DefinePK

Research Objective

To evaluate the venture capital system in Turkey from the perspective of investment trading processes and Islamic law, and to explore the parallels between venture capital and Islamic financial partnerships.

Methodology

The study employs a qualitative approach, analyzing existing literature, historical examples from the Quran and Islamic history, and contemporary venture capital practices. It examines Islamic legal principles related to partnerships and investments, and compares them with modern venture capital models.

Methodology Flowchart

                        graph TD
    A["Literature Review & Quranic/Historical Analysis"] --> B["Examination of Islamic Partnership Principles"];
    B --> C["Analysis of Modern Venture Capital Systems"];
    C --> D["Comparison of Islamic and Modern Models"];
    D --> E["Evaluation of Venture Capital in Turkey"];
    E --> F["Analysis of Excess Profit in Islamic Law"];
    F --> G["Formulation of Conclusions and Implications"];                    

Discussion

The paper argues that venture capital, a system for financing innovative and high-growth potential businesses, has deep roots in Islamic financial principles. It draws parallels between entrepreneurial figures and events in the Quran and modern venture capital activities. The study discusses the operational mechanisms of venture capital in Turkey, including the role of Asset Management/Leasing Companies and Venture Capital Investment Trusts, and suggests that Mudaraba sukuk can serve as a venture capital instrument. The analysis also addresses the ethical considerations of excess profit in venture capital from an Islamic perspective, emphasizing market price determination and the prohibition of exploitation.

Key Findings

Islamic law recognizes three types of partnerships relevant to venture capital: Istisna' (work contracts), Inan (joint stock companies), and Mudaraba (labor-capital partnerships). These Islamic models share similarities with modern venture capital structures, particularly Mudaraba, which predates and conceptually aligns with venture capital. The study highlights the potential for venture capital to operate within an Islamic economic framework, emphasizing the avoidance of prohibited practices like usury, fraud, and speculation.

Conclusion

Venture capital is presented as a modern manifestation of ancient Islamic financial partnership models, particularly Mudaraba. The study concludes that there are sufficient investment tools within the Islamic economy to finance entrepreneurs and that venture capital can be effectively implemented in accordance with Islamic law, provided that prohibited practices are avoided and a diversified investment approach is adopted.

Fact Check

* The study mentions that in the USA, the National Venture Capital Association (NVCA) is an organization made up of hundreds of venture capital firms. (Confirmed by NVCA's website).
* The paper states that in 2018, 340 billion dollars of venture capital investments were made globally, with 100 billion of this invested in the USA. (This figure is consistent with industry reports from 2018, though specific numbers can vary slightly by source).
* The study notes that in Turkey, "Turkvca (Turk Venture Capital Association)" was established on October 17, 2000. (Confirmed by Turkvca's historical information).

Mind Map