Valar Ventures Leads $20 Million Round in Online Brokerage Platform Baraka • TechCrunch

Stock trading apps have multiplied in recent years, targeting different demographics and audiences who need them to engage in investing activities to lead a healthier financial life.

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

Director Feras JalboutHis years of investment experience at Barclays, Standard Chartered and a Dubai-based family office led him to launch baraka in 2020. His upbringing also played a role. In an interview with TechCrunch, Jalbout shared how he learned about investments such as stocks and government-backed pension funds while growing up in Canada, where investing was institutionalized. In the Middle East, however, it was a different ball game. For years, people in the region have invested through traditional savings options such as bank deposits and real estate, Jalbout said; that’s why baraka brings much needed variety.

“When I moved to the region, it was surprising to see people not investing much in digital assets because there was little to no provision for it,” said the founder and CEO. “Many people in the region earn a tax-free income and do not invest. It’s a big part of why I launched baraka, because very few fintechs offered investment opportunities. I wanted to create an app that I would have loved to use based on my experience as a professional investor.”

Before being licensed to launch its trading app, Baraka was a content platform that used newsletters and a podcast to educate private investors in the Middle East, particularly in the UAE, about stock investing and financial literacy. It launched its app a year ago, armed with the backing of Y Combinator and a $4 million seed round. This arsenal has prompted Baraka to offer his “thousands” of investors access to more than 5,000 U.S. stocks and 1,000 Exchange Traded Funds (ETFs). Investors can start investing from as little as $1 (~3.79 dirham) on the platform. Jalbout added that the platform has users in the “tens of thousands” who actively trade and consume in English and Arabic.

Of this user base, 56% are under 30 years old, a sign that the young regional population is looking for digital investment solutions. More than 50% are new investors, indicating that they are very interested in learning more about stock markets through baraka’s content and starting their investment journey on the platform. Also, 83% have traded on the baraka app three times or more in at least one month in their lifetime.

baraka

Image Credits: baraka

Since baraka is a no-commission platform, it does not earn any income from commissions, trades or spreads. Instead, it comes from a subscription service, about $10 (~37.99 dirhams) per month, that retail investors can use to access more company financials and stock reports from Baraka’s partner Refinitiv. Baraka is exploring other revenue streams, including launching commission or asset management-based products that will generate an annuity over time.

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

Offering local stock trading is also on the agenda. Taduwal, the Middle East’s most prominent stock exchange, raised $4.7 billion through 27 new listings in the first half of 2022, contributing to a nearly 300% increase in IPOs on the region’s exchanges this year. As such, Baraka is committing much of this investment to working with local stock exchanges like Tadawul and regulators to secure licenses to democratize access to local stocks.

“Our ambition is to also offer local equities by partnering with Taduwal, the Saudi stock exchange, the Dubai Financial Market (DFM) and the Abu Dhabi Stock Exchange (ADX),” said Jalbout van Baraka’s plans to offer private investors local offering shares. shares.

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

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

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