How ex-VC Feras Jalbout started Middle East's Robinhood
Baraka is a commission free stock investment app for Middle East investors, with localisation at its core. It allows users to start investing in over 6,000 stocks and ETFs in the US Markets.
Feras Jalbout was interested in startups since his time as a venture capitalist. He even found himself asking questions about the process. “The whole experience was mystifying and intriguing,” he says recalling past experiences. This curiosity eventually led him towards setting up Baraka—a commission-free stock investment app for investors in the Middle East.
Akin to Robinhood, a popular trading app in the US, allows users to build a portfolio and manage their investments. It currently offers users the option to invest in over 6,000 stocks and ETFs in the US market available at their disposal.
“We’re trying to give people access to the most prominent financial market in the world and make it as easily accessible as possible,” explains Feras.
How does Baraka works?
Users can set a time period where they can choose to keep investing. For instance, If the user wants to buy the S&P 500 ETF on the first of every month or on any particular date, these investment decisions can be automated.
“It helps create good user behaviour and it's creating dollar cost averaging, which is probably the best way to invest over a long period of time,” says Feras. Dollar cost averaging refers to a fixed amount of money in regular intervals regardless of the price of a security.
The ability to set schedule trades on the app aside, what makes Baraka different is its Middle Eastern roots. While there other platforms like eToro, XTB, Swissquote, and others, similar to the US-based Robinhood, for Feras, the focus on localisation is what sets Baraka apart.
The fintech startup has a feature called the Sharia Screener, which allows users to determine if an investment in the equity of a listed company is permissible from a Sharia perspective.
“People always want to use an app or product that resonates with them. While there are multiple apps that give access to US Markets, and I personally have used some, they don’t speak to me,” he says, adding that young users are looking for these precise features that speak to them.
For Baraka, the focus is on its young user base—nearly 70% of its users are between 18 and 30, says Feras.
Starting-up in the middle east
Being a company that originated during the pandemic is not without its challenges. According to Feras, it took over one year to get things together. “We lived totally online--hiring a team, working with lawyers, working with regulators, and everyone. So, we got used to this virtual world quickly and it was actually efficient as you didn't have to leave your house and you just got a lot of work done,” says Feras.
Pandemic-induced challenges aside, it was not too difficult to set up in the Middle East, especially since infrastructure to build a fintech company was readily available in the region. While Baraka currently doesn’t make money off trading activity, it is working on products that can be monetised within the app.
The Middle East market for fintech
According to a report by EY, the Middle East had over 31 initial public offerings (IPOs) in the first nine months of 2022. This was up by 288% on the same period in 2021. The report stated that the deals have raised over $14.7 billion, up by 550% year-on-year.
The startup raised an undisclosed round last year and will soon be closing a fresh round of funding and sees a steady 30%-40% growth month-on-month.
“The plan is to continue to build out different ways that people can invest and make it more accessible to drive financial inclusion. So, we're building other products that will be kind of derivatives of existing products that will help facilitate different ways to invest,” says Feras. Giving users access to other markets besides the US and various assets classes is also in the works, he adds.
Edited by Megha Reddy