China-based Gobi Partners has expanded its reach into ASEAN over the recent years, with investments into local startups that fuel the venture capital firm’s aim of investing into promising markets. Last year, founding Partner Thomas G. Tsao, along with Gobi’s ASEAN team, coined the term TaqwaTech for Muslim-related businesses. Here, he shares with us the meaning of the term, as well as how this line of business could be the next big thing on the global playing field.
Could you define TaqwaTech and why you chose to create this term?
TaqwaTech is aimed at companies started by Muslim entrepreneurs, so that’s generally one category. Or, it could be startups focusing on using technology to serve Muslim consumers, businesses or communities. We created this term because the old joke in the venture capital industry is that venture capitalists can’t invest into something unless there’s an acronym or term for that sector. A good example is delivery companies – we were looking at delivery companies and calling it “last-mile e-commerce” and no one would invest in that. But when they called it O2O, everybody started investing. So, I think people are recognizing that there’s something there, but it was like before, when people were investing into startups that were trying to innovate around payments or making small loans. However, until it was called FinTech, it wasn’t receiving much investment. Sometimes, if you can put a name around the sector, it can sort of catalyse interest.
“In any case, the biggest opportunities are found in the underserved markets. Gobi is about breaking down barriers, levelling the playing field, giving access to all. It’s those entrepreneurs that are working in the most underserved markets that are going to generate the most returns. And when we’ve identified that, that’s a big opportunity for us.”
You mentioned the criteria for a company to be considered a TaqwaTech company. What sectors does TaqwaTech actually focus on at the moment? And are there additional sectors that you think could be added to the list?
Absolutely. If you look around at the needs of the Muslim community, there could definitely be companies focused on e-commerce, particularly fashion, a good example is FashionValet and Zawara. Gobi has invested in Tripfez, which is around Muslim travellers. We have also done a few in the food technology space that cater for Halal restaurants, primarily Offpeak, but then you have Qraved as well in Indonesia, a company that’s doing a campaign around Ramadhan. And, if you extend that further – it applies to cosmetics where there’s Halal cosmetics, that’s big. You could also extend that even further to fintech, around Shariah-compliant financial services. We’ve also invested in companies like SimplyGiving, which is working on creating an online platform to help people donate to Muslim charities. It is my understanding that Muslims must donate on a regular basis throughout the year, so what SimplyGiving is offering is a natural fit. They are working to help Muslims donate more easily to their preferred charities.
Content is another sector, there’s a ton of opportunities around content, including areas of interests for Muslims which surround religion such as the recitation of prayers. Social media is a good sector, as it connects Muslim communities, and even live streaming, for example; Muslim tech-savvy entrepreneurs who master that piece of technology will gain a lot from being the first to do so. Online learning is also another field that has opportunity.
What about sectors that are relatively new for investors? Something that you would like to see more TaqwaTech players in.
Definitely Fintech, possibly cloud services, and artificial intelligence.
TaqwaTech companies have the potential to enter the global Islamic market. Have you had instances where a TaqwaTech company could also be a player in a traditionally non-Islamic market?
Absolutely. There was a Middle-Eastern e-commerce website called Souq, which got acquired by Amazon. There’s also a company doing cab-hiring services in Saudia Arabia named Careem, and The Halal Guys, a Halal food franchise in the US.
Malaysia is considered to be a key Islamic market player. Do you believe that there are more Bumiputera companies that could become TaqwaTech companies?
Absolutely. As I’ve previously mentioned, Fashion Valet is one. We also have ReciteLab, Peace Be Upon You, and Love-to-Dress. There are plenty of other verticals the companies could come from as well, as I stated before.
In terms of the actual TaqwaTech category. Are you planning on bringing it outside of Malaysia? For example: are there other countries that Gobi has invested in that may have companies that could qualify for TaqwaTech?
Of course. Within Southeast Asia itself, there’s Indonesia, Brunei, but TaqwaTech isn’t limited by these borders. It could expand and flow outside of the ASEAN region as well, into the big markets of Pakistan, Bangladesh and India, the Middle East, particularly the GCC (Gulf Cooperation Council) and North Africa. There’s a huge swath of countries that TaqwaTech could cover.
What were the benefits of setting up the TaqwaTech term in Malaysia first?
It was an important decision for us because as venture capitalists, our job is to be head of the curve, and to identify trends before they happen. Clearly, this trend is something that has been bubbling up, it’s just that we (Gobi) were the first guys to put a name to it. And sometimes, putting a name to it will help to accelerate its growth. It gives something a label. People need to give a label to things, without a label it’s hard to put it into a category; all we’ve done is seen all the data based on the 100s of entrepreneurs that we’ve met. Gobi is just naming a phenomenon that has gained a lot of momentum. WE hope to help and play a vital role in nurturing and developing TaqwaTech. We believe it’s one of the biggest and one of the most exciting investment trends for the next decade.
Lastly, do you have an advice for up and coming startups that have the potential to qualify to be a TaqwaTech company?
Start with what you know. I think the key thing is to be courageous. I’ll give an example: when we first started in China, a lot of Chinese entrepreneurs were unable to raise money. Venture capitalists are people too, so unfortunately, we’re affected by the same unspoken biases and prejudices that affect society. When I first started in 2002, it was very difficult for Chinese entrepreneurs to raise money: they go to Silicon Valley, there were language barriers, culture barriers, and quite frankly, the Chinese guys didn’t look like what an entrepreneur is supposed to look like. They didn’t wear the casual shirts, khakis, they didn’t dress the part; they didn’t look the part. So, once you’ve got proven success, guys that look like Jack Ma now, they get funded, because they’ve got proven success. In the past, if you looked like Mark Zuckerberg, you’re going to get money. Once again, the issue right now for a lot of Muslim entrepreneurs or people focusing on TaqwaTech is that they may not fit the image of what a successful entrepreneur is supposed to look like. So, you’ve just got to fight through that. Sometimes, I feel it’s very important as venture capitalists, when we meet entrepreneurs we should turn our backs à la the popular reality TV show “The Voice” while they pitch, because we’re all driven by these or affected by these biases.