On July 8, President Emmanuel Macron announced that France now has 19 unicorns, i.e. startups that are valued at more than $1 billion. In January 2021, the French government also announced that French start-ups were growing strongly despite the crisis: +7% between 2019 and 2020. France finally counts when we talk about European Tech.
At a time of record-breaking fundraising, French start-ups becoming unicorns and beautiful big companies, what are the key steps not to miss to develop your French start-up across Europe?
First of all, when there are several co-founders, it is essential that they take on specific tasks. Generally, their profiles dictate their roles: the development engineer becomes CTO, the sales person becomes Head of Sales and the engineer with a very versatile profile becomes CEO. Whatever the background of the co-founders, they must define a specific role for themselves. Moreover, very often, even before creating a start-up, the co-founders look for complementary profiles.
Once the starting team is set up, and before thinking about international development, it is essential to be very clear about the company’s DNA: what are its strengths, its weaknesses and its orientation? This extensive upstream work is important to define the future direction of the company.
International expansion must meet the company’s strategic and growth objectives (in the same way as M&A or fundraising…). It should not be the result of a desire to mimic other recognized players. For example, Doctolib and VeePee took a long time to export outside France. It is important to keep in mind that a company’s success is not necessarily linked to its internationalization, which generally occurs after having tested its playbook at the national level and after having validated the “product-market fit” of its offer.
In addition, a playbook is essential for employee training. It helps to support sales teams and addresses the sales strategy and procedures to be implemented in the start-up. The answer to the question “Do you need money to go international?” is clearly yes. And that is why it is necessary to have proven itself locally in order to be able to afford to over-invest in the new target market to quickly acquire first customers. The amount of money needed to enter a new market depends on many factors: the size of the market, the geography, the local culture, the competition already in place… and the growth objectives to be met by this internationalization.
The playbook must measure the risks related to internationalization and anticipate plans B and C to the question “what if it doesn’t work out as planned?” The risks are of different natures: human, technological, regulatory, economic, cultural, etc.
It is also important to identify the final targets and understand how they express their needs in order to create the most impactful dedicated content possible. One of the very first issues is to have local customers quickly to generate local revenues and increase local investment capacity, working on communication based on local examples.
Moreover, a start-up that wants to have a strong growth and to develop everywhere in Europe and/or in the world must be able to attract talents by its vision, but also by the salaries, the missions and the management. All these elements contribute to the employer brand. Interesting profiles go from one scale up to another and competition is tough.
Once all this has been thought out, it is essential to test the solution abroad because it may work very well in France but not in another country.
It is also important to measure upstream its ability to scale because the start-up changes its mindset and has different issues when it develops software for 100 users or for thousands of users. This notion of scaling will also have an impact on the teams in the parent country and they must be prepared to accelerate their productivity.
The international “mindset” is also an issue and must address issues of corporate culture, values, integration of new foreign employees, the process of increasing skills and appropriation of the “brand”…
Then comes the choice of the first country, other than France, in which the start-up will develop. Why choose one market over another? What are the tax / legal and financial issues? What are the existing solutions on the market in question? These are all questions that entrepreneurs must ask themselves.
There are two main solutions: either the company starts to develop in other countries from France, in English or by recruiting a native in France, or the company recruits a native in the country in which it wants to develop. Or it can choose indirect sales and test the market’s appetite via a network of resellers.
When the company is present in several countries, it must keep its culture, its vision. Its rhythm must be the same everywhere, its commercial culture must also be the same from one country to another. Everything must be aligned without duplicating the French model, because a minimum of adaptation is necessary.
When a start-up succeeds in France, it does not mean that it will work well abroad. Many parameters must be taken into account and an entrepreneur must take his time at each stage of development of his company.
Going international is a terribly exciting and exhilarating entrepreneurial challenge. But it must meet strategic challenges consistent with the vision and growth objectives. Let’s not forget that it is not necessary to go abroad to be “successful” and that some have chosen to be local super-stars before going abroad.