At 1.8 billion, the global Muslim market now represents more than 24 percent of the world’s population. Thomson Reuters estimates that they Muslim consumer lifestyle and halal economy is set to reach USD3.7 trillion by 2019.
The segment represents an enormous untapped opportunity, and looking into this promising space closely is Chinese venture capital firm Gobi Partners.
Gobi is the first Chinese venture capital firm to expand into the ASEAN region with over US1.1 billion in assets under management. The firm, based in Shanghai and Kuala Lumpur, supports entrepreneurs from the early to growth stages.
In 2016, founding partner Thomas G. Tsao, along with Gobi’s ASEAN team - based in Kuala Lumpur, coined the term TaqwaTech for Muslim-related businesses.
“The old joke in the industry is that venture capitalists won’t invest into something unless there’s an acronym or term for that sector. So, we created this term,” Tsao jokes, breaking the ice at its TaqwaTech talk in Kuala Lumpur.
“For six months, we tried to come up with something. Then, I started learning Arabic and one day, I learnt the word Taqwa - which means piety, faith, living with a purpose. The word stuck immediately and that’s when TaqwaTech was coined - innovation with value and purpose for the Muslim community.”
Since then, Gobi has made several investments into Muslim-based startups. One area of opportunity that is unique to this region is travel, says Tsao. Gobi has invested in Malaysia’s Muslim-centric online travel agency and hotel review platform Tripfez.
The firm also led a USD 1.5-million Series A funding round for Karachi-based online travel agency, Sastaticket.pk, becoming the first Chinese venture capital to invest in Pakistan.
Muslim-friendly tourism is among the few key areas within the Islamic economy that receive the most attention from digital entrepreneurs. Others include halal food, halal cosmetics, Islamic finance and modest fashion.
Tsao draw parallels between TaqwaTech and the rise Chinese-based startups in the early 2000s; long before the success stories of Alibaba and Tencent, it was very difficult for Chinese companies to break cultural barriers and raise funds.
Some investors, too, were swayed by biases and a negative perception on Chinese companies.
“In 2002, we were helping Chinese firms to raise fund in Silicon Valley and there was a healthy dose of skepticism on what Chinese startups can achieve. They say ‘China can’t innovate’ or ‘China can only copy from the West’,” says Tsao, adding that a lot of the initial skepticism came from within China too.
He says that TaqwaTech, currently faces a lack of ‘investor education’, while funding is far and few in between. “TaqwaTech is an underserved market with innovations on the edge - what happened in China will happen to TaqwaTech.”
The opportunities in TaqwaTech, he adds will be fuelled by a rise in Muslim populations in Asia and the Middle East.
“We believe TaqwaTech is one of the biggest and most exciting investments trends for the next decade. We hope to help play a vital role in nurturing and developing TaqwaTech,” says Tsao.
During the TaqwaTech event, Gobi announced the merger of Dubai-based online travel agency Holidayme with its existing portfolio company Tripfez.
Holidayme - that offers customised travel solutions to travellers in the region - received US$16 million Series C funding round led by Gobi. Through a larger market share, Holidayme and Tripfez are positioned to tap into a strong appetite for travel in both regions, particularly driven by millennials.
The two companies are also building a new Umrah solution, focusing on catering to the 30 million pilgrims to Saudi Arabia by 2030. The solution will first be rolled out in Malaysia and subsequently Indonesia.
Launched in November 2016, Tripfez is essentially a platform that connects mindful Muslim travellers and Muslim-friendly hotels. The company’s patented Salam Standard certification process reviews hotels and scores them according to how Muslim-friendly their rooms and amenities are.
Holidayme will be leveraging on the Salam Standard data, which includes over 93,000 hotels worldwide. While for Tripfez, it provides the opportunity to be seen by the millions of Muslim holidaymakers in the Middle East.
Tripfez co-founder Faeez Fadhlillah speaks about the trends taking place in Muslim travel, and why big hotel chains are taking it seriously. Muslim travel contribution to global GDP, he says, is expected to hit USD 189 billion by 2020.
