Photo: Dominic Perks, Hambro Perks co-founder, gesturing during a meeting at the VC firm's offices in London, UK. Photo supplied by Hambro Perks
*Correction in Para 2: Ali Qaiser's designation has been corrected to Managing Director instead of Director and Head of Middle East
Entrepreneurs in the Islamic economy rely on a range of funding sources to help them grow their ideas and businesses. Beyond the institutional financiers, established private equity investors, and pitch competitions, what are the smaller or emerging venture capital (VC) firms Islamic economy start-ups can tap into for financial backing?
Hambro Perks is a London-based VC firm that focuses on investing in British tech start-ups, including in Muslim relationship app Muzmatch. Ali Qaiser, Managing Director at Hambro Perks, told Salaam Gateway they’re now ready to make investments abroad, including in the Islamic economy.
“We’re looking to deploy about two to four [investments] outside of Europe in the next twelve months,” Qaiser told Salaam Gateway.
This decision follows the British VC signing a memorandum of understanding with the Oman Technology Fund in September to open the “British-Omani Technology Gateway” that’s meant to give start-ups in both the parties’ portfolios access to each other’s ecosystems. Following this agreement, Hambro Perks in January co-hosted a two-week accelerator programme in London for Middle East-based start-ups.
The VC’s entry into the Middle East is a result of a couple of key drivers.
Qaiser himself hails from Oman and joined Hambro Perks two and a half years ago to lead the firm’s internationalisation efforts. The firm itself is young – it was set up in 2013 by former banker Rupert Hambro (of the merchant-banking family, Hambros) and management consultant and serial entrepreneur Dominic Perks.
Secondly, it counts backers from the Middle East as shareholders.
“Hambro Perks in its structure has a number of shareholders from Saudi Arabia, Bahrain, Oman and Egypt. So we have a big connection to the region in that sense,” said Qaiser.
In Oman itself, Qaiser said “about four” of the largest Omani family offices have become Hambro Perks shareholders. Obviously, he said, the firm’s network was built through these shareholders in terms of deals, and relationships with the government and corporates.
The VC’s ties with Oman and its first taste of the Islamic economy, through Muzmatch, have now whetted its appetite for deals beyond the Middle East.
“We’re open for deal flow, especially in the halal economy in areas such as Southeast Asia and the Middle East and we have the in-house expertise and track record now investing in the space,” said Qaiser.
Hambro Perks, said Qaiser, is ready to invest in the Islamic world.
“We’re sector-agnostic when it comes to our investments but the halal economy definitely really interests us. It's an area that we'd like to start making more investments in.”
Pakistan is also on the radar, he said.
Relationship app Muzmatch is currently the only Muslim and Islamic economy-focused start-up in Hambro Perks’ portfolio of forty-three companies, according to Qaiser. The firm typically invests at the seed and pre-Series A stage.
“Muzmatch was our first investment in the [Islamic economy] space. We view it not just as a halal investment but one in the matchmaking dating space as well. It's a very interesting business for us,” said Qaiser.
Hambro Perks pumped in “a few hundred thousand dollars” into Muzmatch at the seed stage and was one of the start-up’s later investors, founder Shahzad Younas told Salaam Gateway. His start-up raised around $1.75 million at the seed stage in 2017, including from well-known Silicon Valley accelerator and investor Y Combinator and New York’s FJ Labs.
For an Islamic economy start-up such as Muzmatch, it’s these VCs that have given it the opportunity to grow. None of the firms that invested in Muzmatch is Muslim, said Younas.
“Sadly, I found Muslim investors to be too risk averse to such new tech and are still more comfortable around traditional investment assets such as property and energy,” Younas said.
Muzmatch launched in April 2015 and took under four years to welcome its one millionth user, in January. This year it's focused on doubling in size, and international expansion, Younas told Salaam Gateway.
For Hambro Perks, investing in Muzmatch was about getting a good deal.
“When we looked at Muzmatch, the metrics of the business were as good as anything else that we’ve ever seen in our portfolio,” said Qaiser.
The start-up, he said, has a “huge potential” to still grow and Hambro Perks is with Muzmatch “for the long run”.
“If you’re building a start-up, whether it’s halal or not or whether you’re in Southeast Asia or UK, we look at everything in a very similar lens,” he added.
It helped that Qaiser was able to “really understand” what Younas and co-founder Ryan Brodie were building.
“Shahzad Younas and I connected very well, you know, we’re both from the same generation and there’s a similar matchmaking issue with the families, and we see the problem that was being solved [by Muzmatch],” said Qaiser.
“For a Muslim or an Islamic founder, it can be difficult at times to tell someone about the market, who probably has not had much exposure to it,” he added.
HOW CAN ISLAMIC ECONOMY ENTREPRENEURS ATTRACT HAMBRO PERKS?
From the entrepreneur perspective:
“Focus on really understanding the Muslim market, and learning how to execute there. This is our edge - accessing the market, understanding the sensitivities, building a product that really services a particular need whilst being respectful of the culture/traditions/values perfectly encapsulate how successful Muzmatch has been across the Muslim world.” - Shahzad Younas, Muzmatch co-founder.
What Hambro Perks invests in:
The VC’s portfolio includes businesses in financial services, insurance, education, business services, and healthcare. In 2017 it brought on Google, AOL and Buzzfeed alum Kate Burns to lead its new media tech arm. The hire was also a boost for gender inclusion in the VC sector that’s dominated by men.
How you can reach Hambro Perks:
The VC holds “Office Hours” that takes the format of a 30-minute chat with members of its investment team. It also has a type form on its website you can share your deck. It gets a lot of inbounds on sites like LinkedIn and it also typically reaches out to founders when they send them messages, said Qaiser.
ISLAMIC ECONOMY GROWTH POTENTIAL
Beyond his personal familiarity with the Islamic space, Qaiser is also keen on the growth potential of the sector.
“I think there’s just not been much innovation in the space yet,” he said.
He cites fintech as a sector in which he sees models originating from the West being replicated in the Islamic space in the Middle East and Southeast Asia.
The VC is keen on fintech and among other initiatives, it has set up an incubator, InsureTech Gateway, and also recently followed through to Series A its seed stage investment in Capitalise.com, an FCA-regulated financial marketplace for accountants and SMEs.
Considering the size of the global Muslim population, there are some interesting products that could emerge, said Qaiser. He cites the example of a start-up from Pakistan that participated in the January accelerator programme: Smartchoice, which is building a financial comparison website.
“I think the legacy of banking has always been great in Pakistan. Fintech is a really interesting sector from there,” said Qaiser.
He also identifies Islamic fintech as having a big growth potential in the Middle East and Southeast Asia.
“We’ve been looking at some fintech investments which are closely related to the halal space,” Qaiser added.
(Reporting by Emmy Abdul Alim; Editing by Seban Scaria firstname.lastname@example.org)
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