Scaleup Vlaanderen
'Now that money is scarce you have to go for low-hanging fruit'
Companies with a digital business model that want to scale often have to go international from the start. Our coaches Maarten Laruelle and Frederik Tibau talk about how they guide growth companies to take that step.
When our grandparents established a business, chances were that their customers were mainly from the same province. Here and there there were exceptions, but a few generations later the situation is completely reversed. Indeed, in some industries it is impossible to stay under the steeple. Especially for digital startups and scale-ups, it is vitally important - the name says it all, in part - to scale beyond national borders.
'For tech companies, the Belgian market is usually too small,' says Maarten Laruelle of Scaleup Flanders. His colleague Frederik Tibau adds, 'Digital products are often not the most expensive. Which means the number of customers you have to convince to become a healthy business is sometimes particularly large. Especially if you are aiming for a niche, you need a big pond to fish in, and Belgium is often not enough. Because your customers could just as easily be in Germany, the United Kingdom or France.'
'Also, your competition tends to be international, so you have to try to gain a large market share in different markets as quickly as possible. In SaaS, the companies that fall out of the top ten matter less, especially in a B2C context. Consider the Google search engine. Microsoft's Bing still plays a small part, but then you're soon out of the game.''
Anno 2023, it is more important than ever to move abroad in a smart and efficient way, it sounds. 'In the past two years there was actually too much money available, so scale-ups got overconfident and started betting on several horses at once, burning a lot of money,' Tibau adds. 'Now that investors have their finger on the pulse, every penny you spend has to be well spent. In that sense, good guidance is more important than ever; you simply can't afford the expensive missteps anymore.'
How you start that internationalization depends on your business model. Product-led growth companies aiming for the masses often need to think globally as much as possible from day one and focus on their marketing efforts (acquisition) from the outset before focusing hard on sales (monetization). Whereas for B2B companies, it is often more important to first reach critical mass domestically before moving abroad.
'There is no one-size-fits-all model that works for everyone,' Laruelle says. 'What we do in our coaching is to zoom deeper into some crucial parameters, unique to each entrepreneur(steam). Who are these founders really, and what are their own ambitions beyond the product? How can they successfully internationalize in line with the persons they are? You have to understand that not everyone strives for extreme growth. For example, if you don't want to be on a plane all the time yourself, that's ok, but first go get people on board who can do this for you. On top of that, you still have to put in some extra time to get these people in line with your vision and culture.'
In a personal coaching program, Scaleup Flanders guides growth companies that want to go international. Spread over a period of about two months, an entrepreneur (steam) spends four days together with the coaches in order to focus on internationalization.
'We deliberately strike a balance to not make that process too tough,' Laruelle says. 'It's a risk to prepare too much before jumping in. You can prepare to the max, but as a scaleup, create the demand and the first customer before putting all the systems and procedures in place.'
'We begin our process with a comprehensive intake in which we reflect on the entrepreneurial team, the past and future plans. Based on that historical information, we can then get to work,' says Laruelle. 'For example, together or for the team, we will once do a segmentation analysis of existing customers and we will examine what the market looks like from our point of view. Who are the competitors, how do they operate, what can we learn from their positioning and how can we position ourselves better?'
Tibau: "We use that knowledge to set certain priorities and work out the right organizational structure. We want to make everything as measurable as possible, although the result can differ from scale-up to scale-up. For example, some work toward a business plan to raise money and others are more likely to want a plan to convince the board.'
The coaches of Scaleup Flanders find that many scale-ups still too often want to work on their internationalization without a concrete plan or investment, and then hit walls. 'You also often see a lack of product-market fit,' says Tibau. Entrepreneurs then make a mistake and want to move too quickly to the United States, for example. Of course, that is also a large market, but internationalization within Europe has its advantages. Doing business on the other side of the world is expensive, a lot of companies rip their pants off. Now that money is scarce, you have to go for low-hanging fruit'.
'Just because you've found your product-market fit here doesn't mean that's true in another market. You have to look at the expectations of certain markets and understand what they see as the solution, because another region may have slightly different needs or expectations. If you're not open to that, you run the risk of missing that nuance," Laruelle adds.
Another common mistake is relying too much on local expertise or established values. Laruelle: "Scale-ups then hire a senior person from that market and give them complete freedom. Often I see things go wrong there because that person never gets the full history of your company and the nuance of why you exist. You really have to find the right balance between your own culture, experience, and the needs of the new local market. By this I don't mean that as an entrepreneur you have to do everything on your own, but you shouldn't blindly rely on local experts either.
In recent years, dozens of entrepreneurs came knocking on Scaleup Flanders' door for guidance. Virto Solar, a tech company active in the solar panel sector, for example. 'Kim Eyckmans is active as a solo entrepreneur and suddenly noticed that his direct competitors were raising tens of millions. Together we drew up a realistic strategic plan so that he too could continue to grow. Virto Solar was already selling well internationally online, but there was a need for a structured approach to further expand his business,' Laruelle says.
Tibau notices a similar scenario at Foodpairing, which certainly today sees more and more AI-driven competitors popping up internationally. "At a time like that, it's very important to reflect on your strategy and to put the right focus. The advantage of our guidance is that we have less tunnel vision than the entrepreneurs themselves, so we can steer companies strategically in the right direction.'
Thanks to that broad perspective, the coaches often also come up with practical advice that entrepreneurs hadn't thought of on their own. That they can get subsidies from FIT to have their website translated, for example. Laruelle: "Entrepreneurs cannot know everything, and sometimes it is important that we can help them with an introduction. We want our pathway to provide the tools and resources that can quickly make a difference.'
Individual counseling at Scaleup Flanders will continue for the next few months. Interested? Send an email to info@scaleup.vlaanderen
