Canada and European countries share many similarities, an important one being that they are often individually large enough for companies to reach $25 million in revenues locally. However, for local champions with ambitious financial goals, upwards of $100 million, let alone $1 billion, it is necessary to aggressively pursue further geographical expansion. Lightspeed achieved this through vigorous growth across both North America and Europe. Virtual work during the pandemic showed that it’s possible to grow remotely, and demonstrated to companies that they can expand sooner than might have once been possible. This has created a mindset shift: the best founders are now thinking globally from the outset, with numerous opportunities on both sides of the Atlantic.

Speed = Distance over Time

There are currently many European markets that are big enough to build $25-50 million revenue businesses, but to grow to say $100 million would often necessitate too high a market share. The best founders acknowledge when they are in a permissive regulatory environment, and look outside of their borders within the first few months or years of selling to take advantage of the opportunities available to them.

For example, Inovia Capital portfolio company Booksy, started out strongly in Poland. Booksy is an operating system for salon owners to run their business, as well as a B2C platform to help customers find salons. Once it had proved product-market fit in its home market, it quickly expanded to other European countries and the US, both organically and through M&A. Booksy is building a solid standalone business in Poland, but to grow any business meaningfully with the VC lifetime, it was important for them to expand geographically.

Selling software globally

In a post-Covid world, it is easier than ever to sell software internationally. Although specific strategies will ultimately depend on the complexity of the individual product and its buyers. At its most simplistic level, it can be split into the following:

Consumer businesses

Easy to enter unregulated markets remotely, following the right marketing tests to see what resonates with a particular audience. This was the approach taken by Howbout. Upon feeling a strong organic pull from the US, it managed expansion from London before its Founders started to spend increasing amounts of time stateside. As a company scales, the rule of thumb is that marketing should be 70% global, and 30% localised, and so considerations for localised hiring (even if freelance) should be made early on in the expansion decision. B2Cs and SMBs can make gains by localising content, hiring a marketer on the ground, therefore get the same bang for their buck without first building a whole team.

SMB to Mid-Market software

Requires a different approach. Sales can be undertaken remotely in the early days, again to gather the right signals from the new location and to build a business case. Sooner or later, however, it would require local support from a time zones perspective and a CEO or strong C-Suite to move to the new location and oversee team build-up, especially when GTM includes large partnerships. Here one can look to rapidly-growing startups Bsport or Veesion for successful examples of early remote sales, whereas established European champions like Brevo only doubled down at the growth stage with the hiring of a Global CMO and North America CEO.

Enterprise software

Here we have seen a polarised approach - with businesses moving to the US either very early or very late in their growth stage. For companies that wait longer and find themselves selling 6-7 digit contracts to the Fortune 1000, their CEO will likely need to jump on a plane every other week to complete business. As Neo4j CEO Emil puts it, moving to San Francisco early was akin to ‘running downhill,’ where efforts are amplified by favourable positioning. However, it is still possible to build a $100m+ enterprise SaaS business in Europe alone, and look to the US afterward. This will likely result in more competition, which could be addressed by an earlier move.

Advice to startups

I would encourage ambitious startup founders to consider their plan for global expansion from the off, which is what Dax and his team at Lightspeed understood in their early days. Many more European companies are now selling to the US earlier than they would have historically, and vice versa. Part of the process is looking for investors whose value proposition and ambitions align with their own. Some VCs might be more operational and regional, whilst others might focus on building the bridge across geographies, having one eye on the horizon. Make sure to find the right match.