For software firms, expanding internationally into markets such as the US and Europe can be enormously profitable. The inherent scalability of software makes it a highly attractive industry for cross border growth. Indeed, more than any other sector, software businesses can scale exceptionally well across geographies.
Software has historically been a winner-takes-all industry, so for a novel proposition underpinned by defensible intellectual property (IP), it is strategically imperative to become a first mover in more than one market. In these situations, it is critical to build a strong pipeline early, and qualify and prioritise territories objectively.
When should management teams begin looking abroad? We have identified three key indicators:
Firstly, you have a proven product in your core addressable market and are growing faster than peers. As your core market saturates, sales and marketing ROI in that geography will typically erode and as growth slows due to limited white-space, new geographies become increasingly attractive.
Secondly, you have the right team around you to support an international journey, e.g., you have an internal champion groomed to become a new territory head of sales and you have active channel partners delivering with velocity in your core market and eager to expand in your new target market.
Thirdly, you have sufficient proof-points for the right-to-win in a new territory. You have locally referenceable blue-chip customers (e.g., multinational corporation accounts, remotely won deals); you have developed a robust pipeline to appropriately allocate resource against; and you have tested your product translates well across language and regulations.
Some do’s and don’ts for entering a new market
Do: Set measurable milestones and course correct based on market feedback.
All ambitious entrepreneurs inevitably fail at some things. The best ones fail the fastest and move on.
Do: Surround yourself with the best possible bench of veterans that have been through your market-specific journey before. They will save you time and money.
- E.g., if you’re selling SME focused technology, talk to someone who has scaled through SME-focused IT service providers before. If you’re selling enterprise Software as a Service (SaaS), retain the former head of global sales from a relevant market leader as your advisor.
Don’t: Let your CRO get distracted by a new market opportunity.
Multiple market-specific quotas can leave sales heads agnostic to where they win. Inadvertently, this may result in the new market being under-prioritised, or alternatively prioritised at the expense of the core market. Having separate heads for new markets helps avoid this challenge.
Don’t: Spread your team too thin.
There are many avenues to winning in a new market and it is atypical for a business to win across all of them. Encourage your team to articulate and deliver a narrow, replicable strategy rather than a free form approach.
- E.g., build a plan to target a specific customer type within a priority vertical first, such that the plan can be scaled to other customers/verticals if successful.
It is usually much easier to scale the success of a systematic and synchronised team than that of independent whale hunters.
How Livingbridge can help
Examples of firms we have supported include TitanHQ and Sycurio. TitanHQ provides Managed Service Providers and businesses with advanced web filtering, email security and email archiving solutions. Among our support, we engaged a US channel advisor and developed a tactical action plan for a broader US team launch.
For Sycurio, a leading provider of data security and compliance for call and contact centres, Livingbridge developed a broad US channel network and set up a dedicated US sales organisation with independent targets and resources.
Carlos Sartorius, Chairman, Sycurio, said:
“International expansion has been a significant element of the firm’s growth story. For businesses with a strong product proposition and established client base in a single market or region, the capability to expand further can be relatively straightforward but highly rewarding.”
Livingbridge has an extensive track record of helping software firms expand overseas, helped by our on-the-ground teams in markets such as the US and Australia as well as investees in several other countries.
In May 2022, we formally launched our Livingbridge Software Advisory Board, a group of world-class software operators. The Board includes Phill Robinson, one of the most accomplished and successful figures in European software, and Sanj Bahyro, Vice President, EMEA Sales for Intercom, and previously Vice President, Operations & Customer Growth, EMEA for Google Cloud and Chief Operating Officer, EMEA at Salesforce.
In addition, our Growth Acceleration Team is an in-house team of tactical functional specialists across data & insights, customer acquisition & retention, talent, M&A and other capabilities.
We spend a lot of time thinking about how to take our investees global. If you’re part of the leadership team at a software firm interested in finding out what opportunities there are for international growth, feel free to reach out.