Maydan Capital provides seed financing to Netherlands-based Fairnance, a home-financing platform for the excluded.
London: Maydan Capital, a UK-based equity crowdfunding platform that seek offer early stage and initial growth halal and ethical investment opportunities to tech-focused investors, recently closed its first fundraising on its platform.
Maydan, which is an appointed representative of US-based Islamic robo-advisor Wahed Invest, and regulated by the UK’s Financial Conduct Authority, provided seed financing to Fairnance, a Netherlands-based home-financing platform that strives to make home-ownership accessible to those who are currently excluded.
Amsterdam-based Fairnance offers an equity-based financing product that shares risk equally between homeowner and investor. Based on the concept of disintermediation in home-financing, Fairnance seeks to build an alternative home-financing solution that serves people in the Netherlands who are excluded from home ownership.
Maydan raised €150,000 ($158,000) via a SAFE [simple agreement for future equity] investment to Fairnance around two weeks ago and then disbursed the funds a few days later, according to Safdar Alam, CEO of Maydan Capital.
“[The] investment is via a SAFE agreement. Disbursement of the funds is in three stages, with clearly defined milestones to be met before the following disbursement is made,” Alam told Salaam Gateway. “Upon future conversion, Maydan will receive Certificates of Ownership in Fairnance, which has been created as a co-operative, rather than a limited company, which provides many operational and administration benefits.”
Upon completion of the milestones and the conversion of the SAFE, it is anticipated that the investment will deliver a return of three times, and then, in addition to that, future returns as the company grows.
“The investments raised via SAFE will support Fairnance for around 12 to 24 months,” he said. “Beyond this, after conversion, Fairnance have already secured significant commitment for their future fundraising requirements.”
Fairnance did not require the funding from Maydan, but were keen on developing a long-term relationship, Alam noted, adding that Maydan warmed to the founders’ story and mission.
"We love the founders - their background, their drive, their commitment to positive social impact. They are entering a new market for equity home financing (with the focus on the EU) and they also have an innovative structure to raise capital for property acquisition, where Maydan can play a significant role in supporting Fairnance,” he said. “This is also addressing a key problem for potential homeowners who are excluded from the debt-based mortgage market.”
Growing Sharia investor base
Despite an estimated $2.28 trillion Islamic finance industry, Sharia compliant fintechs and early-stage start-ups struggle to raise financing from traditional Islamic investors and funds.
To address this gap, the number of UK-based Sharia VC fundraising platforms has steadily increased in the past couple of years. Among the most notable players are IFG.VC angel syndicate as well as Bristol-based Ethical Equity which connects ethical and Sharia compliant start-ups and scale-ups to like-minded investors.
Other efforts include Ethos Invest, which last year announced its intention to establish a £1 billion ($1.23 billion) fund for private equity investments in Islamic and ethical SMEs.
Nonetheless, Maydan is open to suitable global investment and financing opportunities.
“We are happy to consider all geographies – being based in the UK, we do see good deal flow in the UK and in Europe,” said Alam. “We are also working on deals in the GCC, India and Pakistan, Malaysia and Indonesia, and also in the US and Africa. In terms of sectors, we have a strong preference for tech-based ideas, and especially fintech.”
As well as developing its own deals, Maydan works with partners to open up investment and financing opportunities. For example, last month, Maydan Capital signed a partnership with Wa’ed Ventures, the VC arm of the Saudi Aramco Entrepreneurship Centre, to support Saudi-based start-ups. Maydan also works with other organisations, like the UK Pakistan Chamber of Commerce and Industry (UKPCCI), which connects business circles in the UK and Pakistan to promote trade and investment.
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