The practical guide to launching a SaaS startup in a new European market
Launching in your first European country can be daunting: having to deal with a different culture, language, location is trying, and even well-oiled processes will break. When I was the France Country Lead of GoCardless, I found that there was a dearth of advice from the operators on how to expand in a new country. So here are some top tips from my experience launching in our first international market, France.
For context, GoCardless is a UK FinTech SaaS startup enabling companies of any size to simply accept Direct Debit. It powers payments for recurring businesses, be it subscription-based or invoicing, and have raised $25M so far. GoCardless pre-launched in France in December 2014 and officially in April 2015, and grew 6x relative to our UK growth at the same stage.
Choose the right market
European SaaS startups will often by tempted by the US as their first international market — after all, it’s a huge market and it’s likely you already have an English website and maybe some customers. For a FinTech startup however, the US has a whole set of different regulations, which can even vary per state, whereas there is no additional regulatory burden in Europe thanks to the EEA passport, making it a lot easier to expand in the EU (though Brexit might make this harder).
To narrow it down to a specific European country, you should spend a month or two doing a bit of desk research. Interview local companies that would likely be a good fit for your product, analyse your direct and indirect local competitors, and do a rough sizing of the various markets.
Once you have analysed a few countries, you will need to balance a trade-off between:
- Market opportunity: is it 0.1x, 1x or 10x your current market?
- Ability to replicate the current value proposition with minimal product tweaking: do you need 0, 1 or 10 weeks of product work?
- Competition: is there 0, 1 or 10 competitors?
For GoCardless, France was the right balance: a large market (1x), similar product expectation for Direct Debit as in the UK (a few weeks of product), and 1 one direct competitor. Germany, on the other hand, was 10x our current market, with ~5–10 competitors and a lot of product work to meet market expectations — not the best place to start for a first market.
You may well be able to launch in more than one market at the same time, though going from zero to one is already hard enough. If you are going to launch in several markets, they must offer very similar characteristics. For example, US and British startups will find an English-friendly environment in the Netherlands and the Nordics (the Netflix strategy), whereas French startups may find it easier to go after Spain and Italy (the BlaBlaCar strategy).
Find the right people
Being a native or very familiar with the country will be essential for any Country Lead role (even more so in large countries such as France and Germany). They don’t need to have done it before, but they need to want to get their hands dirty — we hired a range of profiles: entrepreneurs, consultants, product managers or business developers.
There is no better way to get started on your first country than by already having employees ready to tackle on the expansion. Even if they only have been there for a few months, they will already understand the company culture and will have generated some trust from previous work. Trust is fundamental because when a country lead passes on feedback, colleagues have to take their word for it — if they can’t speak the language, they can’t just listen in for a client call.
If you need to hire externally, try to hire more than one person for your first market. Startups with cofounders have more chance of success, and the same applies for your first international market. Octave Auger and I launched in France and it worked for a couple of reasons:
- Staying challenged: How do you prevent complacency? How do you make sure a country lead keeps learning if nobody else speaks their language? How do they get feedback? Co-leads can keep each other on their toes.
- Complementing your skill set: Are you good at sales, account management, marketing, PR, recruiting, partnership, product and managing? With the language barrier, there will be no economies of scale with the rest of your company: your English-speaking partnership team have limited ways to help a French partner deal.
- Going fast: It’s not just that two accomplish more than one. There is a multiplier effect to get two brains on tough decisions.
Doubling up becomes less important for launching in future markets. Previous country leads can share their experience and help if they speak multiple languages (keep an eye out for polyglots during recruiting).
Focus on sales pre-launch
When you launch a SaaS in a new market, the only thing that truly matters is sales. Your effort will be judged by clients signed and MRR generated, not number of press articles, incubator deals signed or events attended. Momentum in sales is fundamental, both internally to get the product tweaks you need and externally to get word of mouth.
Before officially launching, you will first need to be perceived as a credible player. Then, you will need to get your first leads and find the elusive local product / market.
Look like a local, act like a local
Whether you decide to manage your expansion from your HQ or to open a local office, you will need to look local to prospects. You will need to:
Speak the language: Translate your website. Not all of it, just what you need to get started: homepage, product, pricing. Do it yourself and do it fast. And don’t leave a drop of English.
Buy a local domain: Get your .fr, .de, .es domain name. Get a local number and a local email. Do you enjoy visiting a “global” website, calling an international number, or getting your call answered in a foreign language? Same for your prospects.
Track everything: Set up your traffic tracking in Google Analytics, Mixpanel and co. Track every lead in Salesforce and Slack. You are not going to have much action in the early days, so capture the few that come through the door impeccably.
Don’t localise contracts upfront: You won’t necessarily need it. Large enterprise clients have big legal teams that can deal with different legal jurisdictions. Most small clients are too busy running a business to care about the fine print. Keep your contract in whichever language and law they are already in, so that your existing lawyer can actually help you in a negotiation. Localise only if you have no other choice and the contract is a very big one.
Get to business
To get to your local minimal viable product, you will need local client feedback. Here are few strategies to get your first local customers:
Target existing leads: If you’re successful in your home country, a prospect in your target country might have noticed you. Dig into Salesforce, Desk.com, Mixpanel to find an existing lead… Contact your existing clients who may have local teams. Work with your existing partners to leverage their local clients. For example, we invested a lot upfront in our partner Zuora to extend our partnership to France who helped us win our first client, Zenchef.
Get some inbound: Get some PPC ads and SEO content in place. Replicate your most successful PPC campaigns. Translate your most visited content and adapt it to local expectations. Track page view to see if it hits the spot.
Avoid cold outbound: A cold lead has typically a longer sales cycle. You may not know what constitutes a good lead early on. If you can, hold on for a couple of months before running a campaign, so that you have a few data points.
Make product tweaks: Make the product changes your clients require, adapt your pricing, tweak your website content but try as much as possible to maintain consistency with the rest of the company.
Prioritising product changes at this stage is very hard: feature requests will sound strange (“do we really need to cover French Guyana?”) and will have an uncertain ROI, whereas your home market will have a list of well-understood and long-awaited features requests. It’s a tricky balance: you need to go the extra mile to win new business but you can’t develop one-off features. Pick your first local clients wisely by avoiding business that is too different from your historical clients. If you don’t think you can replicate that sale, move on.
Now that you have positioned yourself in the market, it’s time to launch. You only have one launch, so go big. At GoCardless, we found that PR can be a positive multiplier for a launch (Slack agrees) by building credibility and giving us a spike of early leads. Doing it right requires serious prep:
- Talk to 5–10 PR agencies: Explain your business model and then let them pitch you angles and press targets. Launching is intense work, so choose the agency you get along with best, that feel savvy and eager to work with you.
- Be bold: You are entering a new market. That’s exciting. There is a back-story here and journalists will want to dig into it. Our fantastic PR agency Rumeur Publique rounded up seven journalists to visit our HQ and meet the darlings of UK FinTech. Six of them published an article the next Monday. And we even ended up on TV.
Time to scale
Congrats, you launched in your first international market. What’s next? You will close your first 10 deals. Things start to break and you will be stretched, so you’ll hire your first sales person to get to 100 deals. You’ll start replicating processes that existing in your historical market. You’ll create localised support and customer success. You’ll write your first local case studies. You’ll develop an international marketing strategy. You’ll start hiring dedicated functional people. Onwards!
Octave Auger and I are now working together on a new project, so if you’re curious, get in touch!