The Role of Interest-Free Financial Institutions in the Development of Venture Capital and the Venture Capital Sector
Synopsis
Venture Capital aims to increase the market value of entrepreneurial businesses by providing financial and other expert services to businesses that have a high development potential and may have a competitive advantage due to productivity increase in the long term, and to obtain high profits by exiting this investment after a certain period of time.
This function of Venture Capital can be demonstrated in supporting small and medium-sized enterprises that bring or have the ability to bring technological innovation, especially in the computer and economic fields that are important today.
The way Venture Capital supports entrepreneurial businesses will be in return for shares, interest-free and based on profit-loss sharing. This working system is structurally similar to the way Interest-Free Financial Institutions work. Especially the "Mudaraba" and "Musharaka" methods, which are the main methods and tools of Interest-Free Financial Institutions, show a very close similarity.
The implementation of the Venture Capital System, which is also on the agenda in Turkey, has reached great dimensions in the USA and European countries. It is imperative to put this system, which is of great importance for Turkey and whose legal infrastructure has been created, into practice. At this stage, considering the structural similarity of the Venture Capital System with participation banking, the actual implementation process of the Venture Capital Sector can be accelerated by receiving the support of participation banks.