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The Challenges of Creating a Startup Overseas

When the founders of Coursera were looking to push into a new market to expand the service, they sought to increase their presence in China. The company saw a major advantage aligning itself with Chinese content providers, and took the time to make multiple connections that would help get their content to a wider Chinese audience. They also partnered with China’s top universities, which helped establish Coursera as a reputable name with excellent content.

In 2015, Coursera reported growing to 1 million Chinese users and counting. Although the company began in the US, foreign expansion was able to improve the user base and engagement rates for the service.

Overseas business expansion via partnership

The fact is that starting or expanding your business into the overseas market can come with many benefits:

  • Less Overhead – Workers and office space may be less expensive depending on where you decide to do business.
  • Available Capital – some parts of the world are starving for investment opportunities, and there is plentiful capital.
  • New Customers – A new class of buyer is unlocked, but there are some caveats to getting them.

If you’re considering trying to make your startup work in the overseas market, wherever the world may take you, then you need to consider several factors that will impact your trajectory. For one, culture and political values should align with what you do. You must be able to work within the boundaries of the infrastructure (be able to send money or hire workers as needed), and maintain good counsel able to operate globally.

Working internationally is a major challenge, but it is possible with proper planning and the right help.

Culture and Politics

In a place like China, information is a commodity. One way that big businesses like LinkedIn have found a foothold in those markets is by providing some level of access to the data on their users. Many of these success stories also create local jobs, so they may invest in local server infrastructure or utilize local contractors for construction projects.

In American politics, we tend to prioritize job creation these days but the political story is the same everywhere else in the world. Built into the Canadian immigration laws for startups are requirements involving ties to existing pre-designated companies allowed to invest in foreign entities. It’s not uncommon to find laws like this all over the world, where some pre-existing relationship is required to facilitate your entry.

There are multiple opportunities to find such entities if you network. Startup meet and greets are good places to locate potential investors and business owners already walking your path. Explore these options and make an effort to understand more about local politics if you want to see long-term success.

Infrastructure

Many startups will need a solid Internet connection capable of reasonably fast speeds, access to good transportation, and probably prefer good weather year round. Some parts of the world will be more conducive to those requirements than others. There are parts of the world where floods can cause massive delays in getting to work, or even keeping offices open for extended periods of time. Frequent storms, or other natural disasters, can slow or stop your business altogether.

Travel to the area you plan to do business throughout the year, and consult with locals you may know for day-to-day conditions. Of course, just like buying a home, you’ll find that thorough research doesn’t guarantee you’ll anticipate everything.

Business consultation

Legal Counsel

The legal protections you enjoy in the United States essentially do not apply once you leave its borders. If you prepare for this, it won’t come as a shock. Otherwise, it could be a costly mistake. Patents are the big one to be mindful of, but all sorts of laws apply. In France, it’s very difficult to fire employees, so business owners should be mindful of these protocols before moving overseas.

Well in advance of making the move, one of the contacts you should try and establish is a law firm that is able to practice internationally. Especially if you’re signing agreements with co-founders or other investors.

Tax laws are another challenge for international startups. As a small business, you probably don’t want to allocate a major of your portion to international accounting firms to manage payroll. Having a contact who understands the intricacies of local tax laws, and can help you find ways to save on the costs of doing business, is invaluable for those early years when profit is the lifeblood of staying afloat.

Final Thoughts

Starting any company is difficult, but starting a company outside of your country of origin presents some unique challenges outside of trying to build and sell a viable product. Without professional contacts inside the country you plan to relocate to, and a solid understanding of local customs, you’re guaranteed hardship. You’ll sell better to your new target market, and have an easier time managing your affairs if you begin preparation before you leave.

About author

Tara Miller
Tara Miller 83 posts

Tara Miller is an experienced writer. She owns and runs a copywriting business.

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