Internationalization is key when scaling your business. Even though there are numerous options to grow internationally, it is very complex to determine the right one.
To make your way to an international roll out you should mainly consider three options:
- Joint Venture,
- Commercial partnership,
- Strategic partnership.
These options are ranked from to the most legally binding option, to the most strategic one.
In a nutshell, choosing which option is more suitable for your business will eventually depend on your revenue, your execution roadmap and your local knowledge of the market you are targeting.
OPTION 1: CONTRACTING A JOINT VENTURE TO CREATE AN ECONOMY OF SCALE
A joint venture is, in legal terms, a general partnership formed by a group of entities or individuals committed to a specific business purpose for a fixed period of time. The aim of a joint venture is promptly achieving strategic growth while lowering production costs. While creating a joint venture you will be able to create a new economy of scale and market power.
At NUMA we believe that joint ventures are a real asset to help mature startups and corporations to connect their resources efficiently. Most of our foreign partnerships are made in the form of a joint venture with existing partners with local knowledge and resources, seeking to create an acceleration program. For this specific business purpose we provide them with our global network, our experts, our expertise and communication tools.
Example of one of NUMA’s successful Joint Ventures:
Likewise, we have been contacted by a Series A startup that connects with local partners through joint ventures, and has the specific business purpose of advertising books online. The most strategic way to leverage power on local authors is for them to identify people with sufficient local resources and network to attract them without having to enter the market themself. In that particular example, the joint venture is a strategic way securing production capacity and lower cost production.
In a nutshell, You should consider a joint venture if:
- Revenue : You believe your business purpose could generate a significant source of revenue abroad but you need a partner to achieve strategic growth.
- Execution roadmap : Your local execution roadmap is linked to your global OKRs.
- Local knowledge : You already know which trusted strategic local partner you want to consider, you will each be able to bring a specific set of resources and adapt them together to the local market.
OPTION 2: CONNECTING WITH A COMMERCIAL PARTNER TO OPTIMIZE FOREIGN SALES
Internationalization has many definitions, ranging from expanding a supply chain abroad to simply shipping your products or delivering your services abroad. For each of these internationalization processes, you will have to choose a peculiar business and legal form.
Why would you choose to have a commercial partnership with a partner abroad? Many of the startups we analyzed while building our internationalization program at Station F, were already established in France but were looking for foreign partners to help them grow and scale their sales pipeline in France.
Likewise, successful french companies have chosen this internationalization channel to optimize their sales abroad. The most relevant example is the company “Docker”, an open platform for developers and sysadmins to build, ship, and run distributed applications, whether on laptops, data center VMs, or cloud. Docker announced last year their partnership with China’s biggest cloud company, Alibaba. In their press release, they declared that this partnership was made “ to ensure optimal access and performance to the thousands of Dockerized images that will serve as the foundation of a new generation of distributed applications in China”.
This commercial agreement is a great success for Docker in terms of sales revenue in China, as well as their exposure in the media, proving once more that internationalization is a very efficient way to grow your sales pipeline.
Docker & Alibaba Cloud alliance: &
In a nutshell, connect with a local partner if :
- Revenue: You already have revenues from foreign sales but you need a local partner to grow your sales pipeline.
- Execution roadmap: Your sales need to scale, this is one of your OKR.
- Local Knowledge: You have knowledge but few executive and efficient resources abroad.
OPTION 3: FINDING A STRATEGIC PARTNER TO START LAUNCHING YOUR BUSINESS ABROAD
If you have validated your product fits in your home country, have stable business metrics and you have done a due diligence identifying a fitting foreign market, you are ready to launch your business abroad.
There is no real partnership that could be valuable when you have no resources to share locally and very little local knowledge aside from the due diligence you have conducted. Even though you have raised a Series A or you are about to, you still need support in building a solid execution and scaling plan. Therefore new offers of specific partnership within ecosystemic program offer cross-border expertise in acceleration.
NUMA acknowledged that more “later stage” startups lacked specific program to help them bridge their next round of financing. This is what we understood as the pain point in internationalization. Even more in times when Europe and more specifically France, have become a new driving market for mature startup businesses providing easier access to capital from influent VC. As shown below, European Scalers are now numerous showing that scaling in Europe offers great perspectives:
: French company, Raised$160 million
: French company, Raised $53 million
In recently being named most influential country in the world, it might be that France could also be the most interesting country to launch your business right now. In this regard, almost a month ago, Station F opened in Paris and became the biggest startup campus in the world.
That’s why NUMA, as a leader in the French entrepreneurial ecosystem, decided to help mature foreign companies in fundraising, scaling and growth hacking strategies to establish and grow rapidly their business in France. This program, NUMA Scale Hub, in partnership with Station F, is ready to help startups rock their internationalization in France!
Are you thinking about scaling your venture? Book a call with Damien Roch, NUMA Scale Hub’s Managing Director and expert in internationalization. Write to: [email protected]
In a nutshell you should consider a strategic local partnership if:
- Revenue: You believe there could be a solid revenue opportunity in expanding your business abroad but you are not sure yet as you didn’t have a market validation in this foreign country.
- Execution roadmap: You want to enter a market, you need it to scale your business.
- Local Knowledge: The strategic partner will bring this added value, adapting your business to the local currencies and customs.
The structure you will choose to internationalize is significant as it will help you be successful in this important journey. It is however your role as founder to be as pro-active as you can, since each and every opportunity you have to go abroad will give you a chance to meet strategic partners and clients!