Startups often enter global markets much too late. By the time they get there, they are facing local "copy cat" versions of their own products that are already entrenched. How can startups accelerate their international expansion without consuming too many resources?
Unlocking the Power of ChatGPT and AI in Testing - A Real-World Look, present...
How to take your startup global now
1. How to Take your Startup Global NOW!
James F. Ryan
Managing Partner
Farpoint Ventures LLC
www.farpointventures.com
2. The Need
There are many startups who have
developed excellent products but
struggle to bring those products to
the global market quickly
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3. The Costs of Delay
Opportunity Cost
• The longer you wait to enter global markets, the more lead-time you are
giving to your competitors.
• In an interconnected world, news of successful US startups travels around
the globe instantly. If you delay too long going to global markets, you may
find yourself competing against local “copy-cat” versions of your own product
when you finally do enter these markets.
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4. The Benefits of Being Global
More Revenue
• The most obvious reason to enter new markets:
New revenue streams that may not even be in the
business plan
Diversification
• Having 100% of your revenue coming from a single country puts you at
catastrophic risk should that country experience an economic downturn
Process and Product Improvement
• Certain markets, such as Japan, have such high quality standards that simply
doing business there greatly improves the quality of your product and your
processes
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5. How to Go Global?
Try to hire a “VP of Sales”
• Difficult to recruit the best talent to
small startups
• Candidates with global experience
demand high salaries
o $350K or more in salaries and commissions
o Add another $300K/year in travel expenses
• Risks
o Difficult to find someone who is experienced
in every market around the world
o Even the best candidate on paper may not
deliver the revenues in reality
o Even you do find a great VP Sales, there’s a
limit to how much one person can
accomplish
o The opportunity costs of pinning your hopes
on a VP Sales for 12-18 months are
enormous
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6. How to Go Global?
Engage “Market Entry Consultants”
• They all claim to be the best, how to choose the right
company?
• These companies often represent tens or even hundreds
of products—how can you ensure they work hard for
you?
o Pay them only on success?
o Companies who pay a retainer will
take priority
o Pay them a monthly retainer?
o They will still only focus on your
product if they think there
is significant upside
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7. Partner with a Global Player
In a perfect world…
• Negotiate an OEM or licensing agreement with a US-based global player
• They take care of sales, logistics and technical support; you sit back and collect royalty
checks
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In the real world…
• OEM and licensing agreements can take 9-12 months to negotiate
• Negotiations eat up enormous amounts of executive staff time
• Legal fees can be hundreds of thousands of dollars
• After signing, the partner may not focus on driving sales of your product through their
sales force, meaning you will still have to mount a sales effort within the partner
company to engage and motivate their sales force
• Large multinational companies have disjointed organizations; it’s entirely
possible that another division of the same company has signed a similar deal
with your competition!
8. Thinking Outside the Box
Discussion:
Are there novel ways to bring your
company to global markets that
address the shortcomings of the
traditional strategies mentioned
above?
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9. Thinking Outside the Box – One Idea
Turn your Liability into an Asset
• The problem:
o “The inability to penetrate global markets effectively is a liability to my company.”
• However, put another way:
o “The global revenue potential of my product in yet untapped markets is a very valuable
asset.”
• Your problem is an asset
o Why should you be spending your precious capital paying a VP Sales or consultancy to
bring you to global markets?
o Shouldn’t they be paying you for the rights to to sell your products in global markets?
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10. One Idea - Exclusive Licensing Deals
Exclusivity is extremely valuable to local players
Exclusivity in overseas markets that you weren’t targeting anyway is a
relatively low cost asset
Dealing with a single player is easier
Offering exclusivity gives you the upper hand in negotiations. You can require
the partner to:
• Pre-order and pre-pay for a fixed amount of product to cover your start-up costs
• Pay for localization, local regulatory approvals, translation of documentation, etc.
• Purchase a minimum number of demo units and maintain a training/testing lab
• Commit to marketing expenditures, dedicated headcount, training, etc.
• Commit to SALES QUOTAS
o If the local partner fails to meet the sales quota, they have to purchase the difference
or lose their exclusivity
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