Go International, Young Startup!
The age of Internet and mobile allows startups to go global in ways never before seen in the world of innovation. The 5th Global Forum on Innovation & Technology Entrepreneurship held this week in South Africa by the World Bank’s infoDev programme addressed examples of such scaling and tips for entrepreneurs to go global.
“In the old model of going global, companies did overseas sales only after several years of operation and after success in the local market, and shipped only solidly-built products. Today, international sales are happening for digital companies within the very first year of operation. Overseas markets can generate even greater revenue than local markets for some products. And these products are often not fully formed at launch but iterated along the way,” observed Angelique Mannella, founder of Decode Global.
Her startup develops mobile games for social change, and is itself a good example of a globalised startup with team members in Canada, Finland and India. She cited at least 10 other examples of tech startups from around the world who achieved international sales within a year of launch, and for whom foreign sales accounted for at least half of total sales in the third year.
These startups include Etoro (Cyprus), Papaya Mobile (China), Griaule (Brazil), Dewak (Colombia), Airbnb (US), Canonical (UK), Good Data and 360 Cities (Czech Republic).
A good success story from South Africa is the gaming company Skillpod Media. “We have 95% of our users and revenue coming from the international market,” said Mark van Diggelen, CEO of the Johannesburg-based company. Its products, casual games, are available internationally via an agreement with Sony, as well as in India via Network 18.
Key success factors for these companies include addressing a problem with global significance, empowering entrepreneurial action in target communities, and using Web-based tools, according to Mannella.
For instance, 360 Cities tapped skilled photographers around the world via crowdsourcing, and Good Data addressed companies looking for business intelligence tools. Airbnb provided information on affordable accommodation and enabled landlords to become entrepreneurial. Papaya Mobile used social media to reach gamers; and Griaule and Etoro created an online marketplace.
Some such discoveries of international audiences can happen by accident, observed Susan Amat, founder of Venture Hive in Miami. For instance, the startup EveryPost from Argentina found that it was receiving orders from Japan without having prior plans for this market, and is now adding Japanese language content on its Web site.
Localisation is a key success factor for taking products global: this includes language and design of the product and company Web site, multilingual search engine optimisation, legal agreements to reflect local conditions, customer support, and media outreach to local bloggers and social media influencers. A whole range of companies has emerged in this space to help localisation of products in new markets.
Challenges arise for startups in some emerging economies such as Nepal where payment gateways for international online sales do not exist due to regulatory obstacles, observed Bibhusan Bista, founder of the Mobile Nepal startup community in Kathmandu.
Solutions for digital inclusion in emerging economies can be replicated or scaled elsewhere, such as financial inclusion (eg. iVenture and mPesa from Africa). Mobile operator Vodafone is replicating the mPesa mobile payment model in India.
“It is important to build relationships with early adopters in foreign markets, and ask for their help on social media. They could also become your future employees!” advised Mannella. Other areas for research in this space include the role of international offices, design of revenue share contracts with foreign partners, mixing ad and subscription models, and risk management.
She cited David Goldberg, CEO, Survey Monkey, who has said: “If you have a product business and aren’t focused on the international market, you are missing out on two-thirds of your potential customers.”
Outcomes of successful internationalisation include additional revenues, new insights into consumer behaviour, and novel resource allocation models (eg. outsourced R&D, tech support). Some attendees at the Forum also joked that international operations allows companies to discover tax havens abroad and successfully avoid tax in their home base countries, as companies such as Apple have been accused of!
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