Emerging markets are steadily growing and breaking forward all over the world, but the US startup ecosystem remains the leader. According to the analysis conducted by the Startup Blink research center, the United States is the world leader in terms of the level of development of the startup ecosystem. Their startup ecosystem indicators are 4 times higher than in the UK, which is second in the ranking. Also, among the cities, the highest positions were taken by the US cities. San Francisco got first place and New York City is on second.
There are two major centers of the world where it is recommended to begin a startup’s entry into international markets – the United States and China. These are the countries whose economic influence in trade has a major impact all over the planet. However, China’s economy has its own peculiarities and specifics. It is dominated by state-owned and mixed-ownership enterprises, and relations are often built not through market instruments, but through connections and interaction with the state structures. In the United States, an open economy is based on private property, where most goods and services are produced by entrepreneurs.
What are the advantages of a startup entering the US market?:
1. The largest venture capital is located in the United States. This is the first market where venture capital investments have started, and the entire economy of the US is built so that young companies can easily start their businesses with minimal obstacles. Opening a company, online banking, accounting, tax reporting — all of these can be done remotely now.
2. In the States, the business network has been better developed than anywhere else: a large number of incubators, accelerators, business clubs, and events for startups that can be useful for networking and gaining new knowledge. The infrastructure of such sites as Y Combinator, 500 Global, Techstars, and Plug & Play is very developed, and of course, Stanford and Berkeley’s universities are the centers attracting young entrepreneurs.
3. Raising investments in the USA is one of the significant competitive advantages of your business. If a startup receives funding in America, the market value of its company will be significantly higher, unlike in any other developed country. At the same time, a startup attracts a round of investments with a significantly larger cheque for a smaller share of the company. This helps the company not only to launch in the US market but also to use part of the investment resources to Go Global and scale in other countries. The year 2021 has already shown phenomenal historical valuations of startups both at the early stages and when entering the IPO. At the same time, the crisis of 2022 greatly reduced the volume of funding deals worldwide, falling by 35% to $415.1 billion compared to 2021, and entire industries were hit, according to the analytics by CB Insights. The American venture capital market is standing stronger than all others. Despite the fact that it has fallen by 37% over the past year, and the European one has only lost 17% of funding, it is still not comparable. The US invested $198.4 billion, and investors in the EU and the UK $81 billion. The global share of venture capital investment in the United States in 2022 was about 35%, and it is important to mention that 57% of them belong to the early stages of startup funding. This is the stage where early projects need support, but their survival rate is always not very high. Investors understand that the risks are high and still they continue investing so it creates the foundation for the development of any startup ecosystem. Nevertheless, the main drop in funding of the venture capital sector in the world came from mega-rounds, where the value of deals almost halved from $371.9 billion in 2021 to $190.1 billion in 2022.
4. There are government business support tools in the US. First, grants for veterans, female founders, and various minorities. Secondly, such programs as SBIR, which offers to finance small and high-tech businesses, and STTR, aimed at budget financing on a competitive basis of R&D.
5. Crowdfunding through Kickstarter, Indiegogo and many other platforms has become a stand-alone popular source of funding. And we observe a large capital raise by individuals or a small team at the idea stage, where private people from all over the world share small amounts at scale in order to help projects get started.
The fundamental steps for the development of your startup will be the launch of sales and the search for investors.
To launch sales, it is important to define and find the target audience, to understand whom you are making your product for. Research how your competitors work with their target audience. Analyze and identify the optimal communication channels suitable for this audience both online and offline. Effective modern communication channels are social networks, creating your own community, and holding various webinars — this is a great way to attract customers if there is no opportunity to buy advertising. Participation in various offline meetings, conferences, and meetups. An additional professional audience is being recruited there, and this creates an opportunity to expand your network with partners and ambassadors, who can become both marketing partners and clients or people who actively talk about you. The US market demonstrates high support from the startup community, so you can always find experts from similar segments who can share their connections or expertise with you.
Before reaching out to investors, you should carefully study them first. Research their investment strategy: verticals, stages, geography, focus metrics, portfolio, etc. They often post all these details on their websites. Set up your CRM for potential investors and start looking for ways to contact them. To find investors, you can use various online resources such as LinkedIn, Signal, AngelList, PitchBook, other similar platforms, pitch events, and conferences, you can also leverage support from accelerators and incubators. To raise capital in the United States, you must incorporate a company in Delaware as C-Corporation and begin positioning your company as an American one. It is important to create not just a positive impression with customers but to ensure that they pay for your solution regularly, use it frequently, and recommend it to others. This is how product-market fit happens which would create greater interest from venture investors. Then your team would need to work on expanding the customers’ live time value.
Metrics in their target markets such as ARR, CAC, Churn, LTV, Retention, and others are important for investors. Therefore, you need to show them sales on the market where you have launched the product, of course, better if it would be on the US market. Also, don’t think that in order to increase the interest of American investors and get funded, you need to immediately move to the United States or even to Silicon Valley. The modern world has changed a lot during the pandemic, and now online communication from anywhere in the world is becoming the accepted norm.
At the same time, I do not recommend young startups to move to the United States before the first sales or before the first investments. Living in the USA is not cheap, unless, of course, you are already spending $3,000 – $5,000 on your rent, so it is inexpedient to spend resources on household and visa expenses, which can be lasting and labor-intensive. All resources should be directed to the development of a startup, to the search for the first buyers and first investors. It is very important to understand that you need your product to become loved by the US market before moving, you also need to get validate it, build the right positioning, and cause your target audience to trust it.
Entering a new market is always difficult and risky, but it will give you a lot of opportunities for your development and scaling. Risk is a necessary component of success. It is important to study and understand the basics of the economy, legislation, and business culture of another country. The United States as the largest center and a country with a developed economy can be the starting point for your growth. But you can start anywhere in the world right now. This way you will be able to achieve the first metrics faster and attract the first seed or pre-seed investments and ensure stable growth of your revenue in a company. A modern startup needs capital for rapid growth to achieve a “hockey stick” chart. This path is not easy, but it is available to those who are not in love with their product but are in love with the problem they are solving for their target audience and obsessed with finding a solution to it.
Therefore, at Go Global World, we are creating a Digital Silicon Valley – a platform where we connect investors, founders, and advisors from all countries to launch and scale innovative solutions that impact the entire world. We make sure that access to knowledge, networking, and capital is equally spread regardless of where the founders are located, and investors get access to the global funnel, closed deals, and the other investors to raise capital for their funds as well as co-invest. The platform gives access to creating your profile, company profile, match-making tools between participants according to their business and personal criteria, pitch programs, events, closed chats of the international community, and perks.
Innovation has no borders anymore, now is the best time to launch startups from anywhere globally and make our world a better place.
