By Matt Lerner from 500 startups
Late stage venture investors want billion-dollar opportunities. Many great businesses simply can’t reach that scale operating in a single European country. In order for early-stage startups to raise growth capital, it’s very helpful if they can demonstrate the ability to expand their business into at-least one or two new markets.
Given that these companies have very limited resources (time, attention, cash, engineering, etc.) I suggest testing the value proposition in new markets with very simple experiments.
For example, with one B2B SAAS company with a fairly expensive offering, they had some leads in the US, and were waiting until they could hire a US sales/account person to follow-up. Instead, we suggested they just set up a Skype call and see if they could sell their service over the phone. It worked nicely and now much of their revenue comes from the U.S. despite not having any “people on the ground.”
For a B2C company, we might suggest setting up a landing page and buying a bit of traffic to see if anyone clicks “buy.” (You can do this even if you don’t actually offer your product or service in the U.S. You can just apologise that you have not yet launched, and add the person to your waiting list.).
In any case, the first step is to perform a bona-fide experiment to validate the demand for your product or service in a new market before you take the time and expense to incorporate, hire, set up offices, file taxes, etc.