“If only I had known” - Going Global: A Startup's Guide to International Expansion by Gernot Schwendtner - Naučno-tehnološki park Beograd

“If only I had known” – Going Global: A Startup’s Guide to International Expansion by Gernot Schwendtner

European and global startups are on the rise, but navigating international waters can be tricky. Challenges are even bigger for Serbian startups.

“If only we had known. We were naive. You were right when you challenged us!” – that’s what a founder of a Dutch startup confessed to Gernot Schwendtner, an internationalization expert, after unsuccessfully entering the German market and having paid lots of learning money.  Let’s keep it with Franklin D. Roosevelt instead: “Optimism is essential for achievement, but it is also essential to see things as they are.”

Gernot Schwendtner is CEO & Co-Founder of Upvisor Global Growth which was founded in 2017. to advise founders and start/scaleups in their growth on a global scale. Soon after, he co-founded the successful international expansion advisory weGrow International. weGrow has worked with a wide range of fast-growing businesses in Europe and the USA, and positively impacted more than 300 founders by helping them achieve their international goals. Gernot is working as an expansion & growth advisor with many international VCs, government and EU organizations, and founders all over the globe.

For the STP Belgrade network, he summarizes the most important points of international expansion – key considerations for founders, investors, and accelerators:

  1. Timing is Everything: While investors often prioritize global ambitions, founders shouldn’t rush. Focus on product-market fit domestically first. Ideally, consider internationalization before Series A, when you have a strong user base and a scalable product. Example: Dollar Shave Club honed its US offering before entering the competitive European market in 2014.
  2. Common Pitfalls: Startups often underestimate cultural nuances, neglect localization, or lack resources. According to a CB Insights Startup Survey], 68% of startups cite cultural differences as a major challenge to international expansion. How do you build trust in France versus Germany? Business lunch your way into the market or focus on the process of your sales? Book tip to navigate business cultures with fewer mistakes: The Culture Map (by Erin Meyer).”A successful internationalization strategy doesn’t begin with picking a country on a world map – it starts with a deep understanding of your customer.” (Gernot Schwendtner, International Expansion Expert & Founder of Upvisor Global).
  3. Market Selection: Choose your next market strategically, and wisely. Always start with your product-market fit in your home market. Look for similar customer needs, favorable regulations, and manageable language barriers. Consider factors like GDP growth and adaption curves for tech products. For example, The Netherlands can be a great testing market due to its size, accelerated digitization, and direct feedback culture (remember: a NO is also valuable). On the other hand, France, Germany, and the UK are much more competitive and harder to conquer. Also consider factor such as:
    • E-commerce Growth: Emerging markets like Southeast Asia (6% CAGR projected growth) present exciting opportunities for e-commerce startups, but require navigating complex logistics and cultural nuances.
    • Language Considerations: Spanish-speaking Latin America offers a large potential user base with a single dominant language, simplifying localization compared to regions with high language diversity.
  4. Testing Markets: Go or no-go? Once your shortlist of geo markets is narrowed down, test and listen to what potential customers and experts provide as feedback. Adapt your GTM strategy accordingly, and only if you have more certainty, double down on hiring and investing more funds. “Don’t be afraid to experiment and iterate. What works in one market might not work in another, and that’s okay. The key is to learn and adapt quickly.”  (Gernot Schwendtner, Expansion Expert).
  5. Planning for Success: The initial phase requires thorough research. Understand the local market landscape, competitor analysis, and legal requirements. Develop a localized marketing plan and assess resource needs for customer support.
    • Legal Complexities:

    Factor in time for navigating regulations in different markets. Example: GDPR compliance can add complexity for European startups expanding to the US or vice versa.

  6. Marketing Budget Allocation: Research suggests allocating 20-30% of your marketing budget to local adaptation for a successful international launch. AI Tools such as GetGloby can help to localize efficiently.
  7. Don’t Copy-Paste – Localization Challenges: Beyond language, consider cultural norms, design preferences, and payment methods. Example: Simply translating humor in marketing materials can backfire. A proactive approach with local teams is key. The biggest mistake a startup can make is to assume that what worked in their home market will work everywhere else.
  8. Localization Wins: Done right, localization enhances user experience. Example: Duolingo, the language learning app, tailors content and gamification elements to specific cultures, boosting engagement.
  9. Local Teams: Often, a local presence is crucial for complex markets, regulations, and navigating cultural nuances. This can be through partnerships or establishing a local office when scaling significantly.
    • Language Fluency: Studies show customer support interactions in a user’s native language can increase customer satisfaction by up to 60% (Source: Microsoft). Here come your future ambassadors!
    • Market Knowledge: Local teams bring vital market knowledge and connections, accelerating your company’s integration into the new market.
    • Time to hire: Never forget, in a new market nobody knows you. This also goes for your employer brand. Working with dedicated recruiters usually pays off.
  10. Don’t starve while running – Funding & Runway: Global ambition is crucial from the very beginning. Investors are looking for companies that have the potential to win big, and that often means winning in multiple markets, eventually. Expansion is expensive and usually takes twice as long and twice as much money as anticipated. Having enough runway is crucial before running off in too many directions. Don’t tap into the sunk cost fallacy of new markets, pouring resources into markets that don’t work. “Pulling the plug on underperforming markets to save your overall company is not a shame – it’s needed. Waiting too long is what’s dangerous”, says Schwendtner, speaking from experience having to have shut down markets himself as expansion lead for scaleups.
  11. Golden Rule: Validate your product-market fit in new markets with a lean approach before full-scale commitment. Test the waters, gather user feedback, and adapt accordingly. Plan, prepare, and push forward. For early-stage startups it’s essential to keep later expansion in mind, already when starting to scale – so as a founder, you make the right decisions early in terms of product, team (diversity and experience), and fundraising.