December 16, 2020 finance & economy

Ethical Business: An Overview of Kuwait Based Venture Capital Firm Faith Capital Holding by Mohammed Jaffar


Interview with Mohammed Jaffar, Deputy Chairman and CEO of Faith Capital Holding (FCH)

You come from a long line of entrepreneurs - your great grandfather, your grandfather, your father. Did this entrepreneurial spirit inspire you to start Faith Capital Holding (FCH)?

Absolutely. That is what inspired me as well. I actually did not join my family business; I started my own thing. I come from a very large, Middle Eastern family business. But I am not involved in that company at all. I decided to venture on my own and do something where I can lead instead of following. There is a gap in tech companies and wealth creation. That is what made me decide to venture into the space. I am only investing in tech and I have been doing so since 2010. Of course, this also comes with a lot of risks. With patience comes a high risk of failure as well. But again, entrepreneurs are the ones that are willing to take that kind of risk.

What makes you different from other investment firms?

Basically, I am a founder, and I am still a founder. I am not only an investor. After exiting my previous company, I ventured into a new one. At the same time, I set up Faith Capital to invest back into the ecosystem. A lot of the VCs (venture capital) in this area are backed by investment bankers, not by founders. We are different. We are founders more than investment bankers. For any company, for any founder, it is good to have both people on the cap table; it is good to have investment bankers on the cap table, it is good to have like-minded founders on your cap table. Given that we are founders ourselves and we go through those difficult day to day hardships, we can add value in another way.

What is the philosophy behind Faith Capital?

I am working very, very hard to show that people like us, Arabs and Muslims, are able to build great companies, great multinational businesses that can go to the next level, similar to our brothers in the West. We have also invested in companies that can go to the next level. Of course, when it comes to investments, you are not the person driving the company, you are the person sitting in the backseat. In the company that I run personally; it is the other way around. I am the guy driving the car, driving the company, and my investors are sitting in the backseat. Of course, our focus is on Sharia compliant companies.

What is the business model behind Faith Capital?

Basically, we invest in companies. We focus on a space we like, on the stage we like, and then we go in. And we are patient. We have no problem waiting 3, 5, 7 years because in the end, we are investing our own money. We are not investing other people's money, so we do not have that pressure to sell now to maximize whatever we invest in. But of course, with investments, sometimes they are going to go right, sometimes they are going to go wrong. Sometimes we are surprised and companies we think are going to do very well are not doing well. And then also, companies might start out just okay, but with time, they improve as they go along. When we have an opportunity to exit and we are happy with the returns, we exit and we invest in something else.

Why is Shariah compliance and ethical business practices important in the companies that you choose, versus just investing in a company that looks like it has a good future, or like it can make you some money later on, like some typical investment firms might do?

The word Shariah means things that abide by the Islamic law. But again, Islam or any other religion does not prohibit us from doing anything. We can do it if we want, but we are just advised not to do so. So, for example, we try to avoid going in with companies that relate to interest payments or anything to do with pork or alcohol. We look at every investment. If it passes that, we will then take it to the next stage. I believe in the end, after this life, we are going to pass on to the second life. God is going to judge us all. So, I am trying my best, hopefully, to build for my second life through this. That is the meaning of strength to stick to Shariah compliance and at the same time ethical business. We are not going to live in this life forever. In the end, we will go somewhere where we will be judged by our creed.

So, it is a very long-term investment?

To be honest, yes, nobody knows. I think about that every day. Nobody knows when his last moment is. It could be at any time. I have lost a couple of friends through Corona in the last few months that were my age and younger. A few months before that, nobody even thought that they could die from it. We all lose people on a daily basis, young and old. It is just something that is going to happen. So, I always think about that. And I think when that happens, have I done well to pass easily? Hopefully, God willing, I have.

With many investment firms, there is the model of making as much money as you can and investing as much as you can. And to have that ethical background to it that it is also important in what you choose to be involved with is a very interesting concept for a business.

Faith Capital Holding (FCH) is a venture capital firm investing in talented founders building long-term value by developing sound operations in Kuwait and abroad.

There is nothing wrong with making money, but it should be done in the right way. It should not be done at the expense of stepping on people. It should not be done at the expense of stepping on the environment. That is another definition of ethical business. There is nothing wrong with being successful. And once you become successful, what do you do with that success? Does it go to your head? Do you think you are better than everybody else? Or do you stay humble and you try to do charity and help people? That also falls under ethical business. I am trying hard as Mohammed to show that, as Arabs and Muslims, we can also build great companies similar to our brothers in Western Europe and the United States. In the end, we are all human beings and we are ambassadors for who we are, for our country, our religion. That is something I think about every day and that is what drives me to do what I do, because sometimes it does get very difficult and very challenging, especially in our field. We take those high risks, but by staying positive and believing that in the end, God will hopefully bless us and give us what we want helps us to keep moving forward.

What has been the impact on investments for you with Coronavirus?

The way some countries have handled the pandemic has been better than others. We have seen some countries handle the pandemic in a very business-oriented way and that has helped the technology companies. However, we have seen other countries that have unfortunately completely mishandled the pandemic in a business sense, which actually affected all businesses, technology and non-technology. Given that our investments are in a number of countries, we have seen the fate of companies derived from the way their government has handled the pandemic.

Project yourself three years’ time, how do you see yourself personally?

Three years ago, when we last spoke, I had just started my new venture around mid 2017. In the last three years, we have made a number of investments and we have been involved in a number of exits. The company that I manage myself was a very small, two-person business and now it is a company that employs several hundred people in several countries. Now, that comes with a lot of challenges and a lot of hardships so I am working very hard. In the next two years, God willing, the company I am managing will hopefully be bigger and better and we will see more investments and be involved in more and bigger exits. I have also been involved over the last three years in a number of government or supportive roles. I was a board member of the Kuwait SME Fund. I am the current Vice President of the Kuwait Olympic Committee. Both positions were given to me by the late Emir who asked me to assist with certain aspects. It is a very different experience. I am extremely busy, which comes at the expense of my wife or my kids. So, it just gets more and more difficult and challenging. But it is something that I enjoy doing. And I have faith that hopefully, whatever I am doing right now and all the hardship will pay off moving forward.

What are the challenges left that you want to resolve? What keeps you up at night?

After I exited my last company, I wanted to be known as someone who had had more than just one success. What I am trying to do right now is build a company that hopefully, God willing, can go public one day. I would love to be part of that club. Moving forward, of course, that by itself is a big challenge, a big dream and that puts a lot of strain and pressure on you emotionally and in every single way. However, we can all do our best as people to strive and leave the rest to God. I have lived most of my life in Western Europe. So, I get to see how people or the media sometimes perceive people like us. If I am able to be a good ambassador for my country, my religion, that will hopefully change the way people look at us. People look at religion and do not understand it properly. Unfortunately, there are a lot of things you see out there in the media that are completely false. So, I thought the best thing to do is not to shout or scream, rather the best thing to do would be to show them by action. Actions speak louder than words.

What are some of your short-term projects?

For the next thing, we are going to be reviewing a number of opportunities right now for us to invest. We have a separate team in the investment side that reviews companies on a weekly basis. Our short-term strategy is to make three, four or five investments a year in technology companies and we are focused on a more mature level now. We started off in more earlier companies. So, in the short term, we will probably make another couple of investments. Due to Coronavirus, a lot of changes have happened in the ecosystem. So, we also have to get our hands down in how to structure and accommodate with the changing environment that has happened. Corona has changed a lot of things and the way people do business. Concerning the company that I manage, JustClean, we are trying to disrupt the laundry space. I feel very, very passionately about this company and I am working very hard every day to try to build a company that could go on and continue even beyond me being there or not.

marcopolis



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