Amidst uncertainty, US-bound companies must remember expansion essentials

We’re living in uncertain times, but for most UK software and tech-enabled service companies plotting a US expansion, short-term market volatility shouldn’t be a blocker to your plans – not if the correct essentials are in place. That means ensuring business in your core markets is scalable and operating efficiently, and ensuring your product-market fit is transferable to the US market.

Building a US function, even remotely, is a costly, time-consuming endeavour and not one that can be taken half-heartedly. But for the businesses that are ready and execute it correctly, it’s a game-changing move. Even amidst uncertainty, the US market remains highly attractive to achieve long-term, sustainable scale, offering companies a larger Total Addressable Market (TAM), enhanced exit opportunities, and wider and deeper talent pools.

Regardless of short-term market volatility, the strategies we take with our partners to help them successfully scale in the US remain the same – built around these three key tenets.

Only go when you’re ready

The US market can be an unforgiving, expensive place for businesses which aren’t quite ready. Product functionality, service delivery models, pricing and other core fundamentals to your product-market fit may differ in the US, while US salaries can be significantly higher than UK equivalents, with much regional variation.

In practice, being ‘ready’ means two things: your business is deeply established in your home market while being well positioned to build something similar in the US.

The former means domestic business operations are efficient, scalable and well-managed with a clear market position and real market share. This will be powered by a mature executive team, with key figures willing to lead the expansion, even potentially moving to the US.

We always work with our portfolio companies to establish a compelling market opportunity and product fit that’s adapted to the nuances of the US market, along with a clear route to access. This starts with validating product fit, market size, ideal customer profile, go-to-market motion and price and your product or service delivery support model – i.e. onshore, nearshore or offshore? All regulatory, tax and legal requirements must also be understood and met.

Market entry strategies can be approached in a variety of ways, varying by risk, cost and revenue opportunity. For example, we typically advise software companies to initially sell and deliver remotely, as this lowers cost and risk. For non-software companies with a similar level of revenue opportunity, we may build local sales partnerships as an equally low-cost, low-risk approach. Where there’s a higher revenue opportunity and more capital available, we’ll support an organic expansion, combining relocated UK staff with local hires, often supplemented by nearshore delivery. If the opportunity calls for it, companies may look to acquire a similar-looking US business to beach-head into the market.

Understanding the best approach is an essential part of preparation.

Enter from the East

Historically, European to US expansion began on the East Coast, with settlers pushing steadily westward – and it's still where we recommend UK companies begin their journey.

In a business’s early days in the US, there is still plenty of contact required with the UK, and East Coast locations provide a much more manageable time zone overlap. The West Coast only allows a small window of concurrent working hours, which creates significant difficulties in maintaining an integrated global business. Your sales team can venture West as required, with in-person meetings a much larger part of US sales than in the UK.

This is, of course, dependent on the needs of your business but it’s likely that one of the cities along the East Coast will make a suitable base, with numerous talent hubs everywhere from Boston to Miami.

A vital part of planning is understanding a regulatory landscape that is considerably more complex than the UK’s. The US operates as 50 distinct markets under a federal system, with California alone having a GDP larger than the UK. Each state has its own tax systems, employment laws, and regulatory frameworks that must be considered alongside federal requirements.

Combine mature company leadership with on-the-ground sales expertise

When it comes to establishing a successful US team, we recommend a transatlantic partnership, with UK leadership brought over to maintain the overall company culture, partnered with US market leaders who understand the local market. That combination of mature company expertise with mature US market expertise is especially key if your entry strategy is more aggressive and M&A-focussed.

In the US, one of the most notable corporate cultural differences is in sales, so leadership should be supported by a local sales team. For a number of reasons, US sales culture is sometimes perceived as more aggressive and competitive. For example, 34% of UK sales reps will wait until the next day to respond to a buyer. Half will leave a prospect waiting up to seven hours for a response. In the US, one-third of all US reps will reply within 60 minutes.

Face-to-face meetings have traditionally been more common – and culturally emphasised – in the US than in the UK, particularly in B2B sales. However, the landscape is shifting post-pandemic, with virtual and hybrid interactions increasingly normalised in both markets.

As mentioned, overall compensation is typically higher in the US, but sales roles are particularly unique, with commission structures often featuring lower base salaries with higher variable compensation potential. For example, while a UK sales role might offer a 70/30 split between base salary and commission, US roles commonly use a 50/50 or even 40/60 split, allowing for higher total compensation through performance-based earnings.

Finally, if your investors have a US presence, that’s a critical lever to pull, especially with a view of the company’s eventual exit. At Livingbridge, we purposefully build a portfolio company’s brand in the US market years before exit, ensuring potential US buyers are familiar with the business before the formal exit process.

Expansion in action: Veramed goes stateside

In an industry renowned for delays and poor service, Veramed – a highly successful UK-based Clinical Research Organisation (CRO) – has set itself apart by delivering consistent quality at scale for its clients and a best-in-class class culture to attract and retain exceptional talent. .

Having long-resisted outside investment, in 2021 founders Matt and Emma Jones decided that making a significant mark on the US market required additional capital and on-the-ground expertise. They began an extensive search, but with a caveat: if they couldn't find the perfect fit, they would walk away from the process.

Upon meeting Livingbridge’s investment team, the Veramed founders could see clearly that Livingbridge not only understood that culture but saw it as a competitive advantage to be protected at all costs.

By November that year, Livingbridge had invested in Veramed.

Following the first year of investment, the combined Livingbridge-Veramed team started prioritising targets on the East Coast, focussing on Boston in particular given its strong presence of life sciences companies. This was also home to Livingbridge’s US office and Veramed’s earlier expansion efforts. Following a period of target identification, outreach, and relationship building, led by Livingbridge’s US lead Curt Kahn (himself a Boston-native), Veramed’s US expansion began in October 2023 with the acquisition of local CRO, Clinical Trial Data Services (CTDS).

The success of the acquisition validated the Boston strategy, and just six months later, Veramed significantly grew its US footprint by acquiring BioPier, a notably larger CRO also based in the city.

As of 2024, it now employs over 500 statisticians, programmers, and data management experts up from 200 in 2021.

You’re either ready or you're not

While Livingbridge typically invests in businesses for three to five years, we take a much longer-term view on a company’s growth potential, with our goal always being to build long-term, category leaders.

Knowing the capital and time required to successfully achieve US expansion, we wouldn’t advise our portfolio companies to take the leap unless we have complete conviction that they are truly ready. Our long-term view is that the US market is going to continue to be strong for years to come, so there’s no rush.

But for those companies that are ready, it’s a jump we encourage them to take, regardless of short-term uncertainty.