For many startup founders, taking their company international is a big, often intimidating dream. But with deep experience in cross-border business, the team at Amasia, a California- and Singapore-based venture capital firm, has helped companies more easily explore opportunities and expand into foreign countries.
We sat down with founding partners John Kim and Ramanan Raghavendran to learn more about the importance of establishing and growing a “cultural quotient,” picking the right moment and market for international expansion and successfully developing a global customer base in an ever-more interconnected world.
What prompted you to start Amasia?
Ramanan: I’ve had a global theme throughout my investment career: I helped lead one of the first deals by a U.S. VC in India in the late 1990s, and have woven overseas investing into my work ever since. The world is shrinking — faster than we presume, thanks to game-changing technology.
In 2012, I was thinking about how the world would evolve and realized that there could be a real role for a VC firm that helps companies not only in their home markets, but also abroad and at an early stage. I met our co-founder John precisely when I was considering all of this, and he was thinking about the same issues. We started Amasia a year later.
John: I’d also add that we’ve built a cross-border firm because Ramanan and I have lived cross-border lives. We have both worked and lived on both sides of the Pacific and the Atlantic and have, at various points, experienced what it’s like to be cultural outsiders. Leveraging our networks and know-how to help startups penetrate often opaque international markets resonates because we can empathize with founders.
How can startup founders help ensure their international expansions are successful?
Ramanan: Making efforts to dramatically increase your cultural quotient (CQ) — or your understanding of another country’s culture — is directly correlated to a startup’s overseas success. For example, we have an education technology company in our portfolio that’s established in the U.S. and looking to expand into Asia. To succeed there, they’ll need to revamp their product to include more features for parents, because parents are far more deeply involved in their children’s education in many Asian countries. These are business decisions founders will need to make based on deep cultural insights, and as we learned from the company’s founder, whose insight this was, you need CQ to make them.
I also think it’s important to pick your moment and market. Companies don’t have unlimited resources and time. So, if you’re a U.S. company wanting to enter international markets, then you could pick markets where the English language is a driving force. That dramatically reduces the number of things you have to think about and make for a more viable expansion.
John: Picking a strong partner is one of the fastest ways to up your cultural quotient and open critical doors in new markets. I’d also add that while it’s important to stay true to your DNA, it also helps to maintain some level of flexibility and an openness to question what feel like “principles” (but are often not). One example of this is in pricing, where companies often must tailor their offering to the purchasing power of the local market to optimize long-term benefit.
How does Amasia help founders “get global?”
Ramanan: First, Amasia does all the things that a “regular” VC would do. I’d say the majority of our work is bread-and-butter “local” VC assistance — from helping with recruiting to keeping founders disciplined and focused on the things that matter. Those are bigger issues than finding an international market.
Once those are sorted out, the “getting global” piece is what we describe as our hidden superpower. For early stage companies, it’s largely about sharing knowledge. For example, we had the founder of a company that serves the education space come to Asia to meet education ministers and potential partners he could learn from. For companies in later stages, we’ve helped them determine how to price their product in foreign markets. In some cases, we’re also helping companies from other countries enter the U.S. market.
John: We think of our value proposition in three categories. First, we work closely with business families and executives who can serve as customers or distribution partners for the portfolio. Second, because Asia tends to have a more top down culture, governments get more involved in the affairs of business than we see in the west. So we have former Prime Ministers or Cabinet Ministers who advise us and our portfolio in navigating regulatory environments. And third, we have relationships with influencers who can use their reach to help our consumer-focused portfolio companies in reaching a broader audience.
We also help in advising on the optimal timing for crossing borders. While we believe that the world is getting smaller and many startups have the opportunity to exploit the international opportunity, there is more than one example in our portfolio where we have urged the CEO to wait.
Finally, what are some common mistakes startups make when they try to expand overseas?
Ramanan: Some companies will over-invest in distribution in a geography before they’ve ever landed a customer there. For example, if you’re an SaaS company, you need to gain a Korean customer before you begin to market there. You need to walk before you run.
John: Probably the most common mistake I see is companies trying to go it alone instead of finding great partners. Even large companies make this mistake frequently (e.g., Google and Facebook in China). A close second is companies forcing principles from their home market on new markets overseas. Product market fit only applies if the market remains constant.
The information in this article is presented as-is.
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