As scale-up software companies look to reach the next level, international expansion is a promising new growth vector. For Insight’s portfolio companies based in the US, Canada, and Israel, making that international jump means expanding their Go-To-Market footprint to Europe – and the majority have made this strategic move as they’ve grown. After all, Europe makes up ~20% of Global IT spend. As one of Insight’s Portfolio executives put it, “It’s a big bet. It's an expensive bet. But if you do it right, you can enjoy incredible revenue growth”.
Almost 60% of Insight’s Portfolio companies in the last 10 years have expanded their footprint in Europe. As a result, we’ve seen first-hand the successes that companies can enjoy in this foray into Europe, but have also come to compile a handful of lessons learned and pitfalls to avoid.
To distill best-practices and watch – outs for the next wave of companies who embark on this journey, we spoke with Insight’s CEOs and CROs who have made the leap successful to help answer a series of critical questions:
- When is the right time to expand GTM to Europe?
- Where should we set up an office?
- How should we prepare and plan?
- What kind of team will we need to hire?
- How do we maintain our culture?
- How will we measure initial success and move forward?
For most companies, the most first, most critical question is “when do we know we’re ready”? Executives need to balance striking while the iron is hot (when demand is clear, and the market pull is real), but also not pulling the trigger prematurely, causing distraction, under-resourcing, and mis-alignment. Below, we outline several key indicators that your company is ready to make the next big leap:
You’re starting to get pull from customer
A key indication that the team is ready to explore a move to Europe is if European customers are already showing interest and creating inbound leads. These early leads are critical to establishing the local reference base needed to scale internationally
The company is sufficiently funded for a large GTM investment
GTM expansion to Europe will be a long and iterative process that most often succeeds with full executive and financial commitment, so make sure you’re well invested enough to do it. “The launches I see that go very well tend to be when the company fully commits themselves to the market and sets up more than just a pop up shop".
Product Market Fit is clear in European markets
Just as in your core market, product market fit is critical. If the product is not quite ready to serve an international audience more broadly, those kinks should be ironed out before a full-scale landing team deploys in Europe. Test to make sure the product is fit for purpose (e.g., currency, language, UX) – this is easier to do when you can be flexible with a small group of early adopters but can be difficult to address if problems arise later on.
Your scale is just right; not a distraction, but also not a missed opportunity
Europe is a significant market - if there is inbound interest, product market fit is there, and the company has runway to invest, don’t wait to expand. That being said, the team should understand the executive and functional commitment required – it can be a distraction if the move happens before the primary GTM is humming.
Many US customers completely ignore Europe until they are around $100M. At $5-10M in ARR, if you’re starting to get $0.5-1M ARR inbound from a new market, I would definitely start looking at expansion…But you need bandwidth. In some cases, it may be smarter to scale to $20-30M so that the move doesn’t become a distraction. It takes real time and executive attention.
Even if all indicators appear positive, it’s critical that the team has the mindset of testing before investing; Portfolio executives should get on planes, talk to potential customers, partners, industry connections and US-based customers with a global footprint to test market pull.
Once it’s clear that the market pull is strong, the funding is place, the product market fit is apparent, and the team has mind-share to dedicate, you should be all-in:
Once you find a market, do not be shy about really going for it. Run it like a growth technology center instead of a profit center.
We were trying to be cautious. If you're going to do it, do it. If you decide not to do it, don’t do it. In between doesn't work.
To help our portfolio companies run at this strategy, and run successfully, Insight has prepared a playbook geared towards companies that are $10M-$30M ARR in size and executing a B2B Mid-Market or Enterprise GTM motion, though findings can be leveraged for companies in all stages of growth. The playbook helps teams think through project plans, geo-strategy and land locations, talent strategy, landing execution, team governance, as well as guidelines around targets and ownership to ensure onward and upward success.
If you are an Insight portfoflio company, you can download the GO Guide: Expanding to Europe playbook on Insight's ScaleUp community platform.
