For companies founded in small markets, the need to go international is a question of survival. For those based in larger markets, internationalization is usually about expansion and going the extra mile. But if you want to become a category leader—global expansion is rarely optional.

Going international is a challenging task that exposes founders to an array of unknowns. To increase your likelihood of success, many factors must be deeply studied. In this article, we’ll dive into three core aspects of global expansion that you need to get right.

The Right Moment

Many startups go international too early and burn time and resources coming to that realization, with most failing due to a lack of product maturity. Dealing with product-related issues is costly enough, but doing so in a new market and in a different language is twice as hard.

Start your path to internationalization by ensuring you have achieved product-market fit in your home market. Then you can evaluate if there are similar patterns in your target market abroad. Be sure to deeply research your competition and how customers are currently solving their pain points. You need to be sure you can win in that new market, and being superficial in your analysis will cost you.

Next, evaluate if you have the resources to take your company to another market. The amount of resources that internationalization requires can be extreme, especially if you are going to the US where salaries are more competitive and there’s a high need for marketing investments.

If you are not yet certain about product-market fit, you haven’t seen strong traction in your first market, and you’re running low on resources—wait to expand. But if all of these factors are in your favor, then it’s time to choose the right location to begin internationalization.

The Right Location

The first step towards choosing the right location is to refine your definition of markets. Many companies think the European Union or Latin America are the next markets to explore, only to realize (maybe too late in the process) that they are in reality many little markets—each with its own idiosyncrasies. 

Next, it is important to weigh locations depending on the goal of expansion. Are you looking to build a hub of engineering talent, create a place for operations to be trained and dispatched, be closer to customers, etc.? Whatever your mission, this will dictate the new market you choose to explore.

Some other basic questions to consider are:

  • Does the market perceive value in solutions like yours (or in other words, is there ROI)?    
  • Is the market big enough to move the needle from a growth standpoint?
  • When looking at competitors in this new geography, do your offerings have a reasonable chance of winning?
  • Is there a taxation or a commercial treaty situation that could impact your competitiveness in this region?

For our portfolio company, Gecko Robotics, this analysis resulted in choosing a starting country in Europe to operate as the HQ for the region. Amsterdam stood out as a city with a large airport to mobilize their people and equipment, and where the population fluently spoke English to make the transition more manageable for the primarily English-speaking team.

Furthermore, the Netherlands had good tax treaties and was close enough to a customer hub. In the case of this example, the focus of internationalization was on operationalizing the business in a key region for expansion.  

Thoughtfully going through this analysis will ensure you’re only entering markets once you’re prepared. Let’s dive into other factors to consider when determining the right location.

Language and Culture

Although English has become a business language in many countries, you’ll find some international customers are resistant to speaking or using a tool in a foreign language. If you don’t have people on your team who are fluent in the local language, and if your offerings are not properly localized, press pause.

Beyond speaking the language, your employees who will act in the new country must have a deep understanding of the culture surrounding the business environment. Deals can be lost for culturally inappropriate humor, behavior around a dinner table, or a lack of consideration for local values.

Legal and Regulatory Requirements

Legal and Regulatory requirements cannot be underestimated. With GDPR, for example, Europe imposes several constraints on companies that host data within the region. On the other hand, local regulations can bring lots of opportunities if used correctly. Make sure you spend the time and resources to ensure your company is in compliance before entering a new market.

Talent

Make sure you can find people with the skills you need for the region. This usually involves a mix of language, culture, sales, and technical skills. It’s important to understand compensation parameters in the region and alternative ways of hiring a team member. Very often, especially in Europe, many protections make it difficult to terminate a working relationship if it doesn’t work out.

Lead Generation

The last element to consider is how leads are generated in the region and their cost. On one hand, some common practices in the US (like cold outreach) are legally constrained in places like Europe. On the other hand, if you are coming into the US, lead acquisition costs can be much higher. Although the US is a much bigger market for almost everything, competition is heavy, and so is the need for investment in marketing and sales. 

The Right Setup

If internationalization is the right step for you, there are different approaches you can take to get started: use channels, try to serve a new region from your home country, build a sales team in the target location, etc. Many different approaches can work, but regardless of the approach you take—start small, but start solid! 

For Gecko Robotics, this meant starting with an analyst focused on digesting inbound European leads. As the volume increased, they established a partnership with a large European enterprise to use their local infrastructure for broader Go-To-Market coverage. They appointed a dedicated sales manager in the US who supported their European partner in winning local deals. To execute after a win,  they started sending American employees to perform work in the region while they gained confidence that the new market was worth a long-term investment.  

It can be easy to waste resources by prematurely setting up large teams overseas. If it’s your first time in a new region, there is a lot to learn before allocating a huge amount of resources. Don’t try to serve a new region with people who don’t speak the local language, don’t understand the local culture, or don’t know the target market. Even if you start small, make sure you have experience on your side. Be sure you don’t make international GTM a side job. Whoever is working on this initiative should be fully dedicated. 

If you believe the best way to start is via channel sales, make sure you collect enough references and provide this function with all the necessary support, including initial leads, documentation, and products in the local language.

Conclusion

Venturing into international markets is a huge lift for startups. There are a ton of factors to work through with relocating people, setting up entities, local infrastructure, etc. Most companies will underestimate this workload—similar to home renovations, this will likely take twice as long as you think and cost twice as much.

Start small but with a solid foundation, ensuring that your team understands and respects the norms of the new market. With the right approach, going international can open up vast opportunities for growth and enable your company to become a global category leader. 

Before making any moves, be sure to connect with other startups or investors who have done this before—most of them will be happy to share their experience and try to shortcut the painful learnings that might occur.