A Joint Venture is a cooperative enterprise entered into by two or more entities for the purpose of a specific project or business activity while retaining separate individual legal status. Joint ventures are often entered into for a single purpose but they may also be formed for a continuing purpose.
If you are a startup or have a feasible business plan and you are looking for venture capital, Trafin has got you covered through its venture capital financing options of Musharakah and Mudarabah.
Musharakah – which is derived from the arabic word ‘shirkah’ – refers to the concept of joint ownership between two or more partners for the purpose of either profit making or for enjoying common ownership in an asset.
In context of venture capital financing, wherein the purpose of the entity is partial funding in its business, Musharakah offers the ideal solution. Under this concept, as long as the nature of business activity is shariah compliant, Trafin will provide you with the required finances and become a joint owner in your business to the extent of its ownership ratio. Accordingly, it will become a partner in the profit/ loss generated by the business as per pre-agreed ratios.
Mudarabah refers to a partnership arrangement where in one partner provides the funds whereas the other offers his skills for managing the business. The former is referred to as ‘rabb ul maal’ whereas the latter is known as ‘mudarib’. The profit generated from the business is shared by the partners as per the agreed ratios whereas any loss is completely borne by the rabb ul maal provided that there is no negligence, wilful misconduct or dishonesty on part of the mudarib.
If you are a start-up and have a feasible shariah compliant business proposition but do not have the requisite funding, Trafin will arrange the funds for you in the capacity of rabb ul maal and will therefore be eligible for its share of profit generated by the business.
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