Despite the rising interest in investing among millennials globally, the Middle East’s youth population doesn’t have trading platforms that cater to them or present financial news in a relatable manner, said the founder and CEO of fintech startup baraka.
Feras Jalbout identified this gap in the market and last July came up with ‘akhbaraka’ by baraka, a finance-themed newsletter that offered “digestible and bite-sized” insights and financial market news to its subscribers to increase investor knowledge among the region’s millennials.
Jalbout says his intention from the start was to create a commission-free mobile-only trading platform and on March 9 he took a step towards that by announcing the launch of baraka’s waitlist and free stock giveaway. The app is expected to officially launch in the second quarter of 2021.
The announcement came in following the company’s pre-seed capital raise of $1 million in a funding round which was led by Class 5 Global, with participation from FJ Labs, IMO Ventures, The Community Fund, VentureSouq and private investment from Dr Abdulla Elyas, co-founder of Careem.
In a wide-ranging interview with Arabian Business, Jalbout shares his thoughts on why the region’s millennials don’t invest as much as their global counterparts and how to make them more comfortable with putting their money in investments.
Feras Jalbout, founder and CEO of fintech startup baraka.
What was the market gap you identified when you came up with baraka?
We really want to serve this demographic of millennials well and I think that in this region, it’s not addressed properly.
I’ve always found that there’s a gap in the market of what’s out there and what that demographic wants to know.
There’s also a gap in the product offering in the region and the way investment platforms communicate with millennials and the look and feel of their platforms. So we set out to build that, essentially.
We’re in a region where 70 percent of the population is under the age of 30 and I don’t think we have a product for these people and so that’s the gap that we’re trying to fill.
In this part of the world, millennials don’t necessarily seem to be investing quite heavily or to have that on top of mind but if you look at what is happening globally, there’s massive interest from millennials investing in different platforms. So I think, it’s about time that we get up to speed here.
What are the investment trends that you have observed among millennials?
They want to invest in companies that they like and that they want to back or causes that they’re interested in.
I think people want to have a little bit more control over the kinds of companies and the kinds of causes that they want to put their money behind.
Moving away from equities, I think there’s a whole other world that’s forming there. Kids in the US or all over the world are investing in shoes, Bitcoins or any kind of cryptocurrency. They’re investing in NFTs, a form of cryptocurrency, which is a whole other space.
All of this potentially leads to the de-centralisation of all kinds of assets, which means they can be fragmented and sold in little bits. So I think the next 10 years is going to be incredibly interesting for retail investing.
What is your business model?
We’ll be the first app to offer US commission-free stock trading so that means that we’re not going to charge $5 or $10 a trade like the other platforms.
There’s a free tier for people to just invest and get started and there is a paid tier where you get more services like world-class research and analytics.
We hope that enough people upgrade to subsidise the other people eventually, but then the idea is that we want to build a platform so we want to build other products.
This is our first product, essentially, but the aim is to kind of build on a suite of products that suit different people.
What are some of your long terms plans or aspirations for baraka?
It’ll always be around retail investing and interesting asset classes that probably are underserved in our market.
It’ll always be about democratising asset classes and along the lines of what we see as interesting emerging asset classes for retail investors, such as the ones I outlined before.
What are the challenges for investing in the region?
When we started this project, we did a lot of user interviews and we got two bits of feedback from around 75 to 80 percent of the people that we surveyed.
One was that they want more content such as market news and analysis to guide them through making the step to investing so we are trying to build content around that.
On our social media channels, we try to address the audience in a tone of voice that is easy to understand with enough information for them to be able to figure it out. We are trying to marry news, market insights and investment products in one.
The other thing we try to do is address this gap through more educational content which is, to my surprise, basic stuff that people want to know such as what a stock or an ETF is.
This is why we have a glossary of financial terms on the website and we’ve built an educational module in the app where users can read about a topic, get quizzed about and rewarded with virtual points just for taking part.
People tend to invest in communities and what we’re trying to do is create that community. A big part of our proposition is that we want to create a space where people can go online, ask questions in the public forum, and eventually get to know different members of the community and ask those questions.
Everyone should be investing but the question is how to get people more comfortable with that? Our challenge is to get people over this line or hurdle because once they start investing, they will see the value in that and continue to invest.
What is your competitive edge?
The look and feel of the platform, the content element, the educational side, eventually the different product-range and the business model are all unique.
Ultimately, we focus on the user experience and making things as seamless and simple as possible.
What was the experience of launching the website during the pandemic like?
I guess it’s become second nature to us. Everything we’ve done, from hiring and managing the team to raising money, has been done during the pandemic. We always joke that we don’t know what it would be like to be in person together and that we live on Zoom.
What advice would you give first-time investors and young entrepreneurs looking to set up their own business?
For the investors, as simple as it may sound, just get started even if it is only $5. Starting with a small number that you can stand to lose will help you overcome that hurdle because at the end of the day if you do something wrong, you will only lose that small amount. But the idea is that you would have crossed one threshold and you can keep progressing.
My advice to entrepreneurs is to be incredibly passionate about what you’re doing because you will need that passion to drive you through the highs and lows of starting your own business.
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