Timing and scalability are usually recognised as two of the most important factors for tech startups to succeed. In fact, the assumption in the industry is that they might not have revenue, let alone profit, for quite a long time, but they must scale up fast. This is because in today’s globalised world, it does not matter if you are the first to have a bright idea or that you are charging for it, but it is paramount that you are the first to gain market access.
While it is important for technology-oriented startups to develop a sound strategy to protect their intellectual capital, even more important would be to scale up fast and in as many markets as possible. The business environment of today would hypothetically allow two (or more) young entrepreneurs to develop the same idea in two different corners of the world. Those entrepreneurs could potentially create a startup and get the first round of funding, hire staff and start to market their service (or product) in their market of reference. The many innovation accelerators around the world are only making this phenomenon more likely to proliferate.
Another key differentiator is the “execution”, which can be defined as the decisions and activities you undertake in order to turn your implemented strategy into commercial success. To achieve “execution excellence” is to realize the best possible results that a strategy and its implementation will allow. This is why it might be wise for tech startups to always have a savvy and experienced business executive among the management team, somebody with past experience in a large multinational company who knows how “big organisation” actually work.
Unfortunately, to scale up a business in multiple foreign countries is not an easy matter, not even for tech companies which are often online-based businesses. Before you even start, there are many procedures, tax regulations and local compliance requirements to understand. Not to mention the need to hire local staff, in which case, local labor laws will make everything more complex. Other problems will come from local practices, technical standards and specifications, and finding potential local partners or vendors. Moreover, while a large number of foreign-invested online businesses entering new markets may not actually need to hire local employees, open local bank accounts nor have local physical offices to implement their operations in that country, they would still need to follow local regulations and compliance requirements, which might include renting office space, hiring local staff and opening a local bank account. In addition to raising costs, this will also add layers of complexity for management, which may severely impact any expansion strategy.
At Vistra, a global service provider of corporate services with a centralised structure operating across 46 jurisdictions in more than 80 offices around the world, we are in a very privileged position to observe global trends and see what works and what doesn’t. While assisting clients to establish and maintain subsidiaries overseas, we also witness the growing pains that some companies go through, especially when they are not properly advised or try to do everything by themselves. Below are two successful case studies of TECH start-ups which in our view have been very successful in expanding internationally.
Case Study 1: SAM Labs
SAM Labs is an educational technology company that empowers teachers with the most engaging STEAM (science, technology, engineering, arts and mathematics) solution including lesson plans, apps and electronics. The goal is to inspire every student to discover the fun in coding and creating. By combining highly engaging software with intuitive, user-friendly hardware, SAM Labs products help educators teach coding and engineering to children of all skill sets and interests. SAM Labs has partnerships in place with governments and company initiatives such as the City of Helsinki, the UAE Ministry of Education, Microsoft Education, and Intel Education.
The founder and CEO Joachim Horn, a young entrepreneur who graduated in mechanical engineering, founded the company in 2014. Joachim was working in Tokyo when the idea for SAM Labs came to him over a bowl of soba noodles. He wanted to create the technology to help students code and create their own connected devices. Joachim fused his passion for education, design and tech to develop what is now known as SAM Labs.
In November 2017, SAM labs raised GBP 5.1 million in a Series A round led by Touchstone Innovations and E15 Ventures. The company currently employs 28 people in the UK.
Case Study 2: Qardio
Qardio is a tech and life science company launched in 2012 with the inspiring mission of transforming the healthcare industry with simpler, smarter and more effective solutions for everyone. Aware that in today’s world, one in three adults lives with a chronic heart condition, making it very difficult to enjoy a normal life without compromising your lifestyle. Founders of Qardio, MP and RI, decided to change that by creating Qardio. Today, Qardio revolutionises personal health monitoring by bringing innovative technologies, high-end design and exceptional user experience to the medical industry.
Between November 2012 and December 2013, from their base in Amsterdam, Qardio raised its first 1.9 million dollars. This allowed the company to establish their current headquarter in San Francisco and to open an office in London. By the time the business took off, with B2C sales at Apple stores, the company also opened offices in Hong Kong, Sydney and Shanghai. The company currently employs 80 staff globally.
Tech startups are cool. They are also changing the world as we know it. Every industry is getting affected and sometimes disrupted and this trend is accelerating. While most of the biggest and well-known tech players are developed in the US, several large players are now expanding from China, such as WeChat (messaging, social media and online payment), Mobike (shared bikes), Tmall and JD.com (e-commerce). However, we can expect the playground to expand as a new wave of innovations sparkle from around the world. Whether they will be able to expand further than their home country and rise to worldwide fame will remain to be seen.
Fonte: a cura di Exportiamo, di Rosario Di Maggio, Director of Business Development presso Vistra Shanghai, firstname.lastname@example.org
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