Midas — making investing accessible to the masses in Turkey and beyond
At Earlybird Digital East, we are delighted to announce that we have invested in Midas, the mobile investing app that lets retail investors trade US and Turkish stocks. We have co-led the $11m seed round along with Spark Capital, with participation from Nigel Morris and Revo.
Midas lets its users invest in US and local stocks with a modern, mobile-first experience that eliminates the typical hassle of accessing local and foreign stock exchanges. This business model is a well-proven one that has created large companies globally, such as Robinhood in the US or Trade Republic in Germany. As the first and only fully-digital stockbroker in Turkey, Midas operates with a vision that blends the best practices learned from these giant players with a business strategy fine-tuned to local market trends and needs. Offline and online dynamics are extremely favorable for fast growth; emerging market users are historically known to underutilize financial instruments (i.e. organic market expansion) and online customers are underserved by unsophisticated/traditional tools (i.e. easy to win market share). On its way to becoming a comprehensive wealth management platform, Midas has also been investing in its B2B modern trading infrastructure to address deeper problems faced in its target markets in order to make investing available to the masses.
“Offline and online dynamics are extremely favorable for fast growth; emerging market users are historically known to underutilize financial instruments (i.e. organic market expansion) and online customers are underserved by unsophisticated/traditional tools (i.e. easy to win market share).”
An unusually untapped large market
There is no need to explain the trends that led to the rise of modern stock trading apps; demographic shift, a negative real interest rate environment, the strong performance of stock markets, increasing UI/UX expectations of consumers among others, exacerbated by incumbents’ inability to respond to shifting trends. The size of the resulting market opportunity has already been proven by the likes of Robinhood. Actually, here is why we believe this model presents an even more attractive opportunity in developing markets.
While US households invest almost 40% of their financial capital in equities and around 20% of European consumers’ savings are invested in the stock market, the figure stands at only 7% for Turkey, with just over 2 million brokerage customers in a population of 84 million. However, while the adoption of stock investing is low, Turkey boasts a very high digital banking adoption rate, with more than 70 million unique digital banking accounts, meaning a large number of people are already acquainted with digital fintech products. But these accounts are distributed among a number of traditional banks that don’t offer easy access to stock investing to their customers. On top of these, the risk of inflation and volatile local currencies increase the demand for foreign currency-based assets. Also, some popular US company shares are even more expensive for consumers in developing countries without the ability to buy fractional shares. All of these factors combined mark the sheer size of the market opportunity for Midas.
Large emerging markets remain out of reach for US companies due to their high barriers to entry for foreign players — this model requires trading platforms to have a strong local presence and execution capabilities, to obtain operating and financial permits from local regulatory bodies, and to connect to local stock exchanges and banks, all of which can be quite burdensome. Setting up the right infrastructure with connections to relevant local bodies is also crucial. In addition, the ability to provide local support to retail investors is also important, both from a branding and a customer experience perspective. Such local requirements play into the hands of regionally-focused players like Warren (LATAM), Ajaib (Southeast Asia), and of course, Midas.
Becoming the de facto platform for investors in the region
After onboarding a critical set of customers and perfecting the overall stock investing experience offered by its app, the natural next step for Midas would be to target customers in other underserved geographies. By adding advisory features and, consequently, more asset classes including options, ETFs, commodities, and cryptocurrencies, we believe Midas can become a comprehensive wealth management platform and the go-to investing infrastructure layer in its markets.
We are impressed with what Egem and the top-class team at Midas have achieved with limited resources so far, and we’re thrilled to partner with a group of experienced investors in this round, and support Midas on their journey to becoming the de facto fintech platform for retail investors and other financial institutions in Turkey and beyond.
Learn more about Midas or follow them on Twitter
Written by Mehmet Atici and Oguzhan Ozer
