Startups, venture building, investing and the halal economy: A candid talk with Siddika Jaffer

Today we have with us Ms Siddika Jaffer, the founder of Enfoundery and Halal Dining Club which is a halal dining app startup recognized by Forbes as one of the Top 5 Muslim Startups. She was named Top 500 Global Business Leader in the Islamic Economy by Islamica 500. She is currently working with BCG Digital Ventures, a venture builder company to create ventures from scratch before launching them into the world. The discussion will touch on her background, what she is currently working on, her advice to young people, the halal economy and lastly, startups and how COVID has affected them. 

This post is a part of “EthisX: The World Tomorrow “– a series of candid interviews with industry thought-leaders to foresee a post-COVID-19 world.

Without further ado, let’s delve into it.

You can listen to the podcast here.

You can watch the full interview here.

Could you share with us a little bit more about your background and what you are doing right now?

Previously, I was running the Halal Dining Club based out of Singapore and since then, I’ve moved back to London and sold it. Along the way, I discovered that entrepreneurs, in particular early-stage entrepreneurs, were having a lot of challenges with fundraising and getting pitched right so, I started Enfoundery which, I still use today to connect entrepreneurs to investors. Then, about a year ago, I joined BCG Digital Ventures, a venture builder company that partners with corporations. My job is to create ventures from scratch with a team of designers, engineers, product managers, and so forth before launching them in the real world. In a span of about 6 to 9 months, we sort of went from idea to a fully launched venture which is incredibly fast and we’ve launched over 100 ventures in the last 5 years.  

How does the sequence go? Do you have an idea and then it gets pitched to a corporate or does the idea come from the corporate who doesn’t know what to do and so they reach out to you?

It can work in several different ways and the starting points can vary. Sometimes the corporate comes to us and says “look, we’re being disrupted by startups” or “we have ideas for opportunities but don’t quite know how to take them to market”. The validation work comes next, so we go through the whole exercise that an entrepreneur normally goes through. For example, we look into whether there is a problem to be solved, whether the market big enough, and the available solutions. If the solutions in the market are not good enough for the corporate to partner with or invest in, then we will build a venture and launch it. 

From one perspective, forgive me for saying this, it seems like you’re actually fighting against startups, right?

To some extent but not exactly. We have a phase called “build, buy or partner” and if there is already a startup that is good enough in that space, then we will connect them to the corporate. However, if we think that there are unaddressed opportunities, we will go into that gap and filter. 

So you do work with startups but if there is no clear solution that fulfills the needs of the client then you would create a startup with or for them?

Yes, exactly. 

Can we take a step back and talk about the Halal Dining Club for a while? Can you share a little bit about your experience setting up something in the halal space in Singapore and where that has brought you? In hindsight, could you share a few things that you would have done differently or the same?

When I started Halal Dining Club, there was a little bit of a movement going on where halal was increasingly on the map — certainly in Singapore there were some things going on as there was a focus on entrepreneurship and starting or helping to build the ecosystem to support startups. At the same time, reports were stating how big the halal economy was going to be and Singapore — I think — was trying to be a part of that movement as well. Also, everyone had mobile phones, so in terms of opportunities or the environment, I think it was a good time to set up Halal Dining Club then. 

The challenge was that the investment space was still in its infancy back then; there weren’t funds dedicated to the halal economy and investors were still slightly unsure since there was no precedent. When I moved to London, I realized that the same challenges exist. Investors would say, “Why don’t you go to the Middle East? There must be investors there who would be willing to invest in this space”. I believe part of that journey created the impetus for me to start Enfoundery because I wanted to shine the light on ethnic minority founders and female founders who were going into places that people didn’t really understand and that were in their infancy. 

What would I do differently? I think that my approach was very collaborative — I spoke to all the entrepreneurs in that space including competitors and asked how we could work together. Whilst I still try to do that on an individual level, I think I should have tried a bit harder to find key investors or influencers to bring a group of people together and create a coalition rather than simply having small individual startups that are trying to succeed. I think if we had done that, we would probably have gotten much more scale in a shorter amount of time. 

I think that this issue that you’ve brought up is a very big pain point for the halal technology space. Even for us Ethis, we’ve been around for a long time and people know who we are but getting investors, especially the right investors is not easy. Do you see significant progress in this area so far especially given your experience with Enfoundery and now as a venture builder? Has something changed or are we still facing the same problems?

Alhamdulilah, I think things are changing. I believe it’s our responsibility as startup founders in this space to build these connections with investors and connect other entrepreneurs to those investors who we think are interested in this space. I remember pitching to Hambro Perks, a VC based in London for Halal Dining Club, and at the time, they said that they weren’t so sure and weren’t looking at that space. However, last year we had the first event purely focusing on the Islamic economy which makes Hambro Perks the first VC in the UK to ever have an event focused on the Islamic economy! I was really proud of that moment and for being able to bring other startups to Hambro Perks who is now looking at the Islamic economy space as something that it wants to invest in. In fact, they’ve invested in Muzmatch as well which, is another startup that is doing well in the space, so I think that things are changing but, it takes time. 

See also: Islamic Investment in Singapore

Based on your experience and your circles, do you see conventional VCs going into the Islamic space as the future or the way forward? What about Islamic finance? Are Islamic venture funds or angel investor clubs from the Islamic world available? Are there more investors from there or is it more of general VCs who understand the space? 

You know, I’m working with two different groups of angel investors who are actively looking at the space. However, they are looking more at backing Muslim investors who they know will create ventures that are ethical but not necessarily ventures that are targeting the Muslim space. So these ventures might be targeting the wider world but just happen to be run ethically. I think that whether it is a venture run by non-Muslims that is targeting the Islamic economy or a Muslim entrepreneur targeting the broader world in a permissible way, both are good and I’m proud to be involved in both of these movements. 

For technology companies or startups in general, whether VC-backed, corporate-backed or a new startup, there have been some reports stating that there has been a significant drop in funding. Is it a bad time to be a startup founder today during this crisis period? 

I believe that the saying “in the midst of every crisis, lies great opportunity” holds true. I think that startups can be successful but, they have to be in the right category. For example, we’re currently seeing a rise in e-commerce. I believe that startups are pivoting or changing their business models to take advantage of things like remote working and so if they are naturally in the space, this is an opportunity for them to do well. I was talking to an investor who said that one of their portfolio companies expressed how there is a big opportunity for them right now and they should bet everything on it because there’s never going to be a better time. It is a risky move because they could lose a lot of money but at the same time, the market conditions appear to be right. I think it really depends on the nature of the startup. I would say, however, that startups at the idea stage with no traction will find it very difficult to raise any kind of funding at this moment. They will have to bootstrap their way through it right now if they can. 

Which areas do you think would be booming? There are obvious ones like healthcare and communication but is there anything unique that has emerged from this crisis that you have identified?

I think digitization will be an area of opportunity. I work with corporates as well and I can see that there is an opportunity to digitize practices. One of the pain points I discovered recently was trying to open a bank account. A lot of banks require you to physically go in and set up a bank account so it feels like this is an opportunity for somebody to work internally with the bank or have a startup that can offer KYC solutions.

I think that mental health is another area of interest because a lot of people are facing troubling times. Some may not be able to attend the funerals of their loved ones while others may have lost their jobs or their businesses that they have invested their entire life savings into. I think that these are things that we do not think of as immediate needs but I know of a couple of startups that are trying to address that space. 

One of my friends who is a successful startup founder in Singapore posted something very interesting on LinkedIn recently. He highlighted how all companies need to think like a startup because circumstances have changed and things are very fluid. Therefore, if a company is not nimble or doesn’t have the agility that a startup is supposed to have, no matter its size, it will still be in trouble. What do you think of this view? 

I agree completely. You have to reinvent the business model because we just don’t know how long the current situation will last. I think that it’s obvious that e-commerce is going to do really well and the retailers that already had successful operations have managed to pivot and take advantage of that. However, others are really struggling because they haven’t got that capability and are coming at it a little bit too late. Will we start to see corporates investing in startups much more actively? I think that could be a trend to watch.

Would you encourage startups to seriously look at how they can work with corporates or plug into a corporate infrastructure?

Yes, because you might have the technology built but not distribution or warehousing if we’re using e-commerce platforms as an example. Maybe there’s an opportunity for you to come together and either white-label your platform or partner up since the technology is there, it just needs to be scaled up. I would encourage startups who have relationships with corporates or who can approach corporate VCs to start doing that.

What would be your tips to startups when they want to approach large corporates? Do they need to know somebody inside or are corporates open enough to talk to startups that approach them directly based on merit? How should they perceive these large mammoth companies?

Speed is something that can be compromised when you’re trying to work with a large corporate. I think the important thing to understand is that corporates are driven by very different metrics. Firstly, they want to make sure that their core business is protected. Secondly, if they are going to invest in new opportunities, it needs to be something that delivers at least 10 – 20% of revenue return otherwise, there’s probably a lot more they can do in their core business to invest in growth. Another thing to remember is that corporates have to get approval from different stakeholders which, will take time. Many corporates have an innovation or venture arm that will have a greater understanding of what it’s like to be lean and agile and will probably have the set-up to invest so, that’s probably a sensible place to reach out to. However, if you’re just starting randomly without any connections, I think it’s going to take a long time. Having said that, I think certain things in our environment are unprecedented, so corporates may be looking for solutions and might be willing to take more risks because it’s either do or die for a lot of them.

See also: Women in Islamic Finance

I have read some reports recently on how the emerging markets are less affected by COVID-19 and will probably grow much faster after this in comparison to developed countries. Do you think that the opportunities lie in emerging market and is that where VCs and investors from developed countries should be looking at? Drawing on your experience in Singapore, the UK and I assume the rest of Southeast Asia, what is your opinion?

I don’t think you need to look at this from a short-term perspective. There’s probably a long wait ahead and nobody knows how long it’s going to take developed countries to create a vaccine. However, I would not necessarily say developing countries are immune. If we look at the situation in Africa, for example, it is still unfolding. I don’t think they have good enough reporting systems and things like that so can we say that the statistics are accurate? Could it be that there are cases but people are not reporting them as COVID related? So for me, the jury is still out a little bit on that.  

I think developing markets are an opportunity generally though. As people become more connected to the digital world and as the population grows, especially if it is a very young population whose spending power will increase, I think this will bring in lots of opportunities. However, the solutions that work in developing countries may be different from those that work in developed countries. I think they all have their individual unique needs, so we need to be developing products for those unique circumstances. 

See also: 3 Things Non-Muslims need to know about Islamic Finance

For those who intend to be startup founders or develop a career/life in the startup area, what would be your advice to them? In general, what would be your advice to young people today? COVID has changed many things but things should go back to some kind of normalcy so what should they be doing now? 

I feel quite bad for people who have just graduated, especially in markets where we know that a recession is looming and where unemployment is going to be high. I would use this as an opportunity to upskill yourself. I think doing something that exposes you to or enhances your digital skills will be useful.

Take the opportunity to volunteer. There are so many initiatives that are going on right now that you can join. I think it is important to be involved, active and learn skills. Don’t worry about not having the money right now if your parents or guardians are supporting you but don’t sit around and wait for opportunities to come to you. Be proactive and get out there.

Here  are our takeaways from this interview:

Takeaway #1: Be collaborative to get more scale in a shorter period. Speak to other entrepreneurs in the space including competitors and see how you can work together. Find key investors or influencers to bring a group of people together to create a coalition rather than simply having small individual startups to achieve the above. 

Takeaway #2: In every crisis lies an opportunity so, startups can be successful but they have to be in the right category. Startups must also understand the mindset of larger companies/corporations if they are reaching out to them. Digitizing conventional practices and coping with mental health are two potential areas that are emerging.

Takeaway #3: In today’s world, every company should be nimble and agile, regardless of its size.