How to Take your Startup Global NOW!

James F. RyanManaging Partner

Farpoint Ventures LLCwww.farpointventures.com

The Need

There are many startups who have

developed excellent products but

struggle to bring those products to

the global market quickly

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The Costs of Delay

Opportunity Cost

• The longer you wait to enter global markets, the more lead-time you are

giving to your competitors.

• In an interconnected world, news of successful US startups travels around

the globe instantly. If you delay too long going to global markets, you may

find yourself competing against local “copy-cat” versions of your own product

when you finally do enter these markets.

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The Benefits of Being Global

More Revenue

• The most obvious reason to enter new markets:

New revenue streams that may not even be in the

business plan

Diversification

• Having 100% of your revenue coming from a single country puts you at

catastrophic risk should that country experience an economic downturn

Process and Product Improvement

• Certain markets, such as Japan, have such high quality standards that simply

doing business there greatly improves the quality of your product and your

processes

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How to Go Global?

Try to hire a “VP of Sales”• Difficult to recruit the best talent to

small startups

• Candidates with global experience demand high salarieso $350K or more in salaries and commissions

o Add another $300K/year in travel expenses

• Riskso Difficult to find someone who is experienced

in every market around the world

o Even the best candidate on paper may not deliver the revenues in reality

o Even you do find a great VP Sales, there’s a limit to how much one person can accomplish

o The opportunity costs of pinning your hopes on a VP Sales for 12-18 months are enormous

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How to Go Global?

Engage “Market Entry Consultants”

• They all claim to be the best, how to choose the right

company?

• These companies often represent tens or even hundreds

of products—how can you ensure they work hard for

you?

o Pay them only on success?

o Companies who pay a retainer will

take priority

o Pay them a monthly retainer?

o They will still only focus on your

product if they think there

is significant upside

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Partner with a Global Player

In a perfect world…

• Negotiate an OEM or licensing agreement with a US-based global player

• They take care of sales, logistics and technical support; you sit back and collect royalty checks

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In the real world…

• OEM and licensing agreements can take 9-12 months to negotiate

• Negotiations eat up enormous amounts of executive staff time

• Legal fees can be hundreds of thousands of dollars

• After signing, the partner may not focus on driving sales of your product through their

sales force, meaning you will still have to mount a sales effort within the partner

company to engage and motivate their sales force

• Large multinational companies have disjointed organizations; it’s entirely

possible that another division of the same company has signed a similar deal

with your competition!

Thinking Outside the Box

Discussion:

Are there novel ways to bring your

company to global markets that

address the shortcomings of the

traditional strategies mentioned

above?

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Thinking Outside the Box – One Idea

Turn your Liability into an Asset

• The problem:

o “The inability to penetrate global markets effectively is a liability to my company.”

• However, put another way:

o “The global revenue potential of my product in yet untapped markets is a very valuable

asset.”

• Your problem is an asset

o Why should you be spending your precious capital paying a VP Sales or consultancy to

bring you to global markets?

o Shouldn’t they be paying you for the rights to to sell your products in global markets?

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One Idea - Exclusive Licensing Deals

Exclusivity is extremely valuable to local players

Exclusivity in overseas markets that you weren’t targeting anyway is a

relatively low cost asset

Dealing with a single player is easier

Offering exclusivity gives you the upper hand in negotiations. You can require

the partner to:

• Pre-order and pre-pay for a fixed amount of product to cover your start-up costs

• Pay for localization, local regulatory approvals, translation of documentation, etc.

• Purchase a minimum number of demo units and maintain a training/testing lab

• Commit to marketing expenditures, dedicated headcount, training, etc.

• Commit to SALES QUOTAS

o If the local partner fails to meet the sales quota, they have to purchase the difference

or lose their exclusivity

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Thinking Outside the Box

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Audience Q&A

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Thank You

For details, contact James Ryan

jim@farpointpartners.com

+1.617.642.8810

www.farpointpartners.com