4 Key Considerations for Tech Companies When Going Global
Four key considerations for technology companies that are preparing to scale and expand internationally.
In our globalized economy, international expansion can be an essential step in the lifecycle of a growing technology company. Going global requires careful planning and strategic action, as it can have a significant impact on exit opportunities. Achieving a merger or acquisition, a buyout or an initial public offering (IPO) doesn't just hinge on revenue growth.
The time to exit for technology companies has dropped steadily, reaching an average 5.6 years today. In this rapid path toward growth and exit, investors increasingly look for capital efficiency, business-wide sophistication and the infrastructure to not just drive but also sustain growth. Having the ability to scale and reach customers internationally dramatically increases a company's total addressable market (TAM), making it more attractive to investors. Transparency, global visibility, and risk and control procedures are critical, impacting valuations as much as the speed with which companies can successfully enter new markets and forge new opportunities.
This raises several priorities for technology companies that are preparing to scale and grow their operations and customer base abroad.
1. Understand How Local Structures Impact the Global Model
Every country presents unique challenges, which can impact the consistency and scalability of a company's operations. Many technology companies operate with a lean workforce, and when encountering unfamiliar global landscapes, businesses should work closely with their banking partners to ensure the viability of their global model. It's important to balance speed with prudence, using a phased roll—out of the global operation to address local factors.
2. Anticipate Costs and Get Help Effectively Managing Cash
Expanding abroad can be resource-intensive. Cash management is a priority, and when going global, technology companies should attempt to identify the tactics that can deliver funds when and where they're needed for a rapid, uninterrupted growth trajectory. For this, businesses require a clear understanding of their true liquidity and credit needs. Working with financial and banking partners, technology companies can capitalize on global liquidity solutions to surge cash concentration and identify additional resources from global balances. At the same time, technology companies can also turn to their financial partners for products and services that may be beneficial when considering Basel III or other financial regulations.
3. Leverage FX Solutions Across the Complex International Landscape
Every business operating abroad must understand and address foreign exchange (FX) risk. The complex factors arising from FX demand consultation and support as global currency values fluctuate and local rules, regulations and bank capacity vary across countries. The best strategy for many technology companies may be to domicile currency in their home country, using FX payment solutions to satisfy minor currency needs in countries where the company is growing.
4. Build Secure Payments and Data Infrastructure
Cybersecurity is a priority for every business. On a global scale, cyber threats to sales, payments and sensitive company data can grow dramatically. Given that investors prize robust, international infrastructure capable of sustaining long-term growth, technology companies need to ensure their global operations by employing effective tools for cybersecurity and fraud detection. In addition to e-commerce infrastructure that uses the latest available security functions, companies should consider exploring the security solutions of banking and payment partners to minimize data exposure and consolidate processing across different channels.
Ultimately, growing abroad can create numerous opportunities for a company-s future. A clear vision of that future state is essential for growth planning and implementation so businesses can realize the greatest expected value of international expansion.
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