International expansion shouldn’t be an afterthought to your strategy
At B Capital Group, we specialize in partnering with entrepreneurs with global aspirations. These days, 80% of the conversations I have with our portfolio companies are about their international expansion. With nearly ⅓ of revenue coming from outside the U.S. on average for public SaaS companies, our entrepreneurs know that going global is a must if they want to become market leaders.
In fact, in the next decade, I predict that 75% of private venture-backed companies will drive sales from 3 or more continents as more people realize the opportunities that exist in solving problems at a global scale.
Which leads us to the question I get the most often: How do you develop a successful expansion strategy? Yes, you need a localized product, a market entry plan, a sales playbook. But more importantly, you need to think and act globally as early as possible. Here’s what a global-first mindset looks like, based on my years working with the best operators.
1. Research the global demand and competitors for your product
Going global doesn’t mean you’re launching in multiple markets on day 1, but it does mean you’re thinking deeply about global use cases and customers as you develop your product. A global-first mindset enables you to:
- Learn: By surveying the global landscape, you see more use cases and innovations that can feed into your product strategy.
- Defend: Being aware of all the big players globally helps you stay ahead of potential competitors. A big competitor may not be in your market today, but nothing prevents them from entering the market tomorrow.
- Derisk: Building your product so it can be used globally mitigates the risk that a downturn in any one market will drag down your business.
Grab is the classic example of a company with a global-first mindset. Everyone thought Grab was doomed to fail when Uber entered Southeast Asia in 2013. But Grab astutely predicted Uber’s arrival and fast-tracked the development of a cash payment system that ultimately helped it retain its leader position in the region. More importantly, this system allowed Grab to expand its platform into new services beyond ridesharing.
2. Build expansion into your business strategy from the start
There’s a common belief that you should start thinking about expansion only after you start seeing demand from customers or partners.
I disagree — entrepreneurs who are serious about global growth should have a 3- to 5-year expansion strategy right out of the gates. You should be deliberately choosing when and how to enter a market based on your strategy, not whether there’s a large partner who’s willing to take you into the market.
With a global-first mindset, you’re thinking through the following as you develop your business strategy:
- Revenue diversification goal: By setting a goal that, say, in 3 years, 50% of your sales will come from Europe and Asia, you’ll think about your potential markets, team organization, and go-to-market strategies in a much more intentional way.
- Market prioritization: If some people wait too long to expand, others don’t wait long enough. They try to enter too many markets at once. Understand where your best customers are and find a way to reach them directly. Don’t set up shop in Singapore or Hong Kong if your actual plan is to reach customers in China and India.
- Market entry strategy: Go direct, find local partners, make acquisitions, work with multinational companies…your choices are endless. Ultimately, you want to go with the strategy that will help you capture your market as efficiently as possible.
Take patient health data platform Evidation Health as an example. The company has great partnerships with global brands like Apple and Johnson & Johnson for their groundbreaking studies. To expand, it could have chosen to go into the markets where Apple had a large user base. Instead, the Evidation team is wisely pursuing markets where they can build personalized health programs together with willing local authorities. This is evident through their work with LumiHealth in Singapore to seamlessly connect research and care, accelerating the identification of evidence-supported practices that improve health outcomes.
3. Create clear milestones to guide your execution
Being global-minded means you’re constantly adjusting your execution based on market conditions and new insights. This point may sound obvious but too often entrepreneurs realize their expansion is going off the rails much too late.
Here are two tools to help keep your team on course:
- Realistic milestones for what your team should achieve in 3, 6, 18 months after entering a market. You should be looking at a range of metrics, from brand presence to pipeline, sales, and overall trajectory.
- A good governance and intervention process. Problems are inevitable and you want to create an environment where you’re solving problems together with your local team. Too many companies get this wrong and place tremendous pressure on their in-region teams to fix problems on their own.
Some of you may need to come around to the fact that your metrics and insights are pointing to an exit strategy. It’s a hard pill to swallow, but if you’re not meeting your profitability goals or staying within your resource allocation despite your best efforts, it’s time to pull the plug and double down on your next growth opportunity.
That’s what Ninja Van did in 2015 after entering Indonesia. The team realized their courier platform needed more customizations to succeed in the region. By quickly pivoting to less complicated markets like Vietnam and the Philippines, they bought themselves the time they needed to build critical features, which ultimately helped the company re-enter Indonesia and successfully relaunch the product. In fact, Indonesia is Ninja Van’s largest market now and rapidly growing.
Mindset is a tricky thing to get right. The challenge isn’t in understanding that you need to go international. It’s in scrutinizing everything you do from a global lens so that you’re ultimately building a more defensible and differentiated business. The best entrepreneurs are the ones with a bit of paranoia, the ones who look globally for emerging opportunities and competitors.
At B Capital Group, we excel at connecting entrepreneurs with the right partners to build out global-first companies. What challenges are you facing with your international expansion? I’d love for you to share in the comments below.
With thanks to Arijit Sengupta for his insightful contributions.