Islamic venture capital: mitigation of agency problem in ICT joint ventures

Abstract

Islamic venture capital financing is a new emerging type of ICT equity financing in Malaysia. Conventional ICT venture capitalists are all the while have been facing agency problems, as for that there is a need for a strategy on mitigating agency problem throughout the Islamic venture capital processes. Experiences by conventional venture capitalists are greatly needed in order to come out with strategy to reduce the risk created by agent. Firstly, this research was the first attempt to investigate Islamic venture capital financing and related agency problem in Malaysia and formulate guideline to mitigate those problems. Secondly, this research attempts to formulate guideline to implement the best practices of ICT projects financing by Islamic venture capital for Kazakhstan based on Malaysian experience. To achieve these objectives, mix-research methods have been used, such as data collection and qualitative methods. The proposed guideline will be helpful firstly to implement in Kazakhstan ICT projects financing by Islamic venture capital and secondly to mitigate agency problem which will face any Islamic Venture capitalists in ICT venture projects financing.