One of the companies that graduated from the inaugural round of Dubai International Financial Centre's Fintech Hive has successfully raised $1.3 million from a group of investors to fund its growth.

Sarwa, a company which offers a 'robo-advisor' wealth management service that invests clients' money using algorithms at lower fees than actively-managed mutual funds, has received backing from a number of high-profile venture capitalists including Middle East Venture Partners (MEVP), 500 Startups and Saudi Arabia's Hala Ventures, among others.

The company's co-founder and CEO, Mark Chahwan, told Zawya in an interview last week that bringing in a series of investors for such an early-stage funding round meant this was "a bit of a unique fundraise", but added that each new backer added strategic value.

For instance, he said that 500 Startups was a global organisation that brought with it experience of investing in similar firms, such as Acorns in the United States, while Middle East Venture Partners was the biggest venture firm in the region.

"They've invested in B2C start-ups, a few fintechs, but they want to invest in even more and Sarwa is one of them," he said.

Sarwa, which was only founded in December last year by Chahwan, chief technology officer Jad Sayegh and and chief marketing officer Nadine Mezher, intends to use the funding to achieve a number of goals before it pursues a Series A funding round, Chahwan said.

Firstly, it plans to extend the service launched in February from individual clients to companies.

Chahwan said the idea to target companies was "to encourage employees to save as well, since there's no formal pension to take on that role and (to) help employees really save, given that it's a tax-free environment - to pay yourself first, to save up 10-15 percent every month".

He said that an initial exercise has been carried out with staff from Dubai-based courier service Fetchr, where it held a lunch session at which it explained its basic rules for investing.

“We've tested it a bit to see if there's some interest from corporates to help their employees, and now we want to come up with a value proposition that gives employers preferential rates and allows their employees to feel like they are getting a better deal from their employer caring about their investment,” Chahwan said.

Secondly, Sarwa is currently operating on an innovation testing licence (ITL) from Dubai's Financial Services Authority, but plans to pursue a full licence. Its current licence only allows it to offer its services to UAE residents, but a full licence would allow it to sell its services across the region.

Thirdly, it plans to use numbers to hire more staff. Sarwa has just taken on a new chief compliance officer, Ramitha Liddington, bringing its total employee number to seven, and Chahwan said that it would also look to bring some of the Paris-based web developers it has been working with to Dubai on a pernanent basis.

Chahwan said that although he was unable to share client numbers, the company has attracted more than 1,000 registered users to its site since the February launch. He added that the $1.3 million raised was "a good amount to really prove out the next phase".

"The type of VCs that came in, such as MEVP, typically lead even bigger rounds, so this is a way for them to get to know the business more and have an impact. Really, the goal is for them to be positioned to lead the Series A."

Other investors taking part in the current funding round include its Abu Dhabi-based early-stage funder Shorooq Investments, Dubai's Women's Angel Investor Network (WAIN), Beirut-based venture capital firm Saned Equity Partners and a number of individual investors, including David Gibson-Moore, who is a former chairman of Chase Manhattan's (now JP Morgan Chase) Swiss operations and an ex-executive director of investment banking at Al Rajhi Bank in Riyadh, who is joining the company's advisory board.

In a press statement announcing the deal on Sunday, Sarwa said the deal brought the total amount raised so far by the company to more than $1.5 million.

Wajdi Ghossoub, an associated director of MEVP, said in the statement that it was "excited to take part of the Sarwa story".

"Sarwa is adapting regionally a model that Wealthfront and Betterment have mastered in mature markets and the opportunity is ripe given the large segment of the population that is young, affluent and interested in investing.”

Sharif El-Badawi, a partner at 500 Startups, added: "Sarwa is an excellent startup led by a great management team. We believe in the fintech space and particularly in wealth-management as people keep migrating their wealth online and look for technologically-enabled solutions to manage and build their wealth."

A Robo Report published last month by U.S.-based Backend Benchmarking tracking the 16 biggest managers of robo-advisory funds that they held more than $188 billion worth of assets under management between them.

(Reporting by Michael Fahy; Editing by Shane McGinley)

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