ABSTRACT
Venture capital (VC) is not a fresh topic in modern finance but Islamic venture capital is relatively new in the Islamic banking and finance literature. There is little doubt that Islamic microfinance aims to ultimately contribute to poverty alleviation among its beneficiaries. On the contrary Islamic VC focuses on entrepreneurship development through funding the start-ups. The word 'entrepreneur' is of French origin which means 'undertaker' in the sense of the one who undertakes to do something. J. B. Say, a well-known French economist in the early 1800s, characterized the entrepreneur as a person who seeks to shift economic resources from the areas of low to high productivity. Venture capital investment screening, contracting and monitoring of mechanisms are to be designed to minimize the moral hazard and adverse selection problem. The provision of trust and reciprocity is clearly pronounced in Islam.
