For growing technology businesses all around the world, the US represents something of a holy grail – it offers a huge target market with sophisticated consumers and business that are ready to embrace innovation. But when foreign companies set up shop on American shores, they’re often shocked by the workload involved in complying with tax and regulatory filing requirements. Indian start-up Inkle, which is today announcing the completion of its first funding round, thinks it can help.
The launch of the business, explains founder Anand Krishna, was inspired by his own experience as a non-US business owner setting up a company in the US. “I found every element of tax, bookkeeping and regulatory filing really challenging,” he recalls. “And when I looked for an accountant to help, I couldn’t find anyone with the right expertise.” His business was too small for the large international accountants to bother with, but the complexities of cross-border transactions were too large for smaller advisers.
Krishna reasoned that if the problem was causing him such a headache, thousands of other businesses setting up in the US must be going through the same pan. His response was to launch Inkle, a chat-based digital accounting platform that gives companies access to specialist expertise as they deal with their cross-border compliance duties.
Inkle is provided through a software-as-a-service platform that enables any business worldwide to put together the filings they need in order to comply with US regulation when running a subsidiary or separate company in the US. Crucially, the service is underpinned by a team of US-qualified certified public accountants (CPAs), who have the expertise to ensure businesses get it right. Each business is able to speak to their CPA in real time through a chat function built into the platform. “It’s a much better solution than sending endless emails to and fro with attachments,” says Krishna.
Krishna, who grew up in the UK but has lived in India for the past 10 years, looked close to home to build Inkle. “It dawned on me that the solution was right under my nose,” he says. “India has the accounting expertise, the engineering expertise, the SSAS expertise and the English speaking skills.”
Inkle’s CPAs work on a contractor basis, rather for than the company itself, with Krishna’s team quality-checking their work. The key thing for clients, says Krishna, is that they have the exact expertise needed. “I’d worked with US CPAs in the past, but the frustration was the didn’t understand the whole cross-border piece.”
Inkle’s focus is very specifically on international businesses setting up C Corp businesses in the state of Delaware, the structure of choice for growing technology businesses, which are typically advised by venture capital backers and other investors to take this route.
“It sounds like a niche market, but the number of these companies has really boomed and no-one is giving them the support they need,” Krishna adds. Indeed, he points to numbers showing that 10,000 non-US businesses have set up US companies on Stripe’s Atlas incorporation platform alone over the past two years.
Inkle founder Anand Krishna
Inkle is steadily picking up a growing share of these businesses, having signed up several hundred technology companies to its service already. Revenues have increased seven-fold over the past 12 months, with Inkle on target to exceed $1 million of sales this year. Revenues come from the firm’s basic monthly subscription costs, which vary by the size of the customer and the level of service they want, plus one-off fees for additional services.
The company’s value proposition is expanding. Its recently launched Inkle Books facility, for example, syncs with customers’ bank accounts in order to support more efficient bookkeeping.
In time, however, Krishna’s vision is of a far larger business. Right now, Inkle serves businesses based all over the world but looking to set up in the US. “Each of these corridors has its own nuances”, Krishna points out, which is enabling the business to build expertise and experience in markets worldwide. Eventually, it should be in a position to support businesses wanting to set up anywhere with their cross border regulatory needs.
Having bootstrapped the business to this stage, Krishna is hopeful that raising money will help Inkle accelerate towards this vision. The business has raised $1.5 million from Picus Capital, Saison Capital and Force Ventures, with the cash earmarked for expansion of the engineering team and the company’s first forays into marketing.
Florien Reichert, managing director of Picus Capital, believes Inkle has landed on a sorely under-served market. “Given the obligatory nature and zero default requirements in accounting, tax and compliance, software tooling is a major customer need and hence also in the current economic climate indispensable,” he says. “With its full-stack SaaS offering Inkle sits at the intersection of customers, CPAs, accounting tools and authorities clearly making workflows more efficient and less error-prone.”