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Unlocking Global Growth

For most start-ups with serious growth ambitions, focusing on the domestic market alone can soon prove too restrictive for significant scale. Many tech businesses, even those at the early stages, have the advantage of being able to trade internationally – with readily transferable technology that has global applications.

Capitalising on this potential is often the key that unlocks major growth and, as Europe continues to benefit from an increasing amount of investment to create tech giants, it is unsurprising that the region is producing more internationally well-known names than ever before. Global success stories like Spotify are becoming more commonplace, and there are countless ventures looking to follow in their footsteps.

Earlier this year, 26 UK tech companies joined the latest cohort of Tech Nation’s Future Fifty growth programme. Of these, only 6 do not yet have an established overseas presence – but the road to global expansion is not necessarily an easy one. Gaining international market share is rarely just a matter of transferring a successful domestic business model to a new territory. It requires robust planning, precision timing and the right leadership in place to deliver.

Speaking in GP Bullhound’s Titans of Tech report, Pär-Jörgen Pärson (Partner at Northzone and Board Member of Spotify) said: “In my twenty years in venture capital, I’ve seen many European start-ups struggle to scale to the US. Yet the Spotify team was able to take the leap forward with success, as they were able to bring in US investors ahead of the company’s entry into the market”.

Cyber security firm, Darktrace, has also benefited from such relationships and is identified in the report as Europe’s most promising billion-dollar tech company. Speaking to GP Bullhound, its CEO EMEA, Poppy Gustafsson, said: “We took great care to select partners who aligned closely with our goals, and investors from Samsung in Asia to KKR and Insight in Europe and the US offered vital insight and strategic support as we looked to capitalise on new markets and scale very rapidly.”

We took great care to select partners who aligned closely with our goals, and investors from Samsung in Asia to KKR and Insight in Europe and the US offered vital insight and strategic support as we looked to capitalise on new markets and scale very rapidly.

Working with investors and strategic partners in target geographies is undoubtedly a powerful way to access overseas markets.   Pitchbook’s 2017 European Venture Report highlighted a marked increase in the presence of US VC activity in Europe, surging to 17.3% last year, compared with 12.8% in 2016. So, the appetite to scale European tech companies is clearly increasing on both sides of the Atlantic.

Talent strategy is another key factor in de-risking the global expansion journey. Appointing a country/regional leader who is both well connected and well versed in the area’s cultural, political and economic landscape can mean the difference between success and failure.

We often work with clients who are looking to appoint an overseas leader that will also help them develop the go-to-market and hiring strategies for the region. Typically, they seek a candidate with a track record of having successfully built an international business division from scratch, perhaps more than once, who knows just what it takes to establish a presence in a new territory.

The talent pool in overseas markets – especially in the US and other major hubs – is deep, but competition can be fierce. Having a clear and compelling proposition is vital to attract the right calibre of talent. For European businesses looking to make appointments in the US, it is also important to note that tech salaries are often considerably higher (especially in Silicon Valley) so this needs to be planned and budgeted for. Where salary demands are likely to prove prohibitive, it is often worth considering appointing local advisory board members who can provide access to their knowledge and network at significantly less cost.

Since there seems to be no imminent slow-down in the rise of the international tech sector, it is expected that many more of Europe’s most innovative companies will set their sights on global domination. With the right strategy, leadership and relationships, there is every likelihood they will succeed.