Why IT Companies Should Go Global and How to Start?

There are more answers to this question than it might seem at first glance.

• “I want to live in country XXX.” This is a valid personal reason, but it has little to do with market dynamics. In this case, your focus should be on choosing a place that suits your preferences, not necessarily business opportunities.
• “I want to diversify currency risks and earn part of the revenue in foreign currency.” This is a strategic business motive. Many companies and investors are driven by this goal, but it’s essential to consider which currencies are most stable and less prone to inflation or unexpected disruptions.
• “I want to build a company with significant capitalization.” This ambition aligns with the expectations of most venture investors. Keep in mind that capitalization typically peaks when a company goes public through an IPO.
• “I need an investment round.” If this is your goal, understand that local investors often require specific conditions. These include registering the legal entity in their country, assigning intellectual property to the company, ensuring the CEO has a visa and legal residency, and demonstrating traction and revenue in their local market. Success in your home country, while noteworthy, is usually insufficient to secure foreign investment.

There are countless valid reasons to enter a new market, and none are inherently wrong. However, having a clear and focused objective is crucial, as your strategy will depend on it.

The Basic Steps to Enter a New Market

The general methodology applies to most companies, regardless of their home country. However, when we talk about markets, we often assume that regions like Europe or Southeast Asia share common characteristics — be it language, culture, history, or faith. However, in reality, markets function on a much more granular level. Expansion decisions often come down to choosing a specific country — or even just part of it.

Follow the Money, But Consider the Details. The simplest approach to market selection is to follow the customer. Where there is more money, there is likely a larger market. At first glance, this suggests targeting the world’s largest economies: the U.S., China, Japan, and Germany.

However, it’s crucial to understand the limitations of this perspective. GDP figures provide a snapshot of economic size but don’t necessarily reflect the potential for your specific industry or segment.

Another important indicator is growth rate. A rapidly growing market is often easier to enter than a mature one. For example, while India is still considered a “developing” market, its growth trajectory is exceptional. Within three to five years, it is projected to become the world’s third-largest economy — a compelling reason to consider it for expansion.

GDP alone doesn’t tell the whole story. Evaluating markets based solely on GDP can be misleading because it doesn’t account for the size or potential of your specific business segment. It’s essential to complement GDP analysis with more focused metrics.

Selecting the Top 3-5 Countries

To narrow down your options, a systematic approach can help. Create a simple ranking system using a table or spreadsheet, evaluating countries based on these key metrics:

1. GDP. How much money circulates in the economy?
2. Customer Base. What is the size of your potential market?
3. CAGR. What is the year-over-year growth in customers or market size?
4. Political Risks. Are there barriers or instability that could hinder operations?
5. Cultural and Religious Characteristics/ Do local customs align with your business model or pose challenges?
6. Legislation. Is the legal framework favorable for your type of business?

• The first four points are relatively straightforward to research online.
• For insights into political risks and cultural dynamics, conversations with locals or regional experts are invaluable.
• Legal considerations often require specialized expertise. Even seasoned lawyers may struggle with niche legal challenges specific to your product or market.

By addressing these 5-6 parameters, you can make an informed decision about whether a market is viable. Depending on your business model, you may need to incorporate additional factors, but these form the foundation for an effective analysis.

While the basic parameters provide a solid foundation, here are some additional factors that can refine your market selection:

• Existing Partnerships with International Companies. Leveraging partnerships can provide trust, connections, and insider knowledge to ease your market entry.
• Existing International Customers. Review your customer data. You may have had unnoticed international purchases. Engaging these customers could provide invaluable insights.
• Competitors’ Market Presence. Identify which markets your competitors have successfully entered. This can indicate where demand exists and where you might find untapped opportunities.
• Team Capabilities in Localization. If your team includes native speakers or has already prepared localized materials, it’s a significant advantage.

Cultural differences can influence your market entry strategy. For instance, in Latin America, decision-making often happens at a slower pace. “Mañana” doesn’t just mean “tomorrow” — it implies “not today.” Understanding such nuances can help set realistic expectations and avoid frustration.

For deeper insights into cultural behaviors, consider tools like the Country Mapping Tool — it offers clear and actionable insights into cultural and behavioral differences.

After evaluating all parameters, you should have a shortlist of 3-4 target markets. Now, it’s time to dive deeper into these markets.

Conducting Interviews and Research

Market research doesn’t stop with data analysis — it requires direct interaction with the market:

• Customer Discovery. This involves interviewing potential clients, competitors, and experts. If you’re unfamiliar with this method, explore resources like books and webinars on the topic.
• Interviews. Including paid ones — some expert insights will come at a cost, but these are often worth the investment.
• Iteration of a product. Be prepared to adapt your product based on the feedback gathered during interviews. This ensures alignment with market needs.

Setting Up Lead Generation

After your initial research, it’s time to launch lead generation campaigns:

• Translate your materials, study competitors’ ads, and start advertising to generate leads.
• Measure conversion rates and lead costs to refine your approach.

Note: Lead generation works well for B2C and SMB markets but is less effective for enterprise clients. For enterprise segments (with only 50–100 potential customers per country), consider alternative approaches like:

• Leveraging connections to reach decision-makers.
• Participating in local accelerators or programs with international networks.

Market testing should culminate in first sales for B2C and B2B SMB or a pilot project for B2B enterprise clients. These initial results validate your market entry strategy.

Choosing One Country to Focus On

If you have significant resources, expanding to multiple countries simultaneously is possible — but this approach requires millions of dollars. For most companies, it’s more practical to concentrate on one country. Here’s what you’ll need:

1. Dedicated team. A team of 2–3 full-time members led by the founder or the future CEO of the international division. Without strong leadership, the market entry is likely to fail.
2. Adequate budget. Expect to allocate tens of thousands of dollars for team salaries, market testing, legal support, translations, and localization.
3. High speed. The team should work quickly, testing at least one hypothesis per week. The entire market selection process should take about three months. If it’s slower, reevaluate your processes.

Supporting Institutions and Programs

Below, you’ll find a curated list of foundations and support institutions from BRICS countries. This is by no means exhaustive, but it offers a great starting point for startups exploring international expansion.

Brazil 

Kaszek Ventures. The largest Latin American venture fund, specializes in technology companies of different stages. Investments from $500 thousand to $10 million. https://kaszek.com/ 

SP Ventures. The fund invests in early stage companies, focusing on agro-technology and innovative solutions. https://spventures.com.br/  

Redpoint Ventures.  International fund with a presence in Brazil. Invests in digital platforms and e-commerce. https://www.redpoint.com/ 

Startup Brasil. Government startup accelerator program, grants up to $100k. http://www.startupbrasil.org.br/ 

Russia

Internet Initiatives Development Fund (IIDF). For more than 10 years, IIDF has been helping startups to grow, find new markets and develop. The GoGlobal program, supported by the Moscow Government and the Moscow Export Center, works specifically for IT companies looking to scale to global markets. Thanks to the support of more than 150 teams, teams have launched sales in 30 countries in Europe, Asia, Africa and Latin America. https://www.iidf.ru/ 

Skolkovo Innovation Center.  A scientific and technological innovation complex for the development and commercialization of new technologies, including the Skolkovo Foundation, the Institute of Science and Technology and the Skolkovo Technopark. The Center provides tax benefits and grant support to residents. https://sk.ru/ 

India 

Yali capital. Venture fund founded in 2023 in Bangalore. Focus is on early-stage Indian startups from the fields of robotics, artificial intelligence, genomics, aerospace technologies. https://yali.vc/ 

YourNest. A $69 million fund focused on breakthrough technologies, aims to improve how humanity utilizes the value of time. Invests in startup founders in various areas of DeepTech: AI, IoT, robotics, AR/VR/MR, development tools, edge cloud and other digital products. https://yournest.in/  

Matrix Partners India. A $500+ million fund, invests primarily in digital platforms. https://www.z47.com

NASSCOM. Industry association of IT companies, has its own accelerator programs. https://www.nasscom.in/

China 

Qiming Venture Partners. Qiming Venture Partners manages eleven U.S. dollar funds and seven RMB funds, with total capital raised of $9.5 billion. Since its inception, the fund has invested in outstanding early and growth stage companies in the technology, consumer and healthcare sectors. One of the early investors in ByteDance, Xiaomi, Meituan and Bilibili. https://www.qimingvc.com/en 

ZhenFund. Based in Beijing, ZhenFund’s investment focus is on biotech and medtech, as well as AI startups.  Over the past decade, ZhenFund has backed bold startups such as RED, Nuro, XtalPi, Momenta, SmartMore and AutoX. A significant number of portfolio companies have gone public, including Hesai Technology, EHang, Waterdrop, and Yatsen. https://en.zhenfund.com/  

Alibaba Entrepreneurs Fund. A $1bn+ fund investing in fintech startups and e-commerce. https://www.alibabaentrepreneurfund.com/  

South Africa

4Di Capital. The fund specializes in technology startups from Africa. Investments from $100k to $2m https://4dicapital.com/  

AlphaCode. Fintech gas pedal and early stage startup support program. https://www.alphabeta.com/alphacode/  

Small Enterprise Development Agency. Small business development program, consulting, entrepreneurship training programs. https://www.seda.org.za/