Organic international expansion
In our view, international expansion looks great on paper but we need to ask some key questions before we dive into the investment.
- Are the use cases for our products similar in other geographies? In the context of healthcare, all providers around the world treat patients. However, patient workflows vary massively across geographies. In fact, even within the same country, the clinical pathway for specific types of cancer could vary. Depending on the nature of the software, it may need to be customised for every country and makes scaling more difficult.
- Is there a network effect? Again using healthcare as an example, we may have to integrate with the hospital’s EPR (Electronic Patient Records) solution. The EPR solutions could vary by country and therefore, selling into any new country will require us to integrate with a range of new EPR solutions that are specific to the country. This can be a catch-22 situation i.e. our chances of winning a bid are low without an existing integration in place. All of this is surmountable but we need to be realistic with the level of investment and timescales before we see meaningful sales.
- Are there language/cultural considerations that make it difficult to scale? Most software solutions can be made multi-lingual by implementing language dictionaries. However for example, if your solution’s use case is to “clean data” that requires understanding the local language/culture, this is harder to scale. We are involved in a business that cleans and enriches metadata for entertainment service providers (Netflix, Sky, BBC, etc.). One of the key pieces of metadata is content synopsis which drives viewing behaviour.
- Do we have insight into the local practices for procuring solutions? This is especially true for public sector procurements. No two countries are the same. If we don’t have insight into this or we don’t have a local partner who knows the ropes, it can be difficult to win contracts.
- What payback period are we willing to tolerate? If you are looking for payback within 12 months after entering a new geography, you may be too ambitious. As a small business. there is always ample opportunity to grow within your core market and expanding in your core market can generally be a faster payback period.