How to Scale Your Startup to Global Markets: Endeavor Romania Mentors Pitch In

Scaling internationally, especially during a downturn, can be a daunting task for founders. Entire books have been written and hours of training prepared for this stage of a startup’s journey. Expanding a startup requires extensive research, planning, risk management, and resource allocation. It also doesn’t boil down to one strategy or a one-size-fits-all solution.

Founders need all the help they can get and they can often receive it from investors, mentors, and other startup founders in their ecosystems, who managed to scale successfully. With the right guidance, scaling becomes attainable.

With that in mind, Endeavor Romania reached out to our growing network of mentors for their best advice on what strategies startups can follow to scale successfully and how they can prepare their teams for this step.

Start with WHY

Like with an ambitious endeavor, starting with clarifying the objectives is paramount to building a measurable plan.

Asking yourselves WHY? determines your goals for scaling (as an optimum strategy may differ from one startup to another,” Mihai Sfintescu, Investment Jury Member & EIC Ambassador at European Innovation Council (EIC), tells us.

Make sure you have the product-market fit

Once you determine your goals for scaling, you can start researching the markets where you can expand and find ones that fit your objectives.

For Romanian founders, these could be nearby markets, such as Bulgaria and Hungary, for e-commerce or logistics synergies, big EU markets like Germany or France, for certain regulated industries, or huge markets such as the US or China, if you have lots of capital available, Mihai Sfintescu adds.

The foundation of any startup succeeding in a specific market is attaining a product-market fit. “So, before you consider opening a new legal entity, you need to do a proper analysis of the market,” Andra-Malina Platon, Start-up advisor and former UiPath Global Head, Key Accounts Program, shares, adding that this step includes:
– a product-market fit analysis,
– a market gap analysis,
– a competitive landscape analysis,
– a price analysis versus your future local competitors.

This point is also emphasized by Andrei Dudoiu, Managing Director and President of the Board of Directors at SeedBlink, who explains that, by analyzing this data, you can identify how much of a product or service you can sell in a given region and at what price, as well as how to reach your target audience with a message that resonates with them.

He further notes that “at the beginning, you will probably not have the necessary budget to expand in many geographies, so you should focus on two or three at the start, and test different tactics and channels, as a pilot approach. Then, you can quickly apply the lessons learned in the next scaling stage.”

Tailor your scaling strategy to the specific country

Once you are set on specific markets, it’s important to note that a one-size-fits-all approach won’t work. “To successfully drive business development, each market needs its own tailored strategy. If we are talking about Europe, it is home to different cultures, languages, and economies, so knowing where to focus budgets and resources can be a challenge,” Andrei Dudoiu adds.

You will need to look at what type of scaling fits both your goals and market specifics, whether to set up a new operation, buy an existing player, establish a partnership, or do franchising,” Mihai Sfintescu shares.

He then adds that in order to develop the right strategy for the particular market, founders “will need to understand the following:
– The culture of the markets you want to expand in,
– Who will decide to buy your product/ service and from what budget,
– What are the best ways to promote your product/ service,
– Whether you have enough capital to sustain the scaling in these foreign markets, overseas management and control issues,
– Who are the right people you need in the foreign market,
– Whether your intellectual property (patents, trade secrets, etc.) is well protected in that market, and so on.”

Assess your financial situation

Another important step when scaling is assessing at which stage of the business and investment your company is in. “Most companies are considering global expansion from Series A and beyond, in order to make sure they have the funding to cover their additional expansion expenses,” Andra-Malina Platon reveals.

What will you need funding for? Well, hiring new teams, setting up new legal entities, paying new offices, and covering additional sales and marketing costs, to name the major categories.

Andra-Malina further advises answering the following questions to understand if you are fully prepared from a funding perspective:
– How much money do you have in the bank?
– How many VCs/Angel investors are backing you up?
– Are these investors global?
– Do they have a presence in the countries where you are planning to expand your business?
– Do you have a community of Angel Investors and other shareholders who have a good network in the countries where you plan to expand?

If you do have external investment, use it wisely:

Investors increasingly look at the ratio of additional revenue generated to the invested capital. Start with an investor from the local market who can use their network and value add in the region and can push you forward to the next round syndicating the deal with bigger western VC funds,” Simona Gemeneanu, co-founder at Morphosis Capital, shares.

Make sure you have experience people on the team

Having people on the Board of Directors and the management team who have experience with growing teams and scaling companies internationally is crucial, mentors agree. More generally, Simona adds that you would need a strong culture in the team and equity incentives to align interests for employees..

To prepare for scaling, you need to make sure that your existing team is ready to take on additional tasks, such as helping with the onboarding of new local teams. In addition, Andra-Malina points out that you will probably need to hire external advisors for financial/ legal support for the new markets.

Finally, you will need a strategy for hiring local talent, including a plan to incentivize and motivate employees in a hybrid or totally remote type of work environment, if needed.