Selling In America. How European Startups Can Bridge The Atlantic

Forbes

6 days ago

Martin Mignot of Index Ventures says the build in Europe sell in America model has proved successful ... More
For a significant number of European startups, going global means breaking into the U.S. market.
According to research published by VC firm Index Ventures, almost two-thirds of Europe's startups (64%) say they have expanded to the U.S. as early as the Seed or even the Pre-Seed Stage. That compares with just 33% five years ago. This shouldn't come as any surprise. North America is the world's largest software market, and ambitious European tech companies naturally want to go where their customers are. The question is, how can a business based in London, Paris, Barcelona or Tallinn successfully establish a bridgehead in a marketplace that has no shortage of well-funded domestic innovators?
Helpfully, Index Ventures has published a playbook for European companies seeking success on the other side of the pond. Titled Winning In The US: The Founder's Guide to Building a Global Company from Europe, the book is intended to encourage more startup businesses to think about expansion into North America from day one while also providing practical advice on just how that can be done.
So, what does a 'conquer the U.S.' game plan look like? To find out more, I spoke to Index Ventures partner Martin Mignot, a contributor to the book. I started by asking him what thinking globally from day one means in practice.
Global Building Blocks
As he acknowledges, not every European company will have the resources or the opportunity to sell outside its domestic market on the first day - or even the first year - of operations. But for those who believe they have a product that can be sold overseas (with the U.S. as an obvious target) founders should put the building blocks in place.
It starts with the product. 'It should be designed so it can be sold globally,' he says.
In addition, Mignot stresses the need to think about the make-up of the team, and in particular hiring people who speak English - not only the lingua franca for international business but also a must for addressing customers in the U.S.
'Everything should be documented in English,' he adds. 'And English should be the common language.' Once designed for a global audience, a product can be localised for specific markets, he adds.
Finding Customers
Arguably, that's the easy part. Connecting with the target market and selling is likely to be more difficult. Index Ventures makes a distinction between 'marketing-led' companies, such as digital games creators who can address a global audience from a single HQ and businesses working in sectors such as Enterprise Software. As Mignot sees it, corporate customers will expect - even in the age of Zoom, Teams and Meet - to engage with representatives who turn up at the office, pitch the product and provide ongoing support.
'If you have a sales-driven strategy and your aim is to sell to corporations in middle-America, you have to have boots on the ground. You have to spend time with them,' he says.
There are a number of ways to establish a U.S. presence. In some cases, European founders move to the U.S. first and build the company there, before edging back into Europe. Mignot says this is less common today.
Instead, startups might choose to adopt what Index calls the 'magnet archetype' ( or playbook), which will see one or more founders moving to the U.S. with a team while co-leaders remain in Europe. Alternatively, founders could simply travel a lot between HQs or bases, an approach dubbed the 'pendulum' by Index.
Of course, not all companies will prioritize the U.S.. Some will anchor their operations in Europe, establishing only a small presence in the U.S. at least initially. Mignot says you choose a playbook, and build the detail around it.
Economic Nationalism
The thought of promising European startups moving their HQs to North America is enough to give many European policymakers nightmares. In strategically and nationally important sectors such as AI, quantum, life sciences, and climate, politicians are keen that businesses should remain based in Europe. The concern is that the sheer size of the U.S. opportunity will result in businesses relocating most of their operations and, ultimately, their value.
Mignot says this is not something that bothers most European founders. 'What is clear is that despite the narrative around nationalism. Entrepreneurs are internationalists. If you have a great product, you should seize the opportunity to sell it in the largest market – the US,' he says.
That could mean a complete relocation but not necessarily. One concern for policymakers is much of the growth capital for scaleups comes from overseas investors who may encourage businesses to move their operations to the U.S.. Here in the U.K. efforts are being made to improve the flow of later stage funding, in particular, by harnessing pension fund money. The Index Ventures research suggests relocating startups are seeking customers not capital, but the various playbooks identified by the new book illustrate that it is possible to have boots on the ground overseas while continuing to build the product in Europe.
Indeed, Europe-based firms have an advantage in that talent is not so expensive as it is in the U.S. and it is also more available. 'The build in Europe, sell in the US formula is a winning one.' says Mignot.