forum 2022.

In a panel discussion titled, Halal Tech & Halal Investment Opportunities over the next decade, Thomas Tsao, Co-Founder of venture capital investment fund Gobi Partners, believes there is a massive potential in Malaysia to drive the growth of halal technology. He said close to a quarter of the world’s population is Muslim, but they are underserved by the current financial system.

“Our vision is that any start-up that can connect the two billion Muslim digital consumers will be tremendous. We would love to play a small role in locating and assisting start-ups on their journey because we have the necessary track record. The ingredients are all in place for a halal tech revolution; the disruption and innovation that are going to come, are going to come. The only thing that is really missing is the funding.”

Dato’ Syed Haizam Jamalullail, Managing Partner of Tuas Capital Partners/The Hive Southeast Asia, which has a track record of investing in halal technology says, “The halal ecosystem is an area that is really exciting for us because of the growth.

“VC funds like myself and Gobi Partners have finite fund lives. We want to look for industries that have tremendous growth and tremendous opportunities. Also potentially look at businesses as well as sectors that are primed for disruption. The halal ecosystem, Islamic financing, etc., has tremendous growth potential.”

One of the major challenges facing emerging markets is how to balance growth with sustainability. Syed Haizam says there is a lot of overlap between ESG (Environment Sustainability and Governance) and Shariah principles.

“Look at the shared principles of morality, fairness, and justice without compromising profits. These are the general principles of Shariah compliance that come from the Qur’an. The opportunity is enormous because you always hear about ESG, but when you think of Shariah compliance and ESG, you think, ‘I’m not in it to make a lot of money.’ But it doesn’t have to be that way at all. If you look at the Shariah indexes over the last quarter, they have outperformed the Dow Jones by two percent.”

Tsao sees massive potential in Malaysia to be a global leader in halal technology, but more funding is desperately needed, particularly from local sources.

“Malaysia’s going to have five unicorns in five years. And that’s just the tip of the iceberg. Remember, seven years ago, nobody thought that was possible. It’s going to take an entire community to help them, it’s going to take early-stage VCs and then, follow-on funding. But it can be done. There is no reason why it can’t be.”