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When it comes to the daunting challenge of international expansion for early-stage companies, it is becoming more of a risk not to do it. For startups wanting their niche idea to evolve into significance, the only way to do so is to take a chance on unknown markets that previously would have been tackled much further along their developmental journey.
In the Nordics, this trend has always been the norm because of the small size of domestic markets. But even there, an acceleration is taking place. For some startups, international expansion is now an opening gambit, rather than a scaling venture – ushering in the concept of “progression in reverse”, whereby overseas success can pave the way for an eventual return home.
“International expansion for digital startups should happen immediately, not years later after a scaling phase,” said Bonnie Roupé, CEO and founder of Bonzun. The serial entrepreneur incepted her latest venture, an app for pregnant women, in China – a market seemingly worlds apart from her native Sweden.
“If you want to have a big company or one that makes a significant difference, you have to be global and you have to do it fast, because target groups are themselves global now,” said Roupé. “It’s not just Nordic companies that need bigger markets – it’s just logical for any ambitious enterprise. Even Chinese companies I’ve encountered have become successful in Sweden. They could have just stayed in their massive domestic market, but it was possible to go global, so why not?”
Turning niche ideas into a scalable proposition is profit-driven, but is also a learning curve that simply wouldn’t exist if companies limited their borders.
Konrad Bergström, CEO at X Shore, a supplier of fully electric, silent boats, said: “Doing business outside my home country has helped me be more open-minded in the development of ideas and inspired much of my work over the years. Throwing yourself into the deep end automatically makes you more humble and forces you to ask more questions.”
Bergström believes that for most startups around the world, the success of an idea in your own country doesn’t always equate to success in another – and believing that it does often proves the downfall of companies making phased leaps into international domains.
He added: “Launching in multiple markets at once brings several challenges, but it will also help you quickly understand if your company has the potential to become a global success, which for most businesses is the ultimate goal.”
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Then, of course, comes the logistical necessity to think big, especially for Nordic countries.
For example, Sweden and its nine million residents wouldn’t even be registered as a city in China, where Roupé raised her Bonzun flag. “It’s about scale,” she said. “I had come up with a niche product for pregnant women, and in Sweden there are 100,000 pregnant women every year. In China, there are 22 million.
“I then deduced that it would take me about five years to get the company to where I wanted it to be. So, over that time, I realised I could reach more than 100 million pregnant women.”
Inevitably, challenges arose from incepting so far from home, with investment opportunities in China a particular difficulty. But by addressing these tests from day one, the company that exists today is robust and resilient enough to meet challenges that await further down the line.
Those that try to establish themselves in smaller local markets before expanding later will face the same challenges, only with less of a stable footing to tackle them head-on.
This was precisely X Shore’s rationale – the company’s forthright drive complemented its business goal of improving the health of the world’s oceans by reducing emissions and removing sound pollution from boating.
Bergström said: “While these issues are significant in Sweden, they are not unique to our home market. If you want to make a real difference, you need to think big from the start, and when it comes to climate change, there simply isn’t enough time to tackle this problem market-by-market.”
A technical head-start
After market scale and the idea of getting ahead of the game, another major advantage of targeting international expansion as a first move is the learning curve it forces upon nascent businesses and budding entrepreneurs. It also compels startups to become more technically proficient, durable and sustainable than they might otherwise need to be.
Bergström’s X Shore has learnt a lot about boat design and aesthetic preferences by visiting various countries and exploring new markets, which has helped to gear up its products for immediate market traction.
For Roupé, taking on such a large and demanding market has paved the way for arguably the most significant stage of Bonzun’s evolution so far – the translation of the product into different languages. “So far, we are available in English, Chinese and Swedish, but now we are looking to translate it into 135 languages to achieve complete global saturation,” she said.
For most companies, this process is hugely complex and time-consuming, often taking as long as a fortnight just to translate into one language. This would especially be the case for companies in a scale-up phase that have previously operated in only one country and one language.
“In our case, however,” said Roupé, “we had already ensured that we had the back-end flexibility to facilitate this process quickly.
“You have to be prepared and able to scale really fast, and by initiating internationally, you are forced to integrate that level of technical preparedness early on, which stands your company in great stead for the long term.”
The days of methodical progression, incremental developments, careful continuous improvement and well-timed risk-taking in order to achieve international traction are over. Now is the time to venture outward from day one to achieve those traditional landmarks successfully and sustainably.
And once that initial daunting, global test has been negotiated, the return journey home is likely to be an even sweeter and more lucrative prospect.