ETHICAL EQUITY
CASE STUDY
FinTech interview with Ethical Equity Founder and SuperTech Seeds winner, Ali Kazmi
Creating a fully functioning funding platform and access to investment in just six weeks
Birmingham-born FinTech founder Ali Kazmi set up Ethical Equity in 2019 in a bid to facilitate greater investment in ethical start-up businesses by Islamic compliant financiers and impact investors. Accepted onto SuperTech Seeds for funded tech development in late 2021, not only has Ali been able to create a fully functioning investment platform but also secured introductions to investors and acceptance onto the national Investment Association Engine Sparks programme – all within a few short weeks. Here Ali discusses the progress he’s made, why he nearly turned down the opportunity and the impact that no_code development from SuperTech has had on his business.
Helping businesses gain access to a $3 trillion market
Ethical Islamic investment is valued at $3 trillion globally. Yet it is still little understood outside of Islamic finance circles. As a result, investors often struggle to source compliant firms and businesses find it difficult to identify where to go to access funds.
One of the common misconceptions of Islamic finance is that those seeking investment must be part of the Islamic faith. In fact, it is a set of guiding principals designed to ensure that the company invested in operates to ethical standards. This means that 1,000s of businesses across the UK are very likely compliant, but unaware that they could be viable for this type of funding. Similarly, a lot of ethical Islamic compliant firms aren’t necessarily aware that they are also meeting the standards for Environmental, Social and Governance (ESG) and Socially Responsible Investing (SRI) sought after by impact investors. Significantly, Islamic finance compliant start-up businesses will also be able to join the Enterprise Investment Scheme (EIS), which offers significant tax breaks for those looking to invest in early-stage businesses. Ethical Equity, for the first time, brings ethical Islamic and impact investors together with businesses that are fully compliant with all the necessary standards needed to enable investment.
Applying to SuperTech Seeds
As well as the core executive team at Ethical Equity we also have an executive advisory team which includes people like Stella Cox CBE, the former global head of securities lending at HSBC Roy Zimmerhansl, David Mellor Associate Director at Whitecap Consulting and Stuart Harrison director of FinTech West. While we had a basic website and were attracting a lot of interest from investors and businesses looking to raise finance it had been clear for some time that a lack of tech development was holding us back. I’d approached a traditional coding company who had quoted up to £200,000 and nine-months’ worth of work to achieve some basic functionality. It was Stuart who advised us of the SuperTech Seeds programme. Initially, I’m ashamed to say, both myself and the executive team considered turning down the Seeds opportunity. It was felt that the level of development needed would necessitate coding and that the new approach offered by SuperTech and Million Labs might not get us to where we needed to be. Thankfully, in discussion with Jof Walters, founder of SuperTech partner Million Labs, we were able to see just how much added functionality we could achieve by taking the no_code approach.
Supercharged development
At the point of applying for SuperTech Seeds we had a very basic website backed by a manually driven process. Within six weeks of starting the programme we had a level of functionality over and above that which we had requested from the coding company. We now have a full solution where investors can add their preferences in terms of the type of ethical companies they are looking for and ideal sector, as well as access to an operational database able to hold their tax certificates. Start up businesses can sign up to the website directly, ahead of going through a vetting process, securely supply sensitive documentation to investors and outline the level of investment they are seeking. In terms of user experience, you can’t tell the difference between our platform and the likes of Seedrs and Crowdcube, businesses that are more than 10 years further down the line from us each with around 150 employees. From a ProfTech perspective this type of rapid development is absolutely invaluable. As with a lot of FinTech and ProfTech businesses it’s not the technology itself that is unique to Ethical Equity, it’s the application to a new market or sector. Being able to realise a fully functioning platform in a matter of weeks provides competitive advantage and puts us in a much stronger position to secure additional investment – one of the secondary advantages of engaging with SuperTech.
Securing investment
While developing the technology behind Ethical Equity was a big driver for us in applying to SuperTech Seeds, gaining access to the SuperTech network to talk about our solution was equally important and in this we haven’t been disappointed. As the UK’s only professional and business services technology supercluster, SuperTech has an unrivalled network of professional services businesses, investors, national programmes and likeminded ProfTech firms. As a result of our involvement in the platform, we’ve been given access to venture capitalists who have invited us to pitch for funding both within the West Midlands and at the Shard in London, we’ve also been accepted onto the Investment Association’s Engine Sparks programme.
Delivering socio-economic impact
As a business our driving purpose is to provide access to finance for early-stage start-ups that are delivering social, environmental and cultural impact. We have a particular focus on supporting ethnic minority and other underrepresented communities who often find it difficult to secure investment. A recent report from the British Business Bank found that just under half of entrepreneurs from ethnic minority backgrounds give up on their business idea due to lack of finance.[i] Fundamentally, there is a flaw within the UK’s funding eco-system, it’s often not the best ideas but the founders with the best network that secure investment. Through Ethical Equity we aim to give everyone equal access to funding, by ensuring ethical businesses are Enterprise Investment Scheme (EIS) compliant and therefore investible. It’s clear that from a network and technology perspective SuperTech is trying to do the same, with no_code essentially levelling the playing field and ensuring all businesses have an investible platform at a fraction of the time and cost it would take to develop traditionally. Essentially, we’re approaching individual, family and syndicate investors with businesses that they wouldn’t otherwise be aware of. Joining the Sparks programme allows us to also talk to institutional investors about these opportunities.
Involvement in SuperTech Seeds has been transformational for us as a business. Both the technological development and access to the wider network have enabled us to progress a much faster pace that would otherwise have been possible. I can wholeheartedly encourage other PofTech and FinTech businesses to get involved.
Ali Kazmi is the CEO and founder of Ethical Equity based at SETsquared Bristol and was one of the first cohorts in SuperTech’s Seeds programme.
To apply for SuperTech Seeds visit: supertechwm.com/seeds.
To check whether your business is Islamic finance compliant and applicable to the Enterprise Investment Scheme (EIS) visit: www.ethicalequity.co.uk.