The international business growth of a start-up is a crucial moment in the life of an entrepreneur. The development of the company and its transition to scale-up depend on it. It is also a delicate stage and one that must be carefully prepared if it is to be a success.
Which country? Where to start? Do you need to find a local investor? There are several criteria to consider. They must be based on a well-defined strategy, as well as on factors linked to the business sector, such as the presence of other competitors, the size of the market, and its maturity. We should also not forget the cultural aspect because it’s important to feel at ease in a new environment if a business is to grow.
Analyze your business needs
“Whether in the process of expanding sales efforts or gearing up for growth, our focus lies in understanding the demand for our products. This includes identifying suitable locations for sales expansion, assessing growth potential, and aligning our strategy with the unique opportunities presented in each market,” explains Radu Florescu, in charge of partnerships for the Romanian start-up Plant an App, which he also co-founded. The company has developed a low-code platform to facilitate the creation of applications, mainly for a corporate audience. Plant an App recently set up in Luxembourg to expand into Western European markets.
The decision to expand internationally is also linked to the need to attract more capital. It can be easier for a company to attract investors by having its headquarters and activities in countries with a certain reputation. “A start-up always needs money to grow, and to do that, it’s crucial to be credible in the eyes of investors,” says Casius Morea, founder of Luxembourg-based email automation start-up EmailTree. “Establishing your headquarters in a country with a solid reputation is one way of providing that credibility. As soon as a company grows in Romania, investors expect part of the team to be based in jurisdictions such as the UK, US, or Luxembourg,” he indicates.
Compare different hubs based on crucial factors
Once the needs of your start-up have been analyzed, you need to choose the ecosystem that best matches your objectives. How do you go about making the best decision? “Essential considerations include evaluating the demand for your solutions within the local market, assessing the business environment’s receptiveness to your products, and understanding the scalability of your operations in each location,” notes Florescu, who has just completed this exercise. “Beyond the market and the appeal to investors, it is essential to reflect on the digital infrastructure and environment for developing the competitiveness of the offering. A country with a low-latency network, a high-performance cybersecurity ecosystem or a research centre willing to collaborate with companies on concrete projects are all important elements,” asserts Morea.
“But there are also human aspects that need to be taken into account. The culture, the way people do business together is also very important. It is important to ask yourself: Do I feel comfortable in this environment? Can I see myself working here?” advises David Foy, Head of International Business Development – Digital Economy at Luxinnovation, Luxembourg’s national innovation agency.
Carry out a quick cost-benefit analysis
One approach could be thinking about the advantages of Luxembourg over other startup destinations like London, Vienna, Amsterdam, Berlin, and so on. “Luxembourg offers many benefits for start-ups looking to expand in Europe. Half of the population is made up of foreigners, which means that our society and business community is multicultural and multilingual. We also have a high standard of living, which is very important for talent attraction,” Foy elaborates.
Its strategic central location in Europe, coupled with the dynamic environment for startups, provides a gateway to diverse markets. “Luxembourg’s international business-friendly atmosphere and stability create an ideal foundation for our sales expansion efforts. The proximity to major financial institutions, combined with the nurturing startup ecosystem, enhances our growth potential significantly,” Florescu affirms. “The legal framework, in particular for IP management, and the business-friendly government were also very important for us”, recalls Morea.
Choosing the right market and ecosystem for internationalization remains a very difficult choice, involving many aspects. “To make the right decision, it’s essential to have as much information as possible,” points out Jonas Mercier, Coordinator of Startup Luxembourg, a public initiative that represents and unifies all Luxembourg ecosystem players supporting entrepreneurship and fostering innovation. “Our aim is to give interested international entrepreneurs easier access to the key players in our ecosystem and also to put them in touch with other entrepreneurs who have already experienced the Luxembourg business environment. To do this, we organize several events a year where we invite all the incubators, accelerators, institutional players, and investor associations to help these entrepreneurs get to know the ecosystem for themselves,” he concludes.