HASAN.VC transforms Malaysia’s halal industry

It aims to fill the gap in Shariah-compliant financing by providing essential support and resources for halal start-ups

by SHAUQI WAHAB

HASAN.VC, a brand under Malaysia-based Fintech group Ethis Global Berhad, aims to revolutionise Malaysia’s halal industry by focusing on technology start-ups and businesses with significant social impact.

As explained by HASAN.VC co-founder and Ethis Global MD Umar Munshi, HASAN.VC identifies, nurtures and invests in Shariah-compliant companies.

These businesses must not engage in haram (forbidden by Islam) activities, though they do not need to be Muslim-focused, thus this approach opens opportunities for a variety of businesses to thrive within the halal framework.

Despite the growth of the halal market, he noted that there has been a notable lack of Shariah-compliant financing options in Malaysia.

“Muslim founders and businesses wanting to do halal businesses have very limited options, almost none, for early-stage venture capital or even angel investment,” he told The Malaysian Reserve (TMR).

HASAN.VC is filling this gap, providing essential support and resources for halal start-ups.

Umar said it was worth noting that the past few years have seen a surge in entrepreneurship among Bumiputera and Muslim expatriates in Malaysia.

“There is a lot more entrepreneurship and new start-ups coming out, such that our first cohort, although regional, had half of the participants from Malaysia,” he said.

Although HASAN.VC was a relatively new entity, it had already started deploying funds to promising start-ups.

Success Stories

Before establishing HASAN.VC, Ethis operated an angel group, investing in about 15 companies in Malaysia, creating many successes in the investments.

Two notable start-ups funded are TheNoor and Du-It.

The former is a Muslim lifestyle app offering various services like azan, Quran and “kiblat” finder.

“TheNoor has more than two million downloads, mostly in Malaysia. Since we invested in it about two years ago, it continues to grow and remains profitable,” TMR was told.

The app’s success has attracted significant investors, including 500 Start-ups, a famous venture capital firm.

Meanwhile, Du-It operates as a “buy now, pay later (BNPL)” platform targeting businesses, not individuals. Although it has a consumer side that is a white-label platform, its primary focus is business-to-business.

As one of the few Shariah-compliant BNPL services globally, Du-It is positioning itself as a significant player in Malaysia’s financial technology (fintech) landscape.

These companies have benefitted from HASAN.VC’s support, expanding their reach and attracting local and foreign investors.

Umar elaborated that one main impact is helping these start-ups become more regional and international by bringing in foreign investors, which in turn boosts local investors’ confidence.

The broader economic impact of HASAN.VC’s investments is apparent.

By enhancing the halal industry’s efficiency and productivity through technology, HASAN.VC contributes to higher incomes and better wages.

Umar noted that there is a demand for remote workers from high-income countries like Singapore and the Gulf Cooperation Council (GCC), which can benefit Malaysia’s economy.

He added that technological innovations in the halal industry are being fuelled by HASAN.VC’s investments.

For example, Qara’a, an artificial intelligence (AI)-powered Quran learning app from Indonesia, is part of HASAN.VC’s current cohort.

Qara’a has around two million downloads and helps Muslims improve their Quran reading through AI.

“It approached us to help expand its software globally,” Umar said.

Umar explained that the company also wants to consolidate and collaborate across the tech space.

Instead of having many small companies doing the same thing, the company took a different approach to encouraging collaboration and consolidation for faster growth.

By fostering such innovations and encouraging cooperation, HASAN.VC is helping to create a vibrant, interconnected halal ecosystem.

This strategic vision not only supports individual start-ups, but also strengthens the entire industry, positioning Malaysia as a leader in halal innovation.

HASAN.VC is also actively funding projects focusing on halal industry sustainability.

One notable example is a company called Zaynfi, which is working on decentralised finance and blockchain technologies.

“We are building a blockchain or web3 infrastructure ecosystem on top of bitcoin and ethereum,” Umar said.

This infrastructure is aimed to provide transparency and Shariah compliance, making it highly suitable for halal businesses.

Strategic Areas of Investment

HASAN.VC’s investment strategy is comprehensive and diversified, where the group invests in various sectors, as long as they are halal in nature.

Specifically for the halal sector, HASAN.VC observed a significant gap in technology solutions.

The company’s approach involves building solutions based on Islamic principles from the ground up, ensuring these businesses remain true to their ethical and religious foundations.

Besides that, incorporating principles of Islamic finance is central to HASAN.VC’s strategy.

The company emphasises fairness and justice in all business interactions, aligning with the core values of Islamic economics.

This approach naturally extends to concepts such as social impact, sustainability, and environmental, social and governance.

“Today, the world is choosing ethical and sustainable solutions, and these are already embedded in the halal worldview,” Umar said.

One practical example is Ethis’s app that offers profit-sharing financing for small and medium enterprises (SMEs), as well as micro-SMEs in Indonesia, which is challenging for traditional banks due to their structure.

However, with fintech solutions, Ethis can offer flexible and Shariah-compliant financing.

Umar added that one of Malaysia’s standout features is its multilingual population.

This proficiency in English is complemented by a smaller yet significant population that can speak and write Arabic.

He said that because of this, Malaysia has provided good opportunities and become an excellent base for talents.

This linguistic diversity positions Malaysia as a preferable hub over other countries like the Philippines, which, while proficient in English, lacks a significant Muslim population crucial for the halal economy.

“When it comes to the halal economy, companies like to employ Malaysian talents. So, we see this as another benefit where applicants can get remote employment from abroad and bring the foreign currency into the country,” he said.

However, despite the country’s high-quality talents, there are challenges related to storytelling, branding and confidence.

“We are seen as humbler and meeker compared to Westerners and even the Arabs,” he said, remarking on why Arab investors preferred Malaysia over other countries.

To prepare local businesses, HASAN.VC assists SMEs by building relationships and guiding them in their approach to global markets.

Foreign companies also find Malaysia to be attractive not only for its talent pool but also for cost efficiency.

This dynamic helps stabilise the Malaysian economy by providing good income to the local workforce.

The establishment of international offices in Malaysia by these international companies highlights the country’s growing importance.

Bridging GCC and SE Asia

For over a decade, Malaysia has served as a bridge between the GCC Arab countries and South-East Asia (SE Asia).

This role has become more prominent with frequent visits from Saudi investors looking for opportunities in Malaysia.

“Now we see almost every month, people from Saudi Arabia travelling to Malaysia looking to invest,” Umar said.

They ranged from institutions and angel investors to government-linked entities.

The shift in investment focus, partly driven by geopolitical situations such as the Palestine issue, has led many to reconsider their investment destinations.

Meanwhile, Malaysian halal businesses are poised to expand their reach globally, thanks to the support from HASAN.VC.

The growing venture capital scene in Saudi Arabia presents new opportunities for Malaysian companies.

Umar noted that Saudi Arabia is booming with new unicorns that would eventually look towards SE Asia for expansion, making Malaysia a strategic base.

A growing demand for ethical and sustainable brands is shaping the future of the halal industry, a trend driven by the Boycott, Divestment, Sanctions movement.

Umar added that Islamic economic principles also offered timeless solutions that align well with modern business ethics.

Another crucial role of HASAN.VC is to educate investors about the risks associated with start-up investments.

Umar cautioned that not putting their eggs in one basket is one of the keys, and educating angel investors helped mitigate risks.

“You just need to diversify. You cannot invest in just one, but in many companies, especially for start-ups,” he said.

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