Egem Eraslan’s resumé isn’t typical of a fintech founder. The CEO of Turkish investment app Midas, which last month closed the largest fintech funding round in the country’s history, didn’t get his entrepreneurial start in banking, tech or any other adjacent industry. Instead he got it running a school.
While working as a software engineer at US office retailer Staples, Eraslan’s brother called him about financial troubles with a construction project for a school funded by their grandfather. Eraslan flew back to Turkey to take charge of the building, and grew it from a small kindergarten into a large school with more than 1,000 students.
As principal of the school, he ended up running operations, finance and HR and spent time creating recipes for school lunches and running the bus service. And after five years, he took over full ownership.
“We didn’t have much money, so I basically did everything,” he tells Sifted. “Investors don't realise how much you have to work to turn a tiny kindergarten into a big K-12 High School.”
‘I think every single potential person who had money in Turkey rejected us’
Eraslan started experimenting with AI models for stock prediction in his spare time, and says he noticed how inefficient the available stock trading services offered by incumbent banks were. That’s when he set out to build Midas, which he founded in 2021.
The company struggled to raise in its early days. Eraslan recalls struggling through meetings with international investors; he could “barely speak English” back then, he says, and ended up flunking a meeting with Sequoia.
“I was extremely unprepared. I didn't know any of the words that they were using, so I would take notes on the side and Google what they were talking about to try to answer,” he says. “It went horribly.”
VCs also saw his lack of tech experience as a red flag. Bek Ventures, which has invested in 13 startups in Turkey, initially passed on Midas’s pre-seed round as it was sceptical of the company’s potential before eventually taking a stake in the fintech.
“I think every single potential person who had money in Turkey rejected us,” Eraslan says.
Eventually, he got a call from one of the founders of Spark Capital, who knew him through his background in education, which led to a $4m investment. “That’s what took us from the early beginning to really starting the company,” he says.
It wasn’t until 2022 — when Midas began offering Turkish equity trading — that things really took off. Net revenue increased tenfold between 2022 and 2023, and more than doubled in the 12 months after that. A Midas spokesperson told Sifted it was unable to disclose exact financials.
Today, Midas provides more than 3.5m users with access to Turkish and US equities, mutual funds and cryptocurrencies, and has raised over $140m from investors such as QED and Nik Storonsky’s QuantumLight — which includes its $80m Series B raised last month.
Navigating Turkish regulation
Midas’s growth has secured its place as one of Turkey’s breakout fintechs. Others in that bracket include payments fintech Sipay, which raised a $78m funding round just shy of a unicorn valuation in April this year.
Turkey’s fintech scene has managed to blossom despite the strong lobbying power of incumbent banks and the country’s history of sky-high inflation rates, which make it harder for fintechs to roll out traditional financial services such as lending.
One of the reasons for the sector’s success is a high level of fintech penetration, helped by a highly digitised banking sector and a population of 86m — around 25% larger than the UK.
The past year hasn’t been without its challenges, and regulators, such as the country’s central bank, have been cracking down on malpractice.
The founder of Papara, a consumer financial superapp equivalent to Revolut which says it has over 20m users, was detained over suspected money laundering and illegal betting operations, according to reports in May this year.
“That investigation is still ongoing so I wouldn’t be able to comment on that,” Eraslan says. “But there are definitely business models that have been abused in Turkey, and the regulator is well aware of that.”
Eraslan says Midas works to be as transparent as possible with the country’s regulators and has been in active dialogue with them about its business model, which sees it charge zero commission on users trading Turkish equities — similar to the model deployed by US rival Robinhood — and has been a big part of its popularity.
Midas makes money by offering specialised trading products such as margin lending, the practice of borrowing capital against the value of your portfolio. It also has plans to introduce derivatives, financial products enabling traders to speculate on the future price of an asset without owning it directly, which it’ll charge a percentage-based fee on top of.
Midas also charges a commission on US stock trades, which contributes significantly to its revenue, says Eraslan. (Midas wouldn’t disclose exact percentages).
“Our current strategy is to win the active trader market, focusing on high value customers,” he says.
To further cater to the professional trader market, Midas is planning to add 24 hour access to US markets five days per week, and build out its crypto offering. This includes access to products in decentralised finance, financial products built on blockchain technology and crypto staking, the process of locking up crypto to help run a blockchain and earn rewards.
Eraslan says Midas also has long-term plans to serve everyday financial needs too, with the hope of replicating the superapp model of Revolut. Other European investment platforms such as Trade Republic and Scalable Capital have also pushed into banking services in recent years.
“In three years, I want the majority of people in Turkey to use us for their financial needs,” he says. “That’s our mission.”
