4 Ways Emerging Markets Startups Can Make The Leap Into Mature Markets

By Luisa Rubio Arribas 

The unfolding digital transformation presents a huge opportunity for emerging market startups to bring their innovation and tech expertise to the table, especially as foreign investors flock to emerging markets at the fastest pace since 2013.

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Companies in these regions have the financial backing and diverse perspective to branch out, but they first need to know how to make that leap, starting with these four areas:

Make your product replicable and scalable

You need to have a fully functioning product, with a proven market fit, before you dive into a mature market. Ideally, your product should already dominate the market at home, or be in the top tier. If not, you should pause internationalization plans.

Whatever your target location, user experience should be a core focus of your growth strategy. Nuances in language, culture and customer behaviors will change their experience of your product. Conduct interviews with locals, read research reports and speak with expert local investors or influencers who have witnessed trends in your industry over time and can prepare you for user expectations.

That said, to be a scalable company, you need to find a way to keep almost the same core product across all the markets you’re targeting, with very light differences mainly relating to language, messaging and style. If you’re redesigning your product for each individual market, you’ll run out of money and energy too quickly to sustain your expansion.

Time your entry carefully

A common mistake founders make is getting caught up in the allure of expanding globally, and losing sight of present conditions.

Conduct a full internal analysis of your business performance. Review core metrics like sales, customer loyalty and net promoter score over the past year. Maybe you’ve seen spikes in sales or revenue but you’ve also had consistent weekly losses, in which case you need to spend time stabilizing your numbers before looking to grow abroad.

You also need to brush up on your competitors’ activity. How many players are already operating in your target market? Pay close attention to when they made the leap and if there are any parallels with your company. If the circumstances are completely different, that might be a red flag that you need to wait.

Don’t bootstrap funding

Larger and more established markets need more momentum than bootstrapping gives you, so it’s best to source money elsewhere.

Public funding is good because a lot of government-led initiatives offer grants and loans to entrepreneurs trying to access foreign countries. For example, the Taiwanese government has its own program dedicated to propelling local businesses into international markets. Don’t assume that you can only utilize funds from your own government either; speak to officials in your target market about possible financial support.

Venture capitalists are another option, as more firms are showing an interest in emerging markets. In fact, Sequoia Capital recently launched funding opportunities to startups in India and southeast Asia.

Foster strategic partnerships

Startup programs can help you better understand new markets, as well as suggest location-specific tools to build a solid business foundation. For example, Samsung‘s startup lab helps bring Asian founders to American events such as CES. Embassies and consulates are also useful for resources, contacts or diplomatic backing that makes your entry smoother.

Reach out to entrepreneurs from your home country and other emerging markets who are bringing similar solutions to your target nation or other nations with similar contexts. Talk to local startups who are already making waves in your vertical. You can be disruptive without disregarding the strides other local businesses have made in your field.

If you’re in the B2B sphere, make a list of customers that have professional relationships in your target market—this could be partners, investors or clients of their own—and ask them to set up introductory meetings. If your product is B2C, consider reaching out to local influencers, specialized media and local investors who have a relationship with your current investors.

Emerging market startups are innovation powerhouses and can bring much-needed solutions to the world. Given the opportunity to do so, they could expand the hubs of Western countries, and make startup success a truly global phenomenon.

Luisa Rubio Arribas is head of Wayra X, Telefónica’s digital innovation hub offering funding, support and access to its extensive network of experts, partners and clients to B2C startups focusing on 5G, e-health, e-learning, smart homes, entertainment, mobility and the future of work.

Illustration: Li-Anne Dias