Analysis of Derivative Transactions, Venture Capital, and Private Equity: A Case Study of International Funding for Zenius as a Risk-Mitigation Strategy Framework for Shariah-Compliant Startups

This study focuses on analyzing the role of Derivative Transactions, Venture Capital (VC), and Private Equity (PE) as modern financial instruments in formulating risk mitigation strategies for Shariah-compliant startups. Derivatives (such as Futures) function as a hedging mechanism, while VC and PE are vital equity investment channels for capital mobilization. The legal basis for these instruments is regulated by OJK (Financial Services Authority) regulations and supported by Shariah proofs (Al-Qur'an, Sunnah, Ijma', Qiyas, Fiqhiyyah rules, and Maqasid Shariah), which are essential for ensuring transactions are free from riba, gharar (excessive uncertainty), and maysir (speculation). From an Islamic finance perspective, Shariah principles are not an obstacle to modernization but a driver of safe innovation and benefit (maslahat). The phenomenon studied is the high failure rate of Indonesian technology startups despite receiving significant international funding, illustrated by the Zenius case study. The central question addressed is: How can derivative instruments, VC, and PE be effectively integrated into an appropriate risk mitigation strategy for Shariah-compliant venture capital in facing the dynamics of startup funding?

The scientific contribution of this research lies in its integrated analytical framework that simultaneously evaluates the Shariah legality of derivatives, VC, and PE, linking them directly to practical risk management through the case study of startup failure in Indonesia (Zenius). This research uses a descriptive qualitative method based on a case study, supported by a systematic literature review using the PRISMA approach. This method was used to analyze five authoritative classical Islamic jurisprudence texts and 40 credible scholarly articles, focusing on the compatibility of these financial instruments with Shariah values in avoiding riba, gharar, and maysir. Secondary data related to Zenius funding and OJK/DSN–MUI (Shariah National Council–Indonesian Ulema Council) regulations were also used to compare the Shariah theoretical framework with real-world operational practices and failures.

Empirical findings indicate that Zenius's failure (marked by mass layoffs in May 2022 and temporary cessation of operations in January 2024), despite receiving approximately US$40 million in funding, was caused by fundamental errors in expansion strategy and risk governance, particularly the decision to acquire Primagama which triggered a surge in operational burden. The discussion indicates that large capital from VC/PE does not guarantee survival; therefore, these instruments must be implemented with active supervision, and derivatives can function as a hedging tool against investment currency risk, while adhering to Shariah limitations.

In conclusion, although Shariah-compliant VC and PE are vital investment channels, their success absolutely depends on proactive risk management integrated into the funding structure. The main implication is the need for standardized Shariah VC/PE contracts with clear control clauses and defined exit plans. Recommended risk mitigation examples include: 1) Milestone-based Funding (gradual fund release based on performance targets achievement), 2) Active Board Representation (strategic supervision through placing investor representatives on the board), and 3) Shariah Liquidity Option (an exit clause that minimizes losses upon performance deviation). The main message of this research is that structured and Shariah-compliant risk mitigation is an absolute prerequisite to ensure the sustainability of investment in Shariah-compliant startups.