Understanding Capital Protection in Crowdinvesting: Shariah Compliance Considerations #

Original Question: Is the principal amount or the whole process of investing through a crowdinvesting company in a business project somehow insured ?
If you are guaranteeing the capital then it’s turning the investment into a loan instead thus prohibited(you can look up AAOIFI Shariah standards on guarantee).

That’s why the risk mitigants they put in place are just the director’s personal guarantee and post dated cheque. There’s also some default law in place.

Of course when it comes to equity and property crowdfunding it’s different.