Why we invested in Sarwa

by Rawad Khalife

Despite numerous crises, wealth growth has proved to be particularly robust, bouncing back every single time. Today there is more wealth in more hands and over the past 20 years, personal financial wealth globally has nearly tripled to cross $226 trillion lately¹.

In the GCC, personal financial wealth crossed $2 trillion in 2020: while banks have traditionally targeted HNWIs through their wealth advisory divisions, there is a significant gap left in the less affluent segment consisting primarily of young working professionals and that accounts for nearly $1 trillion of personal financial wealth.

Historically, many individuals regionally used to fund savings accounts and invest in the real estate market. But with an environment of sustained low interest rates and a housing market that is looking less lucrative, more and more people are looking to invest in the public markets to retain and grow their wealth. This segment of the population is not interested in dealing with physical branches, old-school wealth advisors and high fees as these people expect convenience, ease of access and tech-enabled services (comparable to the well-designed consumer apps that they regularly use).

Sarwa (from the Arabic word ‘ثروة’ meaning “Wealth”) is an investment and personal finance platform democratizing financial investing in the MENA region. The company is announcing today a Series B raise of $15 million and we at MEVP are thrilled to be participating in the round led by Mubadala Ventures.

As the first Fintech to be awarded the Innovation Testing License from the Dubai Financial Services Authority (DFSA), Sarwa initially started with a hybrid robo-advisory (passive investing) approach. With ambitious plans to start offering goal-based financial planning, credit facilities and active trading, Sarwa aims to become the primary money relationship manager for professionals in MENA.

Sarwa as the next-generation investment platform

Despite the unprecedented uncertainties in 2020, Sarwa (with its 40,000+ registered users) was able to quadruple its invested assets. The combination of high recurring monthly deposits with soaring retention rates indicate stickiness that will be further strengthened when Sarwa introduces new product offerings. In addition to dual-licensing by the DFSA (DIFC) and the FSRA (ADGM) in the UAE, Sarwa is in talks with regulators regionally to launch on-the-ground operations across the GCC.

“Traditional wealth management has failed to capture younger demographics in the Middle East” Mark Chahwan (CEO of Sarwa)

More than 40% of the total wealth in the region is estimated to be in cash which indicates that a massive amount of money is just sitting idle in bank accounts and not generating any significant returns. Sarwa’s mission is to remove every single barrier that stops people from investing early and make smart investing accessible to everyone. Sarwa encourages its clients to remain invested for the long term even during turbulent times as it’s been shown repeatedly that people risk losing out big when they try to time the market (stats by the Bank of America indicate that missing out on the market’s 10 best trading days per decade since the 1930s meant the difference between a portfolio gaining 28% over the period or surging a whopping 17,715%!)

Source: Bank of America (BofA)

We’ve known the Sarwa team for many years as we first partnered with them when investing at the early rounds. We’re excited to continue working with Mark, Jad, Nadine and the whole Sarwa crew as they build the next-gen wealth management platform for the new generation in MENA!

¹ Global Wealth 2020 (BCG)

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