Three Wealthtech Startups in MENA That Make Trading Easier

Wealth management, traditionally dominated by expensive specialists managing large sums, is being disrupted by wealthtech startups looking to replace suits with tech that can help average users manage their cash. Just as US-based platforms like Robinhood have facilitated trading for millennials across the US, the last few years have seen the rise of MENA-based wealthtech startups that offer commission-free trading of stocks, Exchange Traded Funds (ETFs), and cryptocurrencies.

So what do wealthtech startups do? For starters, wealthtech is a sub-industry of fintech that focuses on giving investors tools and platforms to manage their wealth. Wealthtechs like Sarwa, baraka, and Thndr offer users the option to trade online without intermediaries. That means that investors no longer have to commission brokers or have deep pockets to invest their money in assets other than real estate. Many of these startups offer users the option to trade on the US stock exchange and allow trading in fractional shares (i.e. less than a full share).

Largely because stock market investing has not been part of the millennial culture in MENA and the GCC, one of the biggest hurdles that wealthtech startups have to overcome is educating users on wealth management and how to generate passive income. A key cornerstone of these startups is content creation and financial education, with podcasts, articles, videos, and webinars helping to onboard and inform budding investors.

While fintech continues to lead the charge when it comes to VC funding in MENA, investment literacy and financial planning are still in their early stages. Dubai Future District Fund singles out wealth management as a sector of focus for them -- particularly as asset classes like cryptocurrency gain traction.^[1]  

These three MENA- and GCC-based startups are enabling millennials and other prospective investors to start trading, rather than saving.

Baraka

Founded in 2020 by former asset manager and VC banker Feras Jalbout and tech-focused CTO Kunal Taneja, baraka is a trading app that targets millennial retail investors. 

Available in both Arabic and English, baraka, which started out as a content platform providing financial education and raising awareness about stock investing, allows investors to trade on the US stock exchange, giving users access to more than 600 stocks and ETFs. Amateur users can trade in fractional shares for small sums of money. The platform does not allow high-risk trading.

baraka currently has a low commission structure as well as a subscription model for users who want to gain insights with analytics. The company hopes to introduce options for trading on the Saudi exchange Tadawul, as well as the Dubai Financial Market (DFM) and the Abu Dhabi Exchange (ADX). ^[2]  

baraka has raised more than $25 million to date and is backed by Valar Ventures, Knollwood Global Founders Capital, FJ Labs, Raptor Group, Tribe Capital, Nuwa Capital, VentureSouq, and Class 5 Global, among others. Baraka became the fourth UAE-based startup to join Y Combinator when it joined the Silicon Valley accelerator’s Summer 2021 cohort.

Thndr

Co-founded by Seif Amr and Ahmed Hammouda in 2019, Thndr is an Egyptian wealthtech platform that gives users access to bilingual mobile-first equity trading in Egypt. In 2020, it acquired the first brokerage license issued by the Egyptian Financial Regulatory Authority (FRA) since 2008, making it possible for investors to open and manage trading accounts in Egyptian financial markets using their mobile phones.

Like its counterparts, it allows investors to trade in stocks, mutual funds, and IPOs with no account minimums. Unlike its counterparts, it does not give investors access to US markets.

Thndr has raised more than $21 million to date and has received funding from Y Combinator, 4DX Ventures, Endure Capital, The Raba Partnership, MSA Capital, Tiger Global, and Prosus Ventures, in addition to investors like DST Managing Partner, Tom Stafford, among others.

Sarwa

Launched in 2018, Sarwa started as an investment and personal finance startup and has evolved into a wealthtech startup. The UAE-based platform allows users to manage their portfolios and acts as a digital financial advisor or roboadvisor for young professionals.

A roboadvisor -- an emerging trend in wealthtech – is an automated, algorithm-driven financial and investment planning service. ^[3]  

Sarwa has a host of products that cater to different investors, including its standard product Sarwa Trade, which allows investors to buy and sell US stocks and ETFs for a minimum of $5, and Sarwa Invest, which allows users to auto-invest in their diversified portfolios, which gives users the option to invest in conventional portfolios, responsible portfolios, and halal portfolios. Sarwa Halal, its Shariah-compliant equivalent, is a money market funds portfolio that offers cash and cash-equivalent securities with a 3% return net of all fees. Sarwa Crypto, which gives investors the same diversification as Sarwa Invest, gives investors exposure to Bitcoin investment vehicle Grayscale Bitcoin Trust GBTC.

In February of this year, Sarwa expanded its platform offerings to include Sarwa Save, a cash account that offers a 3% interest rate (compared to 0.8% on saving accounts in UAE banks), with no account minimums or management fees. ^[4]  

Sarwa has raised $24.9 million to date and is backed by Mubadala, 500 Startups, Kuwait Projects Company, Shorooq Partners, Middle East Venture Partners, DIFC, Hambro Perks Oryx Fund, HALA Ventures, and Vision Ventures, among others.