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3 tips to help set your international expansion in the right direction

So, you’ve made an impact in your native region and built up a strong portfolio of customers that love what you do. What’s next? Like many software companies in your situation, you might shift your attention to the new opportunities that only market expansion can deliver.

Across our many years of working with software companies on the journey to expansion, we’ve come to understand how tempting it can be to opt for the closest geographical choice. And why wouldn’t you? The language, culture, and time-zones are likely similar – but this isn’t always the right approach.

We recommend focusing on the opportunities – not just the geography. Consider the following factors, and if any of them make sense to your organisation, you’re in a good position to kickstart your expansion strategy:

1. Do any of your customers have an international presence?

Establishing a customer base in a new region is a classic catch-22. You need customers to get customers. A really rich area for this is looking at your current customer list, and identifying if any of them have a presence in your target market.

It will usually be far easier to make that branch of the company a customer too as you’ll have internal advocates, then you get the dual benefit of a foothold in the market, and invaluable local references.

“In the software business, references can make or break your expansion,” says Gustav Lagercrantz , Monterro CEO and Chairman of the Board for Next Technology and Mashie. “In most markets, they love domestic references. So, if you have customers there already, you can point to them for reference – and you already have customers to work with when you open your new office. It’s a foundation for growth.”

2. Does anybody in your company have international connections?

When deciding on a region to expand to, the direction doesn’t always have to come from the product, or from desk research on how desirable a market is. In fact, paying attention to the history of your team can prove a fruitful place to start.

This is what happened to our portfolio customer, Viedoc, a data management provider for the pharmaceutical industry. While Viedoc is able to deliver its software solution globally from its Swedish headquarters, the company realised there were parts of the globe it wasn’t reaching due to a combination of time difference and cultural knowledge.

“It all started with Japan – that was an opportunistic move that came out really well.” says Mats Klaar, Viedoc CEO. “One of our founders had a strong understanding of the Japanese market, and some great connections.

“So, we met with a key opinion leader in Japan and after a number of meetings, he started to endorse us. And the rest is history – we now have more than 200 customers worldwide.”

3. Which regions have needs you can help with?

“You can waste months doing desktop research or paying consultancies to find the perfect region – economically and geographically,” says Gustav.

“But depending on what you’re selling, it can be faster and more rewarding to look for opportunistic gaps in different markets. Is demand rising there? And are they facing challenges you can help solve?”

Gustav gives the example of one of our portfolio companies: Itello. They’re a pension software company, so when they are deciding on a country to expand to, it makes far more sense for them to research which countries have similar pension systems.

So it’s worth identifying what the issues are your software solves, and what other markets have comparable issues.

Take a step back – have you missed anything?

Once you’ve weighed up your options, you may find that the best region to expand into is somewhere completely out of left field – just look at Viedoc. But once you know where you’re headed, you’ll need to figure out who your first hires are going to be, and how you’ll embed your culture in a whole new environment.

For more tips and insights about international expansion – from identifying new markets to hiring the right people – read The field-guide to international expansion for Nordic software CEOs.