“London’s inherently innovative and collaborative atmosphere makes it the ideal place for me to fulfil my professional desire to be at the forefront of technological innovation..”
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While regional lockdowns have turned virtual experiences into the new normal, there’s no real substitute for scaling companies looking to expand into international markets. According to experienced entrepreneurs and digital business leaders at Tech Nation’s Expanding Global Tech event held in partnership with the Department for International Trade (DIT) in September 2020, it’s hugely important for ambitious tech companies to do reconnaissance on new markets by spending time in the prospective country in-person.
Just under a quarter of the attendees surveyed at the event said that in order to expand globally they need help acquiring general information to help them decide between key markets. One-the-ground experiences may not be an available option for the foreseeable future, but insights shared by those who have already trodden the path can feed into the first important decision: which region should you expand to? Here are regional tips gleaned from Tech Nation’s the day-long, multi-time-zone event.
Australia and the UK share many of their key priorities for the tech sector, says Natalie Wood, Asia-Pacific (APAC) Trade Commissioner for the UK’s Department of International Trade. “There is real demand in Australia for what the UK is good at: fintech, medtech and cybersecurity,” she says.
Deputy Trade Commissioner for APAC, Michael Ward, echoes this, adding that both countries are aligned on their strategies to develop AI and data tools, tech for an ageing society, the future of mobility and transport, and clean energy.
On the one hand, the legal and operational job of setting up in Australia is fairly familiar to UK businesses, says Queensland’s Chief Entrepreneur and CEO of Everledger, Leanne Kemp, since the two countries share common law concepts. But on the other hand, she highlights the fact that there may be some culture shock since the UK is “more founder-friendly” in the way it sets up taxation and offers the Seed Enterprise Investment Scheme (SEIS) for early-stage companies.
Timothy Cameron, Australia country manager for TransferWise shares first-hand experience of this contrast. He calls London the ‘fintech capital of the world’ where the regulator has developed a range of fintech licenses for new companies in the digital financial services space. “Our experience in Australia was a little bit more difficult than getting licensed in the UK,” he says. “But regulators in Australia have acknowledged that and are planning to improve it. It wasn’t an issue that would have deterred us from going to Australia but we did need to plan a little bit more time to go through the licensing process there.”
In particular, TransferWise identified the business opportunity in Australia resulting from high bank fees for cross-border transactions. The same opportunity applies more generally to fintech startups who can offer alternatives to bank customers while matching the high standard of digital user experience that Australia’s banking sector has developed.
Katy Stevens, VP of APAC, Culture Amp, points out another unique opportunity in Australia; Australian branches of multinational corporations tend to be more open to trialing new technology and products, since they often “fly under the radar of the company headquarters”. She’s seen examples where companies have piloted their product for the corporate’s local customers or workforce, and then successfully rolled out across the global company having demonstrated success in Australia.
Singapore has intentionally designed a number of attractions and incentives for international companies to set up shop. It has low rates of both corporate tax and individual tax, and a number of government grants and financial incentives for UK companies.
Henry Goodwin, partner at PwC in Singapore, notes that the authorities – regulators, policy-makers and government – are keen to develop the country’s reputation as a safe harbour for both data security and IP protection while also fostering innovation in these areas. The Cybersecurity Act passed in 2018 and an AI governance framework developed last year have laid a secure regulatory and legal basis for data and AI focused companies to operate in Singapore.
Tanya Suárez, Founder & CEO of deep tech accelerator, IoT Tribe, which expanded to Singapore, has also noticed the emphasis on AI, connected devices and deep tech more generally. She says “We went to quite a few regional hubs in Southeast Asia to review potential expansion opportunities and we chose Singapore for a very simple reason: it is vibrant. I loved meeting people from other accelerators, from the r&d community, from universities, from government, and of course from local, large companies.”
She adds that the main pull-factor was the fact that a third of deals happening in Southeast Asia are done through Singapore. “It was clear we had to be part of that,” she says.
Singapore is attractive for more personal reasons too, says Nick Wilde, managing director for APAC, Thought Machin. He highlights the convenient and efficient travel connections and the multicultural social environment.
Similarly to the UK’s financial regulator, the Monetary Authority of Singapore (MAS) is known for its progressive approach and commitment to supporting fintechs. The 2020 Payments Services Act has clarified and streamlined the process and opportunities for companies to obtain licenses and particularly aims to bring e-money payments providers into the mainstream.
“MAS is working hard to create an environment where fintechs are attracted and survive,” Nick says.
Germany’s thriving digital sector ranks fourth in the world for volume of digital service exports in 2019 just ahead of the UK, according to Tech Nation’s Unlocking Global Tech report. But the startup ecosystem is less mature than in the UK in some ways, says Kenan Poleo, UK deputy trade minister for Europe.
“The German tech ecosystem is developing quickly, but it does not have the same quantity of startups, or as much funding available compared to the UK ecosystem,” he says. “That in itself provides a great opportunity for innovative UK companies to really tap into the gaps this creates.”
In particular, Germany’s tech sector still carries its legacy of industrial manufacturing, and tends to be less agile, more traditional and dominated by medium-to-large companies and corporates. Kenan has already seen this start to shift as German corporates have introduced startup-friendly procedures including venture arms and startup accelerators.
But foreign companies need a certain level of maturity to succeed in Germany, adds Stefan Bange, DACH country manager at Digital Shadows. Without a good amount of funding and the ability to navigate the complexities of setting up a German operation, new entrants in the German market are unlikely to make it. The first stumbling block, he says, is likely to be hiring employees locally. Culturally, Germans expect well-planned strategies and upfront clarity on relevant issues like employee benefits. “Nobody is going to want to work for you if you haven’t set up a German legal entity” he says. Kenan agrees: “Germany is a market where you can’t rock up, unplanned, and just wing it.”
This extends to business and marketing approaches too, because straight-talking, evidence-based attitudes are deep-rooted. “Marketing in Germany is different to marketing in most other countries,” he says. “You can’t just say you’re the leader in the market, you better prove it.”
Localising your product, service or marketing material is also integral in Germany. If there is a choice between a business which communicates in German on its website or within the service it provides, or one which only operates in English, Germans tend to prefer to engage with the German-language option. Whether this is unconscious – interpreted as a show of commitment to the German language – or resulting from search engine optimisation, it’s important for international companies to consider.
Unlike Berlin in Germany, for example, France has less of a reputation for hosting a community of international entrepreneurs. It’s true, says Kat Borlongan, director of La French Tech, that many international founders move to France because they already have some connection to France or the French language, but this isn’t to say that the tech sector doesn’t welcome and embrace international startups.
In fact, La French Tech have achieved important steps to ensuring the French market is foreigner-friendly, including translating business and legal processes into English which were previously only available in French. The organisation have also opened up the country to increasing numbers of non-EU tech founders and employees through special visa schemes.
Paris-based business incubator, STATION F, has experienced the results of such schemes. Director Roxanne Varza says that among the thousand startups engaging in programmes or activities, around 600 do not speak the French language at all.
“In a lot of contexts you can get by now without knowing French,” she says. “But it helps to make an effort culturally: you do need to like cheese and wine!”
The serious point is that global or international companies in France do need to integrate the French attitudes and lifestyle into their business approaches. Frédéric Mazzella, founder of French startup BlaBlaCar which has expanded internationally, says that work-life balance is non-negotiable in France.
“French people put emphasis on being a complete human in the workplace” he explains. “Get to know your employees and talk about life outside the office.”
The Netherlands – and Amsterdam in particular – is one of the fastest growing hubs for scaling tech companies in Europe. Cecile Ollivier, Chief Innovation Officer at Aparito which expanded from London to the Netherlands, credits the huge amount of government support and ease of setting up business for the success of the Dutch tech ecosystem.
She says: “We considered several countries when we were looking at expanding the company outside of the UK. The Netherlands ranked top particularly for the ease of its administrative process on how to set up the company.”
More generally, the strength and efficiency of both the digital and physical infrastructure in the Netherlands makes it a convenient and attractive choice for expanding companies, says Judith van Voorst Vader, advisor for startups and international talent at the Netherlands Enterprise Agency. Practical efficiency is coupled with an openness to innovation and trying new things, which creates a sophisticated consumer market for launching new products and businesses, she adds.
The Netherlands particularly stands out for making seed funding a national priority, including the Seed Business Angel Fund scheme in which the government contributes 50% of the capital for private investment funds focusing on early-stage startups. Unlike in other countries, Dutch VCs tend to be very approachable, says Janneke Niessen, partner at CapitalT VC. Most are open and responsive even to cold emails, which makes funding much more accessible even to founders without connections in the country.
Amsterdam is a hotspot in Europe for medical and health tech startups, which has only increased since the European Medicines Agency relocated from London in 2019 following the UK’s Brexit decision. Cecile has also found that the streamlined structure of the Netherlands’ public health system enables more innovation and a deeper penetration of technology adoption.
“Hospitals in the Netherlands work together very nicely and can really take the technology to the next level and take initiatives that you might not find in other countries,” she says.
The reasons to expand to the USA are almost self-evident, especially considering that the market opportunity is estimated at around 10 times that in the UK. For most companies, the key question isn’t whether to go to the USA, but when to expand and where exactly to set up a base.
Strategic timing is paramount, advises Dan Glazer, managing partner in the London office of Silicon Valley law firm Wilson Sonsini. Having supported UK tech companies through the complete US expansion journey, he’s noticed that companies tend to succeed if they target the US early with a US-specific business model, or if they wait to tackle the US market after building a successful business in the UK and elsewhere first.
“Go early or go late, but don’t try to take on the UK and the US simultaneously,” he says.
As for where to go first in the US, it also depends on the sector and stage a company is in. New York City is full of fast-paced opportunities, says Hayley Sudbury, Founder & CEO at WERKIN, which is ideal for very agile startups willing to make decisions quickly and pivot when needed. But it’s also expensive, which increases the stakes and highlights the importance of minimising business risks. “The price in New York is too high to keep doing something that doesn’t pay off,” says Adam Ludwin, CVO & Co-Founder, Captify.
Boston is a natural choice for R&D-focused startups, with its wealth of technical expertise and world-leading researchers. Rick Grinnell, founder and managing partner at Glasswing Ventures, says Boston’s talent pool is “totally differentiated”, with experts moving between universities, corporates and startups.
For fintech companies, Atlanta is quickly becoming the go-to hub. The majority of US payments providers and processors are based in the city, and more than 60% of all fintech and payments companies are headquartered in the State of Georgia. For Georgina Nelson – the British CEO & Founder of consumer analytics company TruRating – Atlanta has a vital concentration of clients, partners and expert talent.
Talking about her move to Atlanta, she explains: “We suddenly realised we had this mecca of all our partners within minutes of each other in Atlanta. And there’s so much talent in Atlanta’s fintech and payments space.”
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