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Thu 4 Jul 2019 07:46 AM

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London VC Hambro Perks to invest in 'two to three' Islamic startups

Exclusive: Hambro Perks is set to open office in Abu Dhabi's Hub 71 complex in the coming months - the first British VC to set up an office in the Gulf

London VC Hambro Perks to invest in 'two to three' Islamic startups
Ali Qaiser, managing director and head of Middle East at Hambro Perks said the event’s 100-strong turnout was a solid indicator of growing interest in the Islamic economy sector.

The UK has rubberstamped its reputation as Europe’s Islamic economy hub by hosting its first halal startup pitch event.

Co-hosted by London-based venture capital firm Hambro Perks and start-up advisory firm Enfoundery in mid-June, the event saw five prominent Islamic SMEs meet with investors to showcase their wares.

As the world’s Islamic population continues to grow at a rapid pace, young and wealthy millennials are increasingly demanding consumer products that fit their faith.

In the West, the UK capital is seen the engine for much of Europe’s Islamic economy activity, with several start-ups launched every month in the sought-after segments of modest fashion, premium halal food and halal cosmetics.

Muslim’s den

Prominent Islamic SMEs at the ‘Smart Capital Startup Pitches’ event included VIP halal travel firm Serendipity Tailormade, Muslim lifestyle platform Salam Planet and halal e-commerce site OneAgrix.

Ali Qaiser, managing director and head of Middle East at Hambro Perks said the event’s 100-strong turnout was a solid indicator of growing interest in the Islamic economy sector.

Qaiser said Hambro Perks would invest this year in "two or three" of the start-ups that featured at the pitch event.

The boutique investment firm has strong connections with the Middle East, and is set to open a second office in Abu Dhabi’s Hub 71 complex in the coming months – making Hambro Perks the first British VC to set up an office in the Gulf.

Qaiser told Arabian Business: “There is a huge opportunity right now for Islamic economy players. The sheer size of the market is huge – there are 1.8 billion Muslims globally – and it has been an underserved demographic.”

The MD said rapidly growing populations in emerging markets like MENA, Pakistan, Turkey and Indonesia offer ripe regions for halal technology products and services.

“There is an opportunity for brands to marry up the trends of growing emerging economies with tech opportunity with the Islamic market. This makes for a very interesting space. The mobile phone growth in these emerging markets is through the roof,” he said.

In regions where the population is unbanked, there is also a gap for halal fintech services, Qaiser said.

“We are one of the few VCs which is constantly scouting opportunities in the Islamic economy space. We have a pipeline of Islamic start-ups. We are getting 10 to 15 reach outs a week,” he said.

Islamic opportunity

Hambro Perks made its first investment into the halal start up economy when it funded British Muslim dating app MuzMatch around 18 months ago.

“This was a very successful deal for us and we are eager for more on the back of that,” says Qaiser, adding that Hambro Perks is currently closing a new investment in a Dubai-based Islamic fintech company in the wealth management space.

However, the MD stresses that it is still ‘extremely early days’ for the Islamic economy.

“I think the Islamic tech economy is just about to get going – there are one or two interesting players in the travel and lifestyle sectors, but we haven’t even seen anyone win in halal fintech yet,” he said.

“People are now taking more notice of the Islamic economy… I’m from the Middle East region and I understand the culture so that is why I am so aware of the opportunities.

“I think many investment teams are not that diverse, so they miss out on investment opportunities,” he added.

In the coming years, Qaiser said he expects halal tourism to take off. He also expects to see massive growth in the ‘gamification’ of Islamic lifestyles, such as apps to help prayer rituals and maps for Hajj pilgrimage.

Qaiser said there is an opportunity for the ‘ethical’ sector and the halal sector to be married together – trading on their mutual values of purity and provenance. “These kind of products have cross over appeal to Muslims and non-Muslims,” he said.

However, the MD stressed that the halal industry needs to ‘come together’ to educate consumers on the true nature of halal and its benefits if the market is to reach its full potential.

There is significant scope for growth in the regional and global Islamic economy; there was a mere $800m in disclosed private equity investments over three years, far less than the almost $600bn in private equity and venture capital investments that occurred globally in 2017, according to the Thomson Reuters ‘State of the Economy’ Report.

The report also estimates that the Islamic finance sector has $2.4 trillion in total assets.

It says food and beverage leads Muslim spend by category at $1.3 trillion, followed by clothing and apparel at $270bn, media and entertainment at $209bn, travel at $177bn, and spending on pharmaceuticals and cosmetics at $87bn and $61bn, respectively.