For many Georgians, India may seem like a distant land, but in the realm of business, it feels quite close to home. Understanding the vastness of India is a challenge, especially for a nation as compact as ours. But there’s a familiarity in India’s current phase. We’ve walked in those shoes. We’ve faced corruption, navigated chaos, and braved uncertainties. We’ve watched rapid transformation unfold and, no matter how daunting, we believe in change.
Today’s India is not just about call centers or Bollywood. It’s a budding powerhouse with over 60 million small businesses and a staggering 100 thousand startups. MSMEs are the stars of India’s economic landscape. They’re crucial as India aims to shift from a $3 trillion to a $5 trillion economy. However, there’s a catch. A huge $500 billion finance gap holds these businesses back. This gap, essentially, is the chasm between the financial help MSMEs need and what they get from official channels.
For India to unlock its full economic potential, bridging the financing gap for MSMEs is imperative. This calls for enhanced and innovative strategies from both the government and financial institutions, focusing on digital integration and data utilization. And guess what? A familiar Georgian face is now at the heart of this movement. Enter Kernel, a startup that once dreamt of easing financial burdens for these MSMEs. Today, their dream has grown bigger and bolder.
And who’s leading this exciting journey? Our very own Kernel, with Giorgi Tukhashvili as a leader, who recently became the CEO of the company. We grabbed a moment with Giorgi for a chat to explore Kernel’s new adventures, challenges, and the bright future ahead.
Giorgi, can you set the scene for us? What’s the current vibe in India? What’s the market saying?
Giorgi: Sure, let’s break it down.
We are at a truly unique moment in India. As India stands on the brink of becoming an economic superpower, some even predict it could surpass China within the next decade. As it drives towards its goal of becoming a $5 trillion economy, the key challenge and opportunity lie with MSMEs. Despite being significant growth drivers, a staggering $500 Billion gap in access to formal finance persists for these businesses. The Indian government recognizes this, and there are efforts to bring reforms, but the scale of demand is massive.
Add in the government’s push to get things more, you know, official, like with this GST thing (that’s India’s new digital tax system), and it’s clear these businesses are super hungry for credit. And this isn’t just an “India thing.” Places all over the Global South are feeling the same pinch. That’s why for companies like Kernel, it’s like standing at the edge of this incredible opportunity.
In short, while there’s immense potential and growth, there’s also a pressing need to support these businesses financially to ensure they thrive. This mix of opportunity and challenge is what makes the Indian market incredibly exciting right now.
Over the years much has changed in your vision as the startup. Can you give us a snapshot of where you stand today and the direction you’re headed in?
Giorgi: You know, when we kicked things off, it was all about making financial stuff simpler for small businesses, mostly around their bills and taxes. But man, did we learn a lot on the go! Our heart was in the right place, but some of our moves? They needed a bit of tweaking.
So, diving into the whole SaaS thing, we hit some roadblocks. First, there were just too many players in the field, making it hard to stand out. Then, despite our offerings being pretty affordable, it was a task getting customers on board—lots of back and forth, you know? And, oops, we might have overthought how much these businesses were struggling with the new tax rules.
Our heart and purpose were always in the right place – to empower the growth of MSMEs. But our vision? It needed a bit of tweaking.
But hey, every stumble showed us something new. And while we were digging deeper, we stumbled upon this massive, glaring issue: A FREAKING $500 BILLION CREDIT GAP! These businesses just weren’t getting the financial help they needed.
SO! We swallowed our pride and cooked up a new vision (the old one didn’t go away, it was incorporated into the new one). Now? Our aim has shifted a bit. We want to be the bridge, helping these small businesses get access to financial resources. Our current vision is to bridge this chasm between India’s MSMEs and formal financial institutions. By helping these enterprises align with tax regulations, we’ve gained invaluable operational and financial data.
Our strategy is to address the pressing need for micro and small enterprises to comply with tax regulations. We’ll offer an app designed to assist businesses in staying compliant with governmental regulations. However, the real value proposition for us lies in using the app to gain access to detailed financial and cash flow data. This insight will enable us to identify the most suitable candidates for lending. With this unparalleled data set, we can underwrite transactions that many wouldn’t dare due to a lack of comprehensive financial information.
We are converting data into tangible loan opportunities!
You’ve recently stepped up as Kernel’s CEO. What sparked this change?
Giorgi: The decision was strategic. With our focus now on bridging the finance gap, my experience in loan digitization made me a natural fit for the CEO role. Beka, with his rich expertise in banking and finance, has become the COO. Our combined strengths will propel Kernel toward our renewed vision.
With this renewed focus, how do you envision Kernel’s journey, especially in the Indian market?
Giorgi: You know, while India’s right at the heart of what we’re doing, we’re not stopping there. The challenges we’re addressing in India? Loads of countries in the Global South are grappling with the same issues. So think of our work in India as a sort of pilot episode. If we nail it here, we’ve got a playbook to roll out globally.
Now, as we’re reshaping our game plan, it’s a mix of big dreams and solid plans. We’re teaming up with some amazing partners, and guess what? In the next few months, we’re sending a crack team to really get under the skin of India. Dive into its cities, its villages, and really understand what’s up.
We’re gunning to change how small businesses get their hands on money. We’re digging deep into cool tech like electronic KYC, looking at different ways to decide who gets credit, and thinking out of the box on how to bring in customers.
We also see the beauty in India’s age-old lending system – it’s built on trust and community ties. So, we’re trying to bring that warmth and trust into the more formal world of banking. We’re not just offering money; we want it to feel right for these businesses.
And here’s the big picture: 2024. We’re not just making plans for the here and now. We’ve got our sights set on the huge possibilities a few years down the line. The way we see it, we’re not just riding the wave – we’re aiming to be at the front, leading the charge.
Kernel? Yeah, we began with a dream, a simpler one. But now? We’re dreaming bigger, pushing boundaries, and aiming to shape what’s next. It’s been a wild journey, filled with lessons and adventures. And what’s coming up next? Trust me, it’s looking pretty darn exciting.
