- On Investing: Investing is essential because it allows individuals to reap the benefits over a prolonged period… By investing for the long term, individuals unlock a realm of possibilities for themselves and future generations.
- On Regulatory Challenges: Compliance with regulations inevitably slows down the pace of business operations… The need to employ more personnel and adhere to a multitude of rules makes operating in the financial sector more expensive and resource-intensive.
- On the Role of Conventional Banking: The conventional banking system doesn’t always directly influence the investment sector… Instead, they play a crucial role in facilitating the operational functions of fintech companies.
- On Investor Education: Investing hasn’t been institutionalized nor ingrained in our upbringing… Part of our role is to bridge this knowledge gap by educating people about investing.
- On Fintech Evolution: There’s a noticeable surge in investment interest, particularly in fintech, as well as a growing appetite for accessing a diverse array of digital products and services.
- On Expansion Plans: Our customer base primarily comprises individuals from the GCC who discover our app and choose to onboard with us. While our presence is currently limited to the UAE, we are actively exploring opportunities for expansion throughout the broader region.
- On the Impact of Events Like Web Summit: Events like Web Summit are incredibly impactful… They serve as platforms to showcase the abundant talent and opportunities within our ecosystem.
- Advice for Aspiring Entrepreneurs: It’s important to understand that having the perfect idea or flawless execution isn’t paramount. What truly counts is the wealth of knowledge gained along the way.
During the Web Summit Qatar, Abdul Qavi had the privilege of interacting with Feras Jalbout, the visionary Founder & CEO of Baraka, a leading FinTech platform in the MENA region. Throughout the conversation, Jalbout passionately articulated Baraka’s mission: to make investing accessible to everyone in the Middle East, thereby empowering individuals to secure their financial future.
Feras shed light on the challenges inherent in launching a regulated FinTech startup, stressing the importance of compliance and the resource-intensive nature of operations. Despite these obstacles, he remained optimistic about the transformative potential of investing over the long term.
He spoke about the symbiotic relationship between conventional banking and the burgeoning FinTech industry, as well as the growing interest in retail investing among MENA residents. Feras also emphasized Baraka’s commitment to investor education, offering free resources and newsletters to help individuals navigate the world of finance with confidence.
Furthermore, Feras also discussed Baraka’s plans for expansion and highlighted the supportive ecosystem provided by institutions like the Dubai International Financial Centre (DIFC). He concluded with sage advice for aspiring entrepreneurs, urging them to embrace the journey, build solid businesses, and understand the nuances of fundraising in the ever-evolving world of finance.
Questions
1. What inspired you to launch Baraka, and how do you aim to democratize investment in the Middle East?
Our primary mission is to encourage more individuals to invest at a higher level. Delving deeper into this objective prompts the question: Why is investing necessary? Investing is essential because it allows individuals to reap the benefits over a prolonged period.
Over the course of 10, 20, or even 30 years, wealth compounds, presenting significant opportunities for financial growth. This compounding effect is crucial for individuals as it expands their financial possibilities beyond what is achievable through conventional employment and savings alone.
By investing for the long term, individuals unlock a realm of possibilities for themselves and future generations. It’s not just about personal gain; investing serves as a means to secure a better future for one’s children and subsequent generations. Consequently, investing isn’t merely about immediate returns; it’s about harnessing the power of compounding to create a legacy of prosperity and opportunity.
2. What were the main challenges you faced in establishing Baraka, especially regarding regulatory compliance?
FinTech or financial services in general, operates within a regulated framework. This regulation is crucial for ensuring security and trust within the industry, given its paramount importance. Adherence to local regulations set forth by regulatory bodies is mandatory for all financial service companies. These regulations are in place to safeguard the interests and financial well-being of individuals.
However, compliance with regulations inevitably slows down the pace of business operations. The need to employ more personnel and adhere to a multitude of rules makes operating in the financial sector more expensive and resource-intensive. Consequently, financial stability is imperative for sustaining such operations; it’s not a venture that can be hastily assembled. These challenges are inherent to regulated FinTech operations, constituting an ongoing process that requires constant attention and adaptation.
3. How do conventional banking institutions impact the FinTech industry?
The conventional banking system doesn’t always directly influence the investment sector. While some traditional banks offer investment products, the majority do not. However, there is an interdependence between the two sectors, particularly in scenarios where companies like ours need to open bank accounts to manage client funds.
In such cases, we rely on the infrastructure provided by conventional banks. Therefore, it wouldn’t be accurate to say that traditional banks dominate the investment space. Instead, they play a crucial role in facilitating the operational functions of fintech companies. In essence, there’s room for both traditional and innovative players within the industry.
4. How do you ensure retail investors are well-informed about their investments and their potential impact on financial growth?
This is an important question, particularly in our region, the MENA region, where investing hasn’t been a focal point of education. This gap is inherent in emerging economies like ours. Investing hasn’t been institutionalized nor ingrained in our upbringing. It’s an emerging concept here, and people are still in the process of learning about it. Part of our role is to bridge this knowledge gap by educating people about investing.
To achieve this, we provide a plethora of free resources. Our website is rich with content covering investing basics, accessible to anyone interested. Additionally, our daily newsletter, distributed in both English and Arabic, delivers local and international financial news to over 40,000 subscribers. The interest in the subject matter is evident, and there’s a significant demand for high-quality information.
Our aim is to offer valuable content and a platform for learning. The next step lies in individuals taking action and starting to invest. Naturally, this journey entails experiencing both gains and losses, an integral part of the learning process. It’s a multi-generational learning journey, but by providing information and platforms, we empower individuals to navigate the world of investing at their own pace.
5. Are there any pivotal partnerships or collaborations that have significantly contributed to Baraka’s success?
No, we don’t have any partnerships, and we don’t engage in B2B collaborations. That’s not within our scope. We operate solely as a B2C platform.
6. How do you view the evolving fintech landscape in the Middle East, and what opportunities do you see emerging from this growing interest?
Certainly, there’s a noticeable surge in investment interest, particularly in fintech, as well as a growing appetite for accessing a diverse array of digital products and services. This presents a unique opportunity to cultivate lifelong customer relationships. When individuals join platforms like Baraka, they do so with long-term investment goals in mind, illustrating the potential to secure customers for generations.
On the consumer front, the focus is on crafting innovative products and services to cater to evolving needs and preferences. Meanwhile, on the B2B and government fronts, there’s a promising landscape emerging, characterized by regulatory openness and increased support for fintech ventures. This conducive environment, coupled with strategic partnerships between various entities such as banks, telcos, and operating partners, sets the stage for substantial growth and adoption in the region.
Moreover, factors such as the region’s youthful demographic and significant disposable income further amplify the potential for fintech proliferation and adoption. In essence, it’s akin to a perfect storm of favorable conditions propelling the fintech sector forward in the region.
7. What are your thoughts on the impact and evolution of blockchain and AI technologies, and their potential benefits for various industries?
Honestly, with AI, the applications may often go unnoticed by users. For instance, it plays a crucial role in background tasks such as document scanning, fraud detection, and managing internal ledger systems.
While customers may not directly perceive these applications, they benefit indirectly through increased platform and company efficiency. This efficiency translates into reduced costs for manual services, which can then be passed on to the customer, ultimately benefiting the entire industry.
From the customer’s perspective, AI holds promise in enabling access to vast amounts of information with just a simple prompt. This will likely lead to improved investment opportunities and enhanced information consumption capabilities. Although these advancements may not be fully realized yet, the future holds exciting possibilities.
8. What are your strategies for expanding Baraka into new geographical regions?
We currently have plans for expansion, with several opportunities under consideration. Presently, our operations serve the wider region from our headquarters in the UAE, operating within the regulatory framework of the DFSA within the DIFC.
Our customer base primarily comprises individuals from the GCC who discover our app and choose to onboard with us. While our presence is currently limited to the UAE, we are actively exploring opportunities for expansion throughout the broader region.
9. Can you share your experience with the Dubai International Financial Centre (DIFC) regarding its support for startups and ease of incorporation?
One of the remarkable aspects of DIFC is that they genuinely have world-class infrastructure. From the seamless incorporation process to the meticulously designed portal for managing visas, payments, and other essential licensing and office-related tasks, every aspect is executed with excellence.
The physical infrastructure, including office spaces, retail areas, and restaurants, contributes to fostering a highly conducive work environment. This exceptional setup not only aids in attracting top talent but also plays a crucial role in retaining them. Consequently, individuals from across the globe are drawn to Dubai, and by extension, to opportunities with Baraka, owing to the exemplary infrastructure provided by DIFC.
10. How do you think the Web Summit Qatar is influencing the narrative and dynamics of the tech industry in the Middle East region?
I believe events like Web Summit are incredibly impactful. They serve multiple purposes, the first being that they attract individuals who are keen to kickstart their own ventures.
By listening to the experiences and insights shared by fellow founders and business leaders, attendees often find themselves inspired and motivated to pursue their entrepreneurial dreams. This inclination towards entrepreneurship is undeniably beneficial for society, as it fosters the creation of more businesses and subsequently, more job opportunities.
Secondly, events like these serve as platforms to showcase the abundant talent and opportunities within our ecosystem. Visitors from abroad often leave with a newfound appreciation for the thriving entrepreneurial landscape they’ve encountered.
They witness firsthand the innovation and dedication of individuals building real businesses, all within a supportive environment buoyed by factors such as economic growth and a youthful demographic. This exposure helps solidify our position as a vibrant and promising hub for innovation and enterprise.
11. What advice do you have for aspiring entrepreneurs in the MENA region looking to build a successful venture like Baraka, especially regarding getting started and overcoming common challenges?
Everything must be meticulously planned, but in reality, it rarely unfolds that way. People evolve, they pivot, and opportunities emerge as ventures progress. You may set out to develop a product for one purpose (X) and end up with something entirely different (Y) – and that’s perfectly okay. There is no scoreboard tracking your journey from start to finish; what truly matters is the process itself.
Numerous founders have embarked on one path only to veer off in another direction. The essence of the journey lies in its unpredictability and the growth it facilitates. To aspiring entrepreneurs, it’s important to understand that having the perfect idea or flawless execution isn’t paramount.
What truly counts is the wealth of knowledge gained along the way, which often surpasses what you initially bring to the table. You’ll iterate countless times, adapting and learning as you go. Ultimately, taking that initial step is what matters most.
12. Can you share insights on how aspiring entrepreneurs should approach fundraising, including when to start and how to navigate the process effectively?
First and foremost, it is crucial to emphasise that the primary objective should always be building a solid business, not merely focusing on fundraising. Start by establishing a business with strong unit economics and tangible value. Ensure that the numbers add up, the scalability is evident, and there’s a well-defined plan in place. Once this foundation is laid, approach the appropriate investors.
It’s essential to understand the different stages of funding and which type of investor is suitable for your current stage. Many young founders overlook this aspect and fail to tailor their approach accordingly. Some venture capital firms specialize in seed or pre-seed funding, while others focus on Series A or pre-IPO stages. Knowing whom you are addressing is paramount.
Secondly, execution is key. While revenue and other metrics may not be immediately decisive in the early years, investors look for progress. Present a clear vision and a meticulously crafted plan, then diligently execute it. Demonstrate measurable achievements within the specified timeframe to instil confidence in potential investors.
Lastly, persistence pays off. Even if investors initially pass on your proposal, continue to update them on your progress. Showcase the milestones achieved since your last interaction, as this demonstrates your commitment and ability to deliver results. Remember, there’s always capital available for promising businesses that demonstrate potential.
Last Updated on March 22, 2024 by Safiya K
