WAQF-BASED VENTURE CAPITAL MODELS FOR EMPOWERING SMALL BUSINESSES IN MODERN ISLAMIC ECONOMIES
Saudi Arabia 
Pakistan 
Indonesia 
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Entrepreneurial Empowerment, Islamic Social Finance, Small Businesses
Abstract
Small businesses play a critical role in employment generation, poverty reduction, and inclusive economic development. Persistent financing constraints, limited access to investment capital, and inadequate business support services continue to hinder the growth and sustainability of many enterprises in modern Islamic economies. Waqf institutions possess significant economic potential that remains largely underutilized for entrepreneurial development. This study aims to develop and validate a waqf-based venture capital model designed to empower small businesses through the integration of Islamic social finance principles and sustainable investment mechanisms. A mixed-methods research design was employed using an exploratory sequential approach. Qualitative data were collected through expert interviews involving specialists in waqf management, Islamic finance, venture capital, and entrepreneurship. Quantitative data were obtained from 350 respondents representing waqf institutions, Islamic financial organizations, venture capital entities, and small business sectors. Structural Equation Modeling was utilized to evaluate the proposed framework. Findings reveal that waqf resource mobilization significantly enhances governance effectiveness, investment sustainability, entrepreneurial support services, and small business empowerment. Governance quality and entrepreneurial support emerged as critical factors influencing the effectiveness of waqf-based investment initiatives. Results further indicate that integrating waqf assets with venture capital principles can generate sustainable economic opportunities while maintaining compliance with Islamic ethical values. The study concludes that waqf-based venture capital represents an innovative and sustainable financing model capable of strengthening entrepreneurial ecosystems and promoting inclusive economic development in modern Islamic economies.
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