Musharakah means "partnership" — two or more parties contribute capital to a joint venture, share profits according to a pre-agreed ratio, and share losses strictly in proportion to their investment.
For example, you and a bank each invest $50,000 in a business. You agree to split profits 60-40 (the bank gets more because they also manage the business). But if there is a loss, it is split 50-50 — matching each party's capital contribution.
Musharakah is considered the ideal form of Islamic financing because both parties share risk and reward. Diminishing Musharakah (where one partner gradually buys out the other) is hugely popular for home financing — the customer slowly buys the bank's share until they own the property outright.