Leaving The Valley
The Bay Area is home to about 25% of the world’s venture capital investments. An impressive number undoubtedly. But why don’t we hear more about the remaining 75%?
It should come as no surprise that the geographical footprint of startup affairs extends far beyond Silicon Valley. What may be harder to conceptualize are the vast differences from country to country. In America, negotiations, hiring, fundraising; they all tend to follow a predictable rhythm. That drumbeat is different across the world, making it easy for the inexperienced entrepreneur to step on someone’s foot.
ETW Advisors is fortunate to work with founders of wide ranging experience. Beyond the US, our founders call China, Israel, Belgium, Netherlands, Canada, and India home. With access to such extensive knowledge, we wanted to know as it relates to startup life, what are the differences among nations?
Have you tried to fundraise in an international country? What if anything was different about the experience versus your fundraising efforts in the US?
“Yes, I raised money from Hong Kong, and tried in China. In Hong Kong, VCs actually ask you for your NDA (!). The overall experience is similar, but you have to understand whether funds are in RMB or USD, if they can invest in US companies or only joint ventures, etc. Otherwise the process seemed similar to the US. I got the sense it was based on the US model.”
-Nick Kohut, CEO of Dash Robotics. Work experience in Shenzhen, Beijing, Shanghai, Nanjing China, & Busan South Korea
“Yes, in Europe. European investors tend to be old school. They want to see a written business plan, 5–7 year detailed financial projections, expect strong IP portfolio, and tend to hammer you on valuation.”
-Eric Dy, CEO of Bloomlife. Work experience in Belgium.
“In Canada, the experience is similar although the appetite for a seed stage company is much less. There is nothing like getting smart capital from the Bay Area.”
-Matt Man, Founder of indus.ai. Work experience in China, Hong Kong, Canada, Netherlands, UK, & Germany
Have you negotiated a sales or partner deal with non-US companies? Where? What was different versus your experiences in the US?
“Yes, in China. There is a lot of behind the scenes arrangement and relationships that are not cleared if you just look at the deal dynamics at face value. This can make the deal very inefficient if you don’t have the exposure to those undercurrents. It is encouraging to see that ultimately everything will also be documented in a contract. Insist on having a contract in place. This will give you some protection and common understanding of the terms.”
-Matt Man, Founder of indus.ai
“Yes, in Belgium, Spain, Netherlands, and the UK. No specific difference on this front except contracts will always prefer to litigate in their country.”
“I negotiated a sales deal in India. The biggest difference between the two is in India, there is generally a need to meet face to face to while in the US several deals get done remote.”
-Kuntal Malia, Co-CEO of StyleNook. Based in India with work experience in the US.
What advice would you have for a startup trying to do business for the first time in the countries you referenced in your previous answer?
“Find a local representative that you can trust in your network and incentivize him/her to put your company’s interest first.”
-Matt Man, Founder of indus.ai
“If you are fundraising, try to find a US lead. It simplifies negotiations since EU investors will tend to default to US investors (especially from the Bay Area) with respect to valuation and terms.”
“Ensure that all your compliance and regulation aspects are taken care of early enough. It’s ideal to get in touch with firms who manage other early startups and can advise you on the compliances that need to be followed.”
-Kuntal Malia, Co-CEO of StyleNook
Is there anything else you would like to share regarding the differences between operating in the US versus the international markets in which you have experience?
“Showing up is key, you can’t get things done over the phone.”
-Nick Kohut, CEO of Dash Robotics
“It’s challenging to maintain the same culture in US and EU. The pace of work, hours that are put in, expected vacation days. All of that is just different.”
“Goes without saying, but the audience — customers, vendors and employees are culturally very different. It’s important to keep that in mind and adjust your mindset as you start a business out here.”
-Kuntal Malia, Co-CEO of StyleNook
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