Business Crowd Funding Platforms

Investment Questions and Chats General Investment
#1

Salaams

I am interested in using crowd funding platforms (such as Crowd Cube) to invest in businesses.

I can select businesses that operate in halal industries. However, the information provided by these businesses does not always make it clear what they will use the crowd funded capital for. I am worried they could use it to take out loans or to pay off interest rather than use the funds directly. However, due to the less strict legal obligations compared to an IPO, they do not have to provide this information.

Can I still invest in these companies, knowing that I have done everything I can to find out this information? Also are there any Shariah compliant alternatives? I know IFG have an option but it is for larger investments only.

Many thanks

#2

Assalaamu alaykum,

To minimise the Shariah non compliance risk, you should know the objective of the fund raise.

If you want a Shariah compliant crowdfunding platform, you can consider Qardus.com.

There are others which are launching very soon.

Allah knows best

#3

Salam Alikom @Mufti_Faraz_Adam

Great to hear that Shariah complaint crowdfunding platforms are launching shortly.

Do you know if any will be using Mudarabah or any other model other than commodity murabaha which are not prefered by most scholars.

Thanks

#4

Wa alaykum salaam,

Commodity Murabahah is an acceptable financing mechanism approved by AAOIFI. When structured correctly, it is Shariah compliant.

There are some companies looking to develop a Musharakah based investment.

#5

Jazzak Allah Khair,

Looking forward to hear about these new companies.