European And US Startups Internationalisation

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Over my years of working with startups, I’ve noticed some significant differences between how European and US startup founders go to market internationally.

While you might not think there’s that much difference in global expansion strategy between these different parts of the world, there are a surprising number of things that entrepreneurs need to consider depending on where they are in the world.

How Do European and American Startups Operate?

The biggest thing you need to understand is that go to market strategies for startups depend wholly on how those businesses operate within their home markets, what resources they can access, and how their cultures differ.

Let’s explore two main differences between go to market strategies in the US and Europe:

Accessing Funding

In the US, it’s generally easier to access financing as an entrepreneur than it is in Europe. The US started recognising the value of venture capitalism in 1946, while most of Europe didn’t catch up until the 1990s, meaning that it’s a far bigger part of the American economy.

Accessing funding with this level of ease often makes the go to market plans of US startups focus more on growth rather than revenue generation, as they tend to have more financial security.

However, Europe tends to have a more risk-averse approach to venture capital, and most entrepreneurs are forced to focus on revenue generation before they can access funding.

As Europe is also formed of dozens of smaller, independent countries, this may make the go to market model of European startups less attractive to investors as their economic growth in their home market is limited. This, too, can hinder the amount of capital a European startup can access.

Cultural Differences

While European countries have close ties with each other thanks to the EU and shared land borders, they have different cultures that need to be taken into account.

However, European startup founders understand this from the very start, meaning that when they decide to go to market, they utilise more custom go to market models than their US counterparts.

Across the 50 states of the US, people tend to share a common business culture and language, making it easier for a US startup to expand across state lines. With such a large population, US entrepreneurs can use the same go to market strategy template across different states with only a few minor adjustments.

This makes it easier for European startups to move into the US, but it doesn’t necessarily work the other way around.

Perhaps one of the best go to market strategy example that takes into account cultural differences is McDonald’s. It’s well known that their menu is different in nearly every single country they operate in, and this diversity and awareness has paid off.

Their nearly $9 billion revenue from franchised stores makes them richer than the country of Mongolia, and their daily customer traffic worldwide is greater than the population of Great Britain.

While McDonald’s is a billion-dollar chain, it just goes to show that being aware of cultural differences can make or break your go to market strategy.

How Do Startup Operations Vary by Sector?

Different sectors are bigger in different regions of the world, which can affect every startup’s go to market template.

For example, the SaaS (Software as a Service) sector is far larger in America than in Europe, so European startups tend to form a go to market plan template to break into the US market faster than any other sector.

However, European consumer sector startups tend to stay longer in the European market before they expand overseas. US companies like Amazon have struggled with localisation processes and forming partnerships when moving their consumer sector businesses over to Europe.

Businesses in the digital sector typically find it easier to expand overseas, as they can expand by language, rather than necessarily by country. On the other hand, physical products come with additional localisation costs, meaning startups in these sectors may focus more on building their revenue in their home market before taking on additional costs.

How Many Years Does It Take To Go To Market Internationally?

European startups tend to take a shorter amount of time to go global than their US counterparts. On average, they open their first international office in 3.7 years, while US firms do so in 5.3 years.

Over my years of experience with startups, I’ve found that the clients I work with in European countries move overseas faster because they feel like they’ll struggle to reach their financial goals without entering the US and global markets.

The Final Word

Startups in both Europe and the US have their differences in how they go to market, both of which have been born from the circumstances of their home market and country. European entrepreneurs have mastered the art of localising experiences in each market thanks to their connections with nearby countries, which significantly helps their long term growth.

Startups in the US tend to grow at a faster pace due to their access to funding and a larger market. However, in my experience, they tend to burn out quickly as they struggle to find a go to market strategy framework that works in Europe.

Have we missed anything or have any questions? Get in touch

If you enjoyed reading this, don’t forget to share.

You might also enjoy these popular International Expansion related articles International Market Selection For StartupsWhat To Consider When Expanding A Business Internationally and How To Take Your Business International Guide on the same topic.

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Main Photo by Jan Rosolino on Unsplash

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