An interesting discussion the other day brought up the question “can a startup be ‘born global'”?
We’re talking here’s about startups and not scaleups.
The current model hypothesizes (sp?) that the chosen beachhead market is geographically local, or at least where the startup CEO has personal connections or is familiar/is known in the market.
In this initial scaleup, the venture is not only expanding its client base, but is also maturing as it develops the foundation and systems to be able to serve this new client base. This expansion and maturing requires a significant amount of resources which the venture rarely has on hand at the start of the beachhead scaleup, so the chase after resources and capital adds a third dimension of stress on the venture.
Also, the objective of a beachhead scaleup is to become the leader of the beachhead market, or at least control a sufficient part of the beachhead market that it is seen as a new leader, and this needs to be done within 12-18 months.
The beachhead market is defined as relatively focused. Assuming that revenue at the start of the beachhead is only $100K-500K ARR, and at the consolidation stage should be about 10x (i.e. $1M-$5M).
So the beachhead market will probably not be big enough to be global. The economics of servicing a $5M market (B2B) effectively are just not there.
This is why I think there are two bumps to going global:
A. The first scaleup bump, or beachhead, established the startup as a serious player in a “local” beachhead market and positions for a Series A.
B. The second scaleup builds on the first for a second 10x jump to $10M-$25M+ at which point it is global.
During the first scaleup bump, the venture is growing customer base, maturity and resources/capital base at the same time.
During the second scaleup bump, the venture has enough execution maturity and capital to focus more on growing the customer base.
(As always all of this is hypothesis at the moment, and is scaled to Canadian and Quebec realities and expectations).