Valar Ventures leads $20 million round on online brokerage platform baraka • TechCrunch

0

Stock trading apps have proliferated over the past couple of years, targeting diverse demographics and audiences who they believe need to participate in investing activities to live healthier financial lives.

In the latest development, barakaa commission-free investment platform established in the Middle East for two years, announces that it has closed a $20 million Series A funding round led by Peter Thiel’s Valar Ventures with participation from the investment firm Knollwood global investment to expand in the region and reach more users.

CEO Feras JalboutYears of investment experience from Barclays, Standard Chartered and a Dubai-based family office led him to launch baraka in 2020. His education also played a role. In an interview with TechCrunch, Jalbout shared how he discovered investments such as stocks and government-subsidized retirement funds while growing up in Canada, where investing was institutionalized. However, in the Middle East it was a different ball game. For years, locals have invested through traditional savings options such as bank deposits and real estate, according to Jalbout; therefore, baraka provides much-needed variety.

“When I moved to the area, it was surprising to see that people weren’t investing so much in digital assets because there was little to no provision for it,” said the founder and chief executive. . “A lot of people in the area earn tax-free income and don’t invest. That’s a big part of why I started the baraka, because very few fintechs offered investment options. I wanted to create an app that I would have liked to use based on my experience as a professional investor. »

Prior to obtaining its license to launch its trading app, baraka was a content platform using newsletters and a podcast to educate retail investors in the Middle East, particularly the UAE, about stock investing and trading. financial knowledge. He launched his app a year ago, armed with backing from Y Combinator and a $4 million seed round. This arsenal has prompted the baraka to offer its “thousands” of investors access to more than 5,000 American stocks and 1,000 Exchange Traded Funds (ETFs). Investors can start investing with as little as $1 (~3.79 dirhams) on the platform. Jalbout added that the platform has “tens of thousands” of users actively trading and consuming in English and Arabic.

Among this user base, 56% are under the age of 30, a sign of a young regional population looking for digital investment solutions. Over 50% are first-time investors, indicating high interest in learning more about stock markets through baraka’s content and beginning their investing journey on the platform. Additionally, 83% have traded three or more times in at least a month throughout their life on the baraka app.

Picture credits: baraka

Since baraka is a commission-free platform, it does not generate any revenue from commissions, trades or spreads. Instead, it’s a subscription service, costing around $10 (~37.99 dirhams) per month, that retail investors can use to access more financial data on companies and companies. reports on the actions of baraka’s partner, Refinitiv. Baraka is exploring other sources of income, one of which is launching commission-based or asset management products that will generate an annuity over time.

With this new investment, the Robinhood-esque platform will double its presence in the GCC and in Egypt, its new market (where it will face competition from Thndr), and drive customer acquisition. The company said it will add new services over the next 12 months, including access to features such as dividend reinvestment plans and extended trading hours.

Offering local stock trading is also on the cards. Taduwal, the Middle East’s largest stock exchange, raised $4.7 billion from 27 new listings in the first half of 2022, contributing nearly 300% increase in IPOs in stock exchanges in the region this year. Thus, baraka devotes a large part of this investment to working with local exchanges such as Tadawul and regulators to obtain licenses in order to democratize access to local shares.

“Our ambition is to also offer local equities by partnering with Tadawul, which is the Saudi Stock Exchange, Dubai Financial Market (DFM) and Abu Dhabi Stock Exchange (ADX),” Jalbout said of the plans. de baraka to offer local retail equity investors.

Baraka has raised $25 million in total venture capital funding from investors including Class 5 Global, Global Founders Capital and Venture Souq. Its new investor Valar Ventures has also backed similar digital brokerage startups such as Bitpanda and Shares (also backed by Global Founders Capital).

Valar Ventures general partner Andrew McCormack said it was his company’s first investment in the emerging Middle East fintech ecosystem, which is full of potential. “We are encouraged by the first signs of traction that the baraka has been able to show. We really look forward to working closely with the company as it enters this exciting new phase of growth in the region,” he added.

Share.

Comments are closed.