When Should a Startup Think About Global Markets? (part deux)

Does it make a difference if your home market is France or Germany, rather than the U.S.? To balance responses from U.S. investors and entrepreneurs posted in part one, I reached out to entrepreneurs and observers in Europe, as I suspect they will have a different perspective. I’ll add additional answers here as they come in. Feel free to join the conversation in the comments section.

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Liam Booger is the editor of the Rude Baguette – a well-regarded English language blog covering the French startup scene. He will soon be launching the Rude Pretzel for Germany. (So go sign up.)

Liam, as a keen observer of the European startup scene, do you see entrepreneurs in Paris and Berlin concentrating on their home markets early in life, or do they generally attempt to tackle the broader European or even U.S. markets right from the start?

I think there’s a clear recognition of ‘size of market’ in France, a perspective that wasn’t as prominent a few years back. For companies like Blablacar, it is clear they were thinking international from day one, but it made sense to create a solid base in France, and it allowed them to perfect their product before taking it international.

That being said, there is still a fear of the international that you see in companies like Deezer, which still has startups describing themselves as “X for France.”

Do French startups tend to look first at other European markets for expansion, or do they look to launch in the U.S.?

More and more, I think there is recognition that attacking the US market means spending a lot of cash. On the one hand, you can raise that money in the US. On the other, why not start with a market you know – Europe?

I think that, today, US companies have a harder time getting into Europe than European companies have getting into the US. It’s Skype vs. Netflix.

How does this vary by industry?

Some industries “exist in the internet,” some exist “in the market,” or in the physical/political/language barriers built around countries. Ad-Tech startups, for example, seem to be global from day one – Criteo, StickyAds, eBuzzing, .etc.

Do European angels and VCs prefer the companies they back to succeed first in their home markets (as American angel investors have told us), or are they comfortable with their capital being used to solve the language and culture and currency challenges inherent in early international expansion?

European investors don’t tend to invest in something that hasn’t launched yet – there are a few exceptions for proven founders – which means they want to see traction. They prefer that entrepreneurs tackle the ‘tweaks’ first before they invest in scaling – or at least that’s what I’ve noticed.

Can you think of startups that have launched in multiple markets simultaneously and handled it smoothly, or startups that stumbled when they first crossed national borders?

Deezer launched in about 180 countries at once in December of 2011 – they have maintained growth alongside Spotify. Viadeo, like Xing, took too long to go international, and now LinkedIn has more users in France than Viadeo. Viadeo, however, is very strong in China.