Baraka, a commission-free investment platform based in the Middle East, has secured $20 million in a Series A round led by Valar ventures with participation from Knollwood, a global investment firm. The new funding will be used to reach more users and expand across the region.
Following the latest funding, the total amount of funding raised by Baraka stands at $25 million. The online brokerage firm which was founded two years ago counts investors such as Class 5 Global, Global Founders, and Venture Souq as backers.
The company was founded by CEO Ferras Jalbout. He has experience working with Barclays, Standard Chartered, and a Dubai-based family office. He learned about investments such as stocks and government-assisted retirement funds while growing up in Canada, a country where investing was institutionalized.
In the Middle East, investing is completely different. According to CEO Ferras Jalbout, people are used to investing through traditional savings options such as bank deposits and real estate, and that was why he knew Baraka would thrive in that environment.
“When I moved to the region, it was surprising to see that people didn’t invest in digital assets much as there were little to no provisions for that. Many people in the region earn tax-free income and don’t invest. It’s a big part of why I launched baraka because very few fintechs offered investment options. I wanted to make an app I would’ve loved to use based on my experience as a professional investor,” he said.
Before it got its license to operate as an online broker, Baraka operated as a content platform. It used newsletters and a podcast to educate retail investors in the Middle East about stock investing and general financial knowledge. Its app was launched a year ago after it secured $4 million in seed funding. Armed with this funding, Baraka started offering its multitude of investors access to over 5,000 US stocks and 1,000 Exchange Traded Funds (ETF). On its platform, with as little as $1, people can start investing.
According to Baraka’s CEO, the platform now has “tens of thousands” of active traders trading in English and Arabic. He added that 56 percent of its users are people younger than 30. This suggests that the young population is also interested in digital investment solutions like Baraka. Additionally, 50 percent of its user base are first-time investors; this goes to say that Baraka’s beginning as a content platform paid off and shows that there is a high interest in learning about equity markets.
Baraka operates as a zero-commission platform, but how does it earn revenue? The platform generates revenue from its subscription service which costs $10 monthly. The platform is currently exploring other revenue streams. One of them includes launching commission or asset management-based products that will generate annuity over time.
“We’re encouraged by the early signs of traction that baraka has been able to showcase. We’re really looking forward to working closely with the company as they enter this exciting new phase of growth across the region,” Andrew McCormack, general partner at Valar Ventures who emphasized that this was his firm’s first investment in the Middle East’s emerging fintech ecosystem, said.