Financial capital that is provided, under an investment scheme, to early-stage, high-potential, high-risk, start-up companies (investees), in accordance with shariah principles and rules (i.e., by means of shari’ah permissible contracts/ arrangements and transactions). In essence, Islamic venture capital and conventional counterpart apply a similar risk sharing investment concept to finance start-ups and early-stage ventures, with the only difference being the application of shariah-compliant modes of investing/ finance for fund mobilization and deployment.

Broadly speaking, the investment (capital contributions) may be made up of financial or non-financial contributions (seed money and other resources). This includes providing funds to cover costs related to managerial, logistic or technical expertise, and generally all costs required to kick-start the new investee/ business.

Overall, it is meant to help an investee stand on its own feet in order to grow and start generating profits.. In exchange for the capital contributions, venture capital investors receive  stakes in the investee and have voting rights as to its management and operations.

Islamic venture capital belongs to the broader sphere of Islamic private equity.