How Georgian fintech conquers Indian and Philippine markets. Interview with Kernel co-founder

Kernel is a Tbilisi-based developer of a platform with invoicing and financial tools for small businesses and freelancers. This fintech startup has already acquired more than 45,000 users in Georgia, the Philippines, and India. At the beginning of June, Kernel raised $30,000 at a popular pitch show in the US called Shark Tank.

AIN.Capital talked to Beka Dalakishvili, co-founder and CEO of Kernel, about the startup’s idea, product features, and ambitious plans that include further digital financial tools development and scaling into Pakistan and Nigerian markets.

What is the idea behind Kernel? How did you come up with it? 

Kernel is a simple invoicing and financial tools platform that helps small business owners digitize day-to-day operations, automate business processes, and exchange information with accountants.

Interestingly, the idea of ​​Kernel arose from my own needs about two years ago. I am a financier. I have consulted for hundreds of small businesses and worked with dozens of accounting teams. At the time of founding the startup, I was in charge of the financial department in one of the holding companies and faced the problem of communication and information exchange between the holding companies and accountants. Small businesses face so many challenges that the idea we created to solve our own problem gradually turned into a startup idea.

As it turned out, Georgia is not the only developing country with similar issues. We started researching and found that the problem is much more pronounced in large, developing countries: the Philippines and India, where the government is encouraging businesses to become digital in light of revised tax regulations. However, it is also interesting to note that no simple invoicing platform was found for these markets.

Along the way, we obtained several significant grants. We added a lot of effort, work, and enthusiasm, which led us to a flexible, stable platform today and even to enter international markets.

What kind of pain points does the startup cover?

For non-financial managers / small entrepreneurs, financial management is challenging; assessing the business’s financial condition at any time and controlling customer debt is a prerequisite for making the right decisions. Still, unfortunately, small businesses do not have the luxury of having separate finance departments. In addition, gathering reliable and complete information or documentation for accountants is always a headache, but it is necessary for tax returns and preparing reports. Consequently, inadequate accounting information and the mechanisms for exchanging this information pose a problem for both businesses and accountants. It was to solve these problems that Kernel was created.

Switching to digital platforms is a long and painful process for those who manage their finances using traditional methods. We have faced these challenges in India and the Philippines as well. At the moment, we are actively trying to facilitate the digitization process and appropriately benefit consumers, so they can better evolve.

In addition, the frequent need for dialogue with locals has posed significant difficulties. Getting Indian and Filipino customers interested in cooperating with us was challenging. This was also mainly due to the cultural gap, which made us realize that we need to better get to know the locals’ culture and values to communicate with them more easily. We are already working on this challenge with an international team in India and the Philippines. Local representatives help us in collaborating with potential customers.

Tell us please a bit more about your product. How does it work? 

Kernel’s main advantage is GST-compliant invoicing, which simplifies the lives of our customers. In addition, with the help of Kernel Tools, you can:

• Choose from professional templates — Invoice with style;
• Set up automated reminders for overdue invoices;
• Create recurring invoices;
• Create invoices in multiple currencies;
• Manage all your customers in one place-save their information and keep a customer base;
• Control the payment statuses of all your invoices in one space;
• Use insightful reports.

Who are your target customers? How many customers Kernel has already acquired?

Our target customers are small business owners who need a simple invoicing platform to support their accounting processes. Our target market currently includes Georgia, India, and the Philippines, and the number of users is already over 45,000.

What is Kernel’s business model? How do you monetize the service? 

This time, we are guided by the SaaS business model, which means that the company generates income by selling digital products. Packages are made up of three types of subscriptions.

• We also have Freemium, which means the user can use the trial version of the premium package for one month to judge how much the product is worth buying.
• It is essential to mention the so-called Custom solution, which is intended for Enterprise level users.
• We also offer customized solutions to companies with different/additional needs to use our platform better.

For example, our customers in the Philippines will soon be able to receive payments from their clients directly through our platform to their accounts and e-wallets. The transfer fees will be an additional source of income for us. In addition, we are working on alternative sources of income by building integrations, partnerships, and various banking services on our platform.

Kernel plans to spend the $30,000 investment it raised at the Shark Tank show to develop its product in the Philippines and India. Why did you choose these markets? 

The Kernel team plans to use the investment to cover operating costs and product development in the Indian market, which will be reflected in the refinement of the mobile application.

The Indian market holds great promise for us, as we target a wide range of customers there. The digitalization process has started in India, and we want to help in this process with our simple invoicing system.

What else will you spend the proceeds on? What are your future plans?

It is a priority for us to get a firm foothold in whichever market we enter and only then think about expansion. Therefore, in 2022, we will devote ourselves to strengthening our positions in India and the Philippines, taking advantage of the market, and refining our products.

Our goal is to become the simplest, customized, and most effective financial management platform for small businesses and freelance accountants in the Georgian and international markets. Based on this big goal, we are now working on several important issues, and our future plans are divided into three main directions:

1. Product development, which in turn is divided into two subcategories:

Integrations with partners. Accounting programs, payment systems, banks, tax systems, etc., which will allow our users to automate business processes as much as possible.

Adding additional functionality. Soon, our customers will be able to use the Kernel mobile application, which will allow them to issue invoices anytime, anywhere, and perform any invoicing-related operations even more easily through their mobile phones. We have already launched the mobile application for the Philippine market, which will soon be offered to the Georgian and Indian markets as well. In addition, we plan to add a cost module, and we are also going to develop the payroll system in India and the Philippines, which we already have in Georgia.

Ultimately, we are creating a kind of operating system for small businesses that will allow them to fully digitize their business processes and automatically exchange this information between different business functions and programs.

2. On the other hand, business development:

We are primarily focused on effectively tapping into the huge Indian market, where customers face many financial, accounting, and tax challenges. At this point, we don’t know where to start solving these problems, which will be the fastest path to success and create the most value for customers. We have standardized the process in Georgia and the Philippines. We know the market well and users’ needs, and we will soon offer all the necessary functionality. When we reach this level of standardization in India, then we will think about other countries: Pakistan and Nigeria.

3. Finally, our launchpad product is an electronic invoicing system that allows us to get feedback from our customers and understand their wants and needs.

The Kernel team believes that exchanging information and receiving user feedback is the best way to develop. Therefore, we decided to refine and expand information platforms and provide non-financial audiences with helpful information in an understandable language — financial advice that will help them or their business develop.

Accordingly, our goal is to add innovations to Kernel’s digital financial tools based on customer demand and needs and tap into new markets. Also, our next step is to develop the expense module and make the Kernel a platform where small and medium businesses can do routine business operations in the shortest possible time.

We have already started integrating financial services into our platform and will offer complete banking services to Kernel users by the end of this year.