(Venture Capital): A partnership between two parties, both of whom provide capital towards the financing of a project. Both parties share profits on a preagreed ratio, but losses are shared on the basis of equity participation. Management of the project is carried out by both the parties.

Profit and loss sharing. It is a partnership where profits are shared as per an agreed ratio whereas the losses are shared in proportion to the capital/investment of each partner. In a Musharakah, all partners to a business undertaking contribute funds and have the right, but not the obligation, to exercise executive powers in that project, which is similar to a conventional partnership structure and the holding of voting stock in a limited company. This equity financing arrangement is widely regarded as the purest form of Islamic financing.