Sitly, the largest online marketplace for babysitters, first launched in Germany. However, the market was too big for Sitly and their model did not work. Sitly pulled out of Germany immediately and expanded to Italy against all the advice. The startup not only thrived but learned an important lesson on expanding to a new market.
For all the Dutch startups and especially those based in Amsterdam, it has become easier to thrive in their home market but difficult to expand elsewhere. As Europe aims to become the alternative to Silicon Valley, there is a profound need for Dutch startups to become global startups. They need to expand to new markets and show that their business model can suit that market.
In recent times, Dutch startups like Talk360, Recharge.com, Syntho, and Bits of Stock have not only succeeded with their expansion but are also creating a playbook. Their approach and methodology could pave the way for other European startups to tap into the US, Asia, and Africa. Here is how they made it work.
Understanding the local market and customers
“International expansion always causes challenges at different levels of the company,” says Arash Asady, CEO of Bits of Stock. For Hans Osnabrugge, co-founder and CEO, the first challenge is “understanding the local needs of customers and understanding their perspectives on life.”
Osnabrugge adds that finding the right distribution partner with local payment methods to allow customers to purchase its service was the second challenge. Günther Vogelpoel, CEO of Recharge.com, agrees that when a startup grows globally, they need to ensure that they understand the consumers they serve.
“I would say the biggest problem was the uncertainty of expanding. Onboarding new employees, adapting to different needs, and starting from 0 in a new market comes with unexpected costs and uncertainties. The key is to acknowledge them, plan, and be prepared to adapt,” adds Asady.
“As we have grown in scale, to have the nationalities of our team helping us to ensure we are relevant in as many corners of the globe as possible,” explains Vogelpoel.
For startups like Talk360, it is equally important to have the right people. Osnabrugge says he found the right support in the form of his South African co-founder Dean Hiine when expanding to Africa. “Through the support of Hiine and Jorne Schamp, [Talk360] was able to successfully become the voice market leader in South Africa,” says Osnabrugge.
However, not everyone faces the same challenge. For Wim Kees Janssen, CEO and co-founder of Syntho, the biggest challenge was “explaining the concept of synthetic data generation.” He says most organisations are familiar with the concept and are looking for a scalable platform.
“Scaling up internationally is challenging in multiple ways: there’s the lack of network, the need for funding, and the challenge of talent. With ScaleNL we really positioned the participating founders to enter the US market competitively from day 1. They’ve been properly introduced to the ecosystem through the three major hubs in the US: San Francisco, Los Angeles & New York,” says Michael Dooijes, Startup Liaison for the Netherlands Consulates General in the USA.
Things to consider when expanding to a new market
With every new market, there comes a unique challenge as well but these Dutch startups have not only figured it out but have masterfully executed their expansion plan. Osnabrugge suggests that entrepreneurs looking to expand should begin by developing a framework describing “everything you want to get across” before diving into a new market.
In order to be ready for hyperscale or mass customisation, he suggests being prepared on the regulatory front as well. Apart from that, he recommends being cognizant on the economic considerations, distribution, and partnership front. Kees Janssen says being product market fit is one of the things every entrepreneur should consider when expanding to a new market.
Vogelpoel agrees with Kees Janssen and says entrepreneurs should look at consumer demand for products, availability for appropriate partnerships, and whether the business is ready to move into this new region. Asady believes they should also look at cultural adaptation. “For start-ups like us that are based in fintech, you must be highly aware of legislation between countries,” he adds.
Right time to expand
The idea of not expanding is akin to missing a boat. These successful Dutch startups say there are several indicators that help identify the right time to expand to a new market or region.
Asady says they decided to expand to the US when there was “high interest across borders.” “We realised we can start offering [our product] to other countries, without the requirement of significantly changing our products or at a high cost.”
Kees Janssen also had a similar indicator in the form of in-bound contact from international organisations being interested in their proposition. For Recharge.com, the expansion came naturally since they were already on a growth trajectory and expanding to new markets.
“The US is big and every hub has different advantages,” says Dooijes. “Silicon Valley is famous for its all-round tech ecosystem, but it’s better to be in Atlanta for fintech or Boston for cleantech. Together with the consulates in the US we assess what markets are a good fit for Dutch startups.”
Osnabrugge says expanding Talk360 to South Africa was a no-brainer since it “fits our purpose of connecting underserved communities with the world.”
Finding synergy between expansion and talent
The common denominator between Talk360, Syntho, Bits of Stock, and Recharge.com is not only that they are Dutch startups or that they recently expanded to a new market, but also the fact that they all ensured that their culture stayed intact while expanding as a business.
Asady says, “We are making sure that the team feels like being part of the mission. Our values are being echoed through our internal goals and events.”
With offices in Amsterdam, Johannesburg, and New Delhi, Osnabrugge says they purposefully built a global company with a diverse and inclusive team. “We ensure our culture stays intact by hosting monthly sessions with the whole company where both business updates are given but also fun team building exercises are done,” he adds.
Vogelpoel believes their continued success is possible by keeping the team “grounded and focussed on its mission to be the global one-stop-shop for prepaid payments.” Kees Janssen says “there is no golden rule [to keep the culture intact] and being away can sometimes make it more difficult.”
Apart from ensuring the culture stays intact, there is also a need to ensure that there is synergy between the existing and new colleagues. Osnabrugge says the easiest way to achieve this synergy is by clear goal setting.
“We make sure that our new employees feel like a part of the team from day one. Every new employee gets to know everybody in their first weeks,” says Asady.
Vogelpoel, says, “At Recharge.com, when recruiting, we seek new employees that want to be part of our vision and share our values. This ensures we continue to play as one as we grow our business internationally.”
Focus and great team makes expansion easier
These Dutch startup founders agree on one thing – focus and a great team can actually make expansion easier and successful. “With a great team you can achieve many things,” says Vogelpoel.
Osnabrugge recommends connecting with other founders who have already expanded to other markets. “Ensure that the people you talk to have also entered similar markets as to what you want to enter, as there are many different pieces to this puzzle,” he says.
Kees Janssen has a singular advice for entrepreneurs looking to expand to a new market. He recommends starting with the question “why” and not forgetting to focus on the mission while asking that question.
They also agree that after taking the first conscious step of focussing on the mission and building a great team, they should also ensure that there is a robust growth model and great partners to support that mission. The result will ensure that you are successful when you expand internationally.