220208 Thiel
Peter Thiel's been associated with PayPal and Palantir Technologies, and remains one of the biggest proponents of digital led transformation plays. Image Credit: Bloomberg

Dubai: DIFC-based baraka – an equity and ETF trading platform – has drawn in $20 million for a Series A round, bringing on board Valar Ventures backed by US billionaire and PayPal co-founder Peter Theil.

Launched last year, baraka offers its users access to commission-free investing and more than 6,000 US stocks and Exchange Traded Funds (ETFs). Users can start placing their trades from as low as $1, with Baraka hoping to cash in on a trend that has seen UAE and Gulf investors take to global equity and diversify from property investment and bank deposits.

This is Valar Ventures' first investment in the region and has previously backed global fintech unicorns Wise, N26 and BitPanda amongst others. The funds drawn in by baraka from Valar – and investment firm Knollwood – would be used for further regional expansion. The plan is to ‘secure licensing at some point in the future’.

The company has committed the majority of this fund raise to new markets and ‘create more access to local stock exchanges for regional investors’. "Tens of thousands of users have signed up to baraka," said Feras Jalbout, founder and CEO of baraka. "By empowering the next generation of investors in our region with low-cost and comprehensive investment choices, we remain committed to enabling financial inclusion for millions of investors across MENA.

We are excited to have Valar Ventures and Knollwood join us in transforming how users here save, invest and grow their money for the future.

- Feras Jalbout, founder and CEO of baraka
How baraka's trades function
baraka users have their shares and ETFs registered in their names through an affiliation with an SEC Registered broker. Dividends are paid directly to their brokerage accounts, and there is protection through the Securities Investor Protection Corporation (SIPC) with a limit of up to $500,000.

The platform plans to introduce features that give access to dividend reinvestment plans and extended hours trading.

Local trades too?

baraka is working with local stock exchanges such as Saudi Tadawul and regulators to enable access to local market trades via its app. Tadawul raised $4.7 billion through 27 new listings in H1-2022 and has a h’ealthy pipeline of companies looking to list over the coming months’. baraka will also introduce its Arabic content to newly licensed markets.

baraka is also a part of Abu Dhabi’s Hub 71. Investors who are already a part of the venture include VCs such as Class 5 Global, Global Founders Capital, and Venture Souq.

The baraka app launch last year came just as more Middle East retail investors were starting to track and trade in global equity. Image Credit: Supplied

"The region’s emerging fintech ecosystem has immense potential and we’re encouraged by the early signs of traction that baraka has been able to showcase," said Andrew McCormack, General Partner at Valar Ventures. "We’re really looking forward to working closely with the company as they enter this exciting new phase of growth across the region."

Retail investors drive region's IPOs
Middle East Exchanges have had a nearly 300 per cent increase in IPOs in 2022 with retail investors driving a 16 per cent increase in the region’s assets under management to $1.2 trillion.