GXP Summit: When should startups expand overseas?

When should startups and scale-ups move into overseas markets? Relocate Global garnered the expert opinion on how startups can begin to expand globally at the GXP Summit's Innovate Abroad sessions.

What are the keys to ensure that a global business expansion is successful? When is the right time to do so? The Global Expansion Summit in London set out to demistify the questions around global expansion."First of all, you absolutely have to have product/market fit," Paul Fifield, serial entrepreneur and current Chief Revenue Officer of UNiDAYS said in a panel on US expansion and fundraising."You need to make sure you have a product or a service that is actually working, that you're getting customers. And when you're thinking about international expansion and specifically the US, there's a reasonably favourable visa system in that you can go over and spend three months there. There's a lot that you can do selling into the US and building your business before you actually make the investment to physically be there."

Global demand drives business expansion

Dan Glazer, who leads the US Expansion practice at the Silicon Valley-headquartered law firm Wilson Sonsini Goodrich & Rosati, added, "I think that's something that we've seen, that the most successful companies that go there are the ones that are actually pulled into the US, rather than the ones that stand up and say 'right, we're going to tackle the US!' If you're pushing it rather than just having an open door because clients or customers are asking for it."Mr Glazer's comments were echoed by several attendees. "For us, a crowdsourcing site for legal cases, the US is always going to provide. It's a natural fit," said Jo Sidhu, Head of Legal & Partnerships, CrowdJustice. But that didn't mean they powered in cold. "It happened at a time after we were getting lots of emails from people asking, 'when are you going to be launching in the US?' That's really what pulled us."

Web-based distribution a key driver to global expansion

Saalim Chowdhury, Entrepreneur in Residence at venture fund and seed accelerator 500 Startups, reframed the entire issue around customer demand in a fireside chat on going global. "I think the real question is, 'when do you respond to your customers looking in from abroad?'" he said."The reality is if you're doing well in your own country in this day and age, where we have web-based distribution, you will get enquiries from other markets. That's what we discovered at my last startup, and that's what we see across a large number of 500 Startups companies."If you do something awesome in one country, people from other countries will want it. You've got to do your analytics because they may not reach out to you, but if you find that all of a sudden you have a high penetration from people of a certain country, guess what that's telling you? That 's telling you that you should be trying to serve those folks. If they start contacting you saying, 'can we get your service in our country?' then nine out of 10 times the answer is yes, you can."Because here's the big difference between most start-ups these days and the environment 10, 15 years ago - it is so much easier to trade in other places. The timing is customer demand. As a founder of a start-up you are a servant to your customers, not the other way around."
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What are the barriers to international expansion?

During a venture capital panel David Lee, Chief Financial Officer of private plane chartering startup Stratajet, urged companies to take a structured approach. "There are many barriers to going international," he said. "The big one for us is, don't go too soon. There's a global market, global opportunity, it gets investors excited, but you also have to remember that going international has a significant cost. It takes time, it takes capital, it takes management, organisational bandwidth, and actually making sure that you're not doing too much too soon is, I think, critical. The world's a big place."Asked to expand, he went on, "We've been taking the Crossing the Chasm methodology to international growth. It's a book about how to grow disruptive products into marketplaces. We've been following this methodology which says that when you're working in a fast-paced environment fuelled by ambitious entrepreneurs you have to make sure that you have the right focus, patience and discipline in terms of your growth strategy."The Crossing the Chasm methodology is about focusing on the areas that you can win, and when you win you can focus on the next area. You grow from the core. You don't just grow by scattergunning 12 markets at once and, especially at a global expansion conference, it's important to remember to pick the battles you can win, one after the other, and then move on. Don't just think you can take over the world overnight. So I think my message as to what the barriers are is internal capacity, so that you don't overstretch."
Fiona Murchie, Relocate Global’s managing editor, was moderator and chairperson of the Global sourcing, Logistics and Mobility sessions at the Global Expansion (GXP) Summit in London.
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