Kernolab raises $1M to help make any business a fintech
Kernolab, the Lithuanian fintech startup that provides agile and highly flexible Banking-as-a-Service, has closed a $1 million pre-seed round led by Lighthouse Ventures. Joining the round was Startup Wise Guys, which has also previously invested in the company earlier this year. The funds will be used to scale the team with an emphasis on high-caliber hires. The larger team will support faster new market expansion, growth in B2B sales, and partnerships.
Fintech has made it easier for financial services to become disseminated outside of banks. These new financial products and services are increasingly moving toward a number of different nonbank venues where people work and shop – online and often via mobile platforms. The rise of so-called embedded finance is an obvious but difficult proposition for many nonbank businesses that are otherwise running their normal operations, but who could benefit from having the ability to offer their own bank accounts, cards, and other services.
Kernolab solves that issue with its out-of-the-box solutions, acting as a bridge between fintech and non-finance businesses, making it easy for these businesses to create and market financial services. The startup’s unique business model allows it to pool the capabilities of different financial services and banking licenses. Kernolab works with license holders, supporting them with technology, and is able to rent their licenses to non-licensed businesses. This alleviates a huge burden in terms of compliance and allows Kernolab to support businesses with the widest range of financial services, regardless of geography or industry vertical, with its middleware solution.
“Financial services can blend into any business that has a potential to optimise its operations or generate additional revenues. A logistics company with drivers all over Europe would benefit from simplifying salary payouts by offering its own bank accounts. Starbucks’ card, for instance, has allowed it to classify customers’ pre-loaded cash as ‘stored value card liabilities’, effectively giving itself a 0% interest rate on a $1.6bn loan. The possibilities are endless and our technology enables any company to benefit,” said Vachtangas Babunasvili, co-founder and CEO of Kernolab.
With the new investment, Kernolab aims to boost business development and grow the core team with a series of high-caliber hires, ahead of building a sandbox environment for product development, which will be Stripe-like in its emphasis on programmer-friendliness and community-building.
“Embedded finance is the next step in fintech and something that can touch almost any business on the planet. The challenge is finding a solution that can seamlessly enable the transition into that next phase of fintech, and with Kernolab we have found that solution as well as the right team to lead it to widespread adoption. If every business will be a fintech in the future, then chances are that they will be working with Kernolab. It took us only six weeks to move forward with this investment,” said Michal Zalesak, managing partner at Lighthouse Ventures.
“Kernolab has created a unique, powerful solution at the perfect time for embedded finance. The possibilities are endless and their technology is completely industry-agnostic. Vachtangas, Natan, and the team have deep domain knowledge not only of the financial industry but also the technology behind it. This combined with their fast traction and ability to execute made it a no-brainer for us to invest initially and continue backing the team moving forward,” said Jone Vaituleviciute, Partner at Startup Wise Guys