Startups Are Looking Overseas From The Outset

The motivations for starting a business are understandably diverse and complex. In a recent report by the Department for Business Innovation & Skills, over 1,000 global entrepreneurs were interviewed and listed their primary motivations for creating a company. These included:

  • Autonomy & better work: Freedom, flexibility, and better work opportunities.
  • Challenge & opportunity: Personal challenge, fulfilling a vision, opportunities to use existing skills and receiving recognition.
  • Financial motives: Financial security, larger income, and wealth.
  • Family & legacy: Continuing or creating a family business.

While the extent of these motivations will no doubt vary depending on an individual’s desire for world domination, the one trait that was found to be universal among all entrepreneurs is the desire to succeed. Interestingly the research found a correlation between “success”, and a company’s ability for growth. Startups led by entrepreneurs with low growth expectations were more likely to fail.

Technology is enabling faster growth

Before the Internet, the common formulae for startup growth, establish a presence in your own country and encourage expansion by diversifying products, new customer segments, and innovation. Today companies are considering international expansion right from the outset. Barriers that traditionally inhibited early international expansion have been either eroded or eliminated, thanks to recent technological advances.

Long gone are the days of Steve Jobs’ Interpersonal Computing demo having to be delivered to customers by a travel weary sales exec. Worldwide communication and logistical processes are of course much easier today, and the growth achievable through globalisation is an extremely competitive strategy, particularly if your competitors have yet to create a presence in a particular country, or if the local market has become saturated.

A new study from Pew Research Center found that social networks like Instagram, Facebook and Twitter are all slowing down considerably when it comes to adding U.S. based adult users. Facebook, Instagram, and Pinterest had slight increases during 2015, Twitter remained static when compared to 2014 and LinkedIn’s members actually decreased. The saturation of the domestic market is arguably one of the primary reasons why Facebook is looking towards India.

Success stories

International expansion, however, isn’t the solely reserved for large, established companies. One of the most famous examples of startups expanding early is Uber. It started its international expansion only three years after being formed and six years in, the company has a presence in over 60 countries.

Criteo is another notable success story and probably one of the most successful tech IPOs in the last ten years. Criteo originally formed in Paris before expanding to the UK, then to Silicon Valley, Japan, and now they’re a multi-national doing business across the world. Similarly, from its humble beginnings in Sweden, Spotify has the majority of its users in the US and 18 offices throughout the world. While the service they offer played an important role in their ultimate success, the original location of Spotify is likely to have helped define their international plans.

Startups located in countries with a relatively small domestic market are almost programmed to think about global solutions from the very outset. These entrepreneurs arguably have a head start over their US peers, as solely focusing on the domestic audience and trying to re-engineer products years later for an alternative market can be a headache. By laying the groundwork at the very beginning and challenging teams to think about a product’s global limitations can certainly help with international strategies.

This decision to go global however is not always planned. Opportunities may arise because a customer makes an approach from a new market and services naturally grow from there. Whereas a planned international growth strategy is a deliberate intention to acquire foreign customers. However even with the best-laid plans, the speed of growth can often make the process haphazard and it’s imperative to get the timing right.

Timing is everything

Deciding to expand too quickly has its dangers and there are a number of high profile, well document cases of what can happen if everything doesn’t go according to plan. Careful consideration and advice from international experts and those who have been there and done it is an integral part of any international strategy.

The whole world is fast becoming one market and whether you’re selling in China, marketing to the French or closing a deal in New York, it’s often just as easy – particularly for tech-based startups – to generate revenue internationally as it is to do with your home base clientele.

The result is that every startup company now needs to consider every aspect of management, sales, and service on a global basis. The best-placed companies are increasingly international from day one and it may just be the best route to fulfilling your own entrepreneurial motivations.