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Internationalising

Internationalising a European SaaS business is generally done sooner than US peers

International expansion is a core part of GTMF, and one of the primary growth drivers for scale-up stage software businesses.

 

For SaaS businesses born in Europe, internationalising is generally considered sooner than US businesses, who have historically been able to get to scale domestically for longer. The average European scale-up generates 40% of its total revenue from foreign markets  according to the European Scale-Up Report; a higher proportion than equivalent US-domiciled scale-ups. A study from Balderton found that SaaS companies opened their first international office after 4.1 years, over 20% quicker than US companies at 5.3 years.

 

Interestingly, several reports now state that a booming European scale-up market has meant businesses are heading to the US later than they used to. For example, a report from Index Ventures found that the proportion of businesses moving to the US before their Series A round fell from 2/3 prior to 2014, to just 1/3 since then.

 

The US continues to have a strong pull for founders of European software businesses (particularly enterprise software businesses, where the US is a critical end-market) but many are also emphasising the importance of growing well in Europe first.

“[Growing in Europe] will enable you to see nuances and learnings, and be able to raise the capital required to go after the US. You will see 10x the competition in the States, and you have to be ready for that.”

 

DANIEL EK | CEO, SPOTIFY

There are a few traditional European expansion strategies we cover, with some of their drawbacks, as well as some general recommendations and common pitfalls to avoid.

There are 5 general approaches to internationalising from a European base

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Expanding internationally can be transformational, but watch out for common pitfalls

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There are many VC playbooks and articles with a huge amount of specific advice on international expansion. Some of our favourites include:

 

We hope this toolkit is useful as you scale your SaaS company and build towards nailing GTMF. We'll continue to update this toolkit, so if you have feedback or suggestions, please let us know.

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Oxx is a specialist SaaS venture capital firm, backing Europe and Israel's best B2B SaaS companies from Series A and beyond. Want to pitch? Get in touch.

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