4 Reasons Why E-commerce Companies Should Consider Revenue-Based Financing
In less than 5 minutes; we’ll convince you on why your e-commerce business should use revenue-based financing (RBF).
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More and more, investors are realising that their money can do more than just grow – it can reflect their values. Rather than maximising profit, individuals today are increasingly looking for ways to align their portfolios with their ethical principles.
Shariah-compliant investing, rooted in Islamic values of fairness, transparency, and social responsibility, offers a compelling avenue for investors seeking value-based investments that generate competitive returns while contributing to a more equitable and sustainable world.
As a growing hub for Islamic finance, Malaysia provides a fertile ground for Shariah-compliant investment opportunities. This blog post will delve into the principles of Shariah-compliant investing, explore various halal investment options available in Malaysia, and highlight the benefits of supporting ethical businesses through Shariah-compliant financing for retailers.
Shariah-compliant investing adheres to the principles of Islamic law, ensuring that financial activities are conducted in a manner that is just, ethical, and socially responsible. It prohibits investments in businesses involved in activities considered harmful or unethical, such as alcohol, gambling, and tobacco.
It also strictly prohibits interest (riba), excessive uncertainty (gharar), and gambling (maysir).
Permissible investments under Shariah law include equities in companies that meet specific criteria, such as those operating in halal industries and maintaining acceptable debt levels. Sukuk (Islamic bonds), real estate, and other asset classes that comply with Shariah guidelines are also viable investment options.
Malaysia offers a diverse range of Shariah-compliant investment avenues:
These funds pool money from multiple investors to invest in a diversified portfolio of Shariah-compliant assets. This offers investors the benefits of diversification and professional management while adhering to Islamic principles.
These funds cater to a variety of risk appetites and investment goals, with some focusing on equities, others on Sukuk, and some offering a balanced approach.
Sukuk are often referred to as Islamic bonds, but they differ significantly from conventional bonds. Instead of representing debt, Sukuk represent ownership in an underlying asset, such as property, infrastructure, or a business venture.
This structure ensures that the investment is compliant with Shariah prohibitions against interest (riba). Sukuk offer investors a fixed or variable income stream, generated from the profits of the underlying asset. They are considered a relatively low-risk investment option and are suitable for investors seeking regular income and capital preservation.
Takaful provides a Shariah-compliant alternative to conventional insurance. It operates on the principles of mutual cooperation and risk-sharing, where participants contribute to a common fund. This fund is then used to provide financial protection to members in the event of unforeseen circumstances, such as illness, accidents, or property damage.
Unlike conventional insurance, which is based on the concept of transferring risk, Takaful emphasises shared responsibility and mutual assistance.
Investors can also explore Shariah-compliant equity indices, Islamic exchange-traded funds (ETFs), and other investment products that adhere to Shariah principles.
Shariah-compliant investing offers numerous advantages:
Investing in Shariah-compliant businesses goes beyond simply seeking financial returns. It supports companies that operate ethically and contribute positively to society. Access to Shariah-compliant financing is crucial for these businesses to thrive and expand while upholding their values.
Choco Up's Revenue-Based Financing (RBF) solution is a prime example of a Shariah-compliant funding option that aligns with Islamic finance principles. RBF allows businesses to access growth capital without incurring interest or giving up equity, providing a non-dilutive alternative to traditional loans or equity-based financing.
Beyond its alignment with Islamic principles, the reason for Shariah-compliant investing’s increasing popularity and relevance comes from the fact that it resonates with the growing global movement towards sustainable and responsible investing.
Shariah-compliant investing prohibits investments in industries considered harmful to society while encouraging participation in real economic activities and discouraging excessive speculation. It also promotes fair dealing, transparency, and risk-sharing, all factors which increase its appeal.
In line with this worldwide shift in attitudes, Choco Up’s funding solutions, like invoice financing and Revenue-Based Financing, empower businesses to grow without compromising their ethical principles. We provide access to much-needed growth capital for e-commerce businesses, retailers, F&B entrepreneurs, and more to allow them to reach their full potential.
Explore Choco Up’s various funding options today and discover how we can support Shariah-compliant businesses and participate in their growth journey.
Grow your business with Choco Up
In less than 5 minutes; we’ll convince you on why your e-commerce business should use revenue-based financing (RBF).
If you are a business owner looking for external funding, you may have heard of revenue loans or revenue lending. But what is a revenue-based loan? Is it really a loan?
