Islamic Crowdfunding: Viability for Start-ups

The purpose of this study is to examine the success factors of the Islamic Development Bank (IsDB) Innovate Start-ups and how social finance-based contracts can be implemented in Brunei Darussalam. It will discuss the foreseeable challenges of establishing such platform, notably the involvement of an entrusted authority, the practicality of adoption, as well as the encompassing regulatory and governance. Accordingly, this study employs a qualitative research approach, relying on secondary data analysis, to review sources within the fields of crowdfunding, Islamic crowdfunding, IsDB, and micro-, small and medium-sized enterprises (MSMEs). As a result, this study is one of the few applied studies which acknowledged the viability of Islamic crowdfunding based on the mualamah contracts, such as mudarabah and musyarakah equity contracts for both start-ups and MSMEs. From a Shariah perspective, the interest of both investors and businesses are better protected, while encouraging good business practices and socioeconomic progress without any regard for financial limitations. Recommendation includes a trustworthy organization to act as a gatekeeper, along with an appropriate information systems and cyber security, including an assessment of both contract and agreements, as well as the subsequent regulations and governance.