ABSTRACT
Venture capital (VC) is considered a significant source of financing for early stage, innovative, and high-growth start-up companies. This chapter examines the cultural advantages of Islamic altruism and reciprocity as important institutions which may contribute to setting up Islamic VC. The New Institutional Economics has been concerned principally with two basic issues of societies: economics of property rights and transaction costs. The rational pursuit of self-interest is what makes the Adam Smith's invisible hands work in reality. The tendency of self-interest, an essential characteristic of one's well-being, is therefore, prerequisite for the market to function. Green traces the origin of 'altruism' to August Comte who coined the term in the nineteenth century from the Latin word 'alter' which means 'other' or 'care for others'. Charity in Islam can take many forms. For instance, Islam not only proposes zakat as an obligation for well-off Muslims but also makes it one of the basic five pillars of Islam.
