Navigate The Complexities Of Scaling Deep Tech Startups Across Borders

When deep tech companies face challenges, they often stem from the complexities of the technology commercialization process. Issues generally fall into four broad categories.

When deep tech companies face challenges, they often stem from the complexities of the technology commercialization process. Issues generally fall into four broad categories: prolonged development timelines, complex value chains, limited availability of social and physical infrastructure, and high capital demand. Considering the scarcity of deep tech resources in many ecosystems, young ventures often focus on developing abroad early on. But framing an international strategy isn’t just driven by market sizing, timing and scalability. The deep tech entrepreneurial journey requires dynamic short- and medium-term efforts to build trust with industrial players looking for an entry ticket to the adequate spot on the value chain.

Because of the complexities of the productization tasks at hand and the deep scientific background needed, the barriers to entry, maturation and scalability in another country are extremely high. But the risks with developing or combining high technologies can be mitigated by founders who are successful at striking those key cross-border partnerships.

Building Connections To Fuel Growth

While framed as client-supplier relationships, the collaborations that deep tech startup leaders form are more complex and rarely purely commercial. Founders interact with corporate R&D teams—otherwise unavailable to small customers—who convinced their decision makers about the opportunities of a collaboration. Equipment manufacturers and process specialists are broadly keen on showcasing their products alongside the technologies that deep tech startups develop. Often, a mix of corporate giants and “hidden champion” SMEs forms the fabric of a successful long-term, win-win partnership network.

The amount, typology and aggregated know-how of industrial key players often hint toward North America, Europe and Japan as Tier 1 targets, with Israel, South Korea, China and India as contenders. Deciphering cross-border value chains is a strategic necessity, though it can be overwhelming and complex. To successfully create impact, founders need to navigate a moving network of stakeholder relationships in these spaces. They must constantly assess and understand the ultimate users of their startup’s product or service, as well as the intermediaries.

Decisions about how much time, energy and resources founders want to spend will drive how they approach the intermediaries who sit between their venture and future customers or partners. These parties include asset managers, corporate sponsors, advisors or investors. While intermediaries are a bridge, they can also create barriers. The expertise and willingness of an intermediary to collaborate on the development and evolution of a startup strategy can be critical for its success.

An incredibly strategic mindset and the associated cross-border processes go hand in hand with better control over development timelines, go-to-market and funding in the long run. The need to intimately interact with established players forces deep tech startups to professionalize internal processes and governance much sooner. Successful mastery of this change process—from the “garage startup” to a process-oriented tech company—boosts the attractiveness for future corporate acquisitions. It’s therefore a key success factor.

3 Tips For Handling Common Pitfalls With Cross-Border Scaling

The obstacles that deep tech startups may encounter during this expansion journey are numerous. There are different legal systems to master, potential challenges with identifying the right partners and eventual push-back from the original entrepreneurial ecosystem or the local government.

The idea that national distances affect the conduct and performance of businesses operating across borders has been at the core of entrepreneurship for decades. Cultural misalignment raises barriers to information sharing, reduces trust and increases transaction costs. Institutional distance, meanwhile, increases the risks of inefficient governance, marketing and potential sanctions associated with different institutionalized practices.

Here are three practical tips that founders can take to overcome some of those pitfalls.

1. Being Default Global Vs. Default Local

Future international success starts as soon as the venture is incorporated. Globalizing doesn’t happen overseas; it happens at founders’ desks. Startup leaders need to first identify the right support in advanced economies, large markets and top industrial ecosystems, then convince them to be involved.

Without the founders’ quasi-obsession to build as a global player, the future expansion is at risk. Mistiming of the internationalization strategy, forgetting the root causes of global success, hiring the wrong leaders or over-delegating the international developments are typical mistakes to be avoided.

2. Capitalizing On International Playbooks

The path to becoming a cross-border firm is a series of iterations and humbling experiences, and each business model requires a different playbook. The reality is that few early-stage deep tech startups are actually multi-geography, therefore not many people have actually been confronted with the challenges of growing a business across borders. As a result, that knowledge is a scarce resource.

Because so few people have been there, it’s difficult to seek expertise when going down the globalization road. Founders should spend some time preparing a version that serves as their company’s single source of truth and covers the latest learning on how their venture can grow effectively at the global scale.

3. Empowering The Right Executives

When a deep tech company hires an executive, the business essentially hires that person’s network. While great executives will staff a team quickly, those with weak networks burn time to build their teams. In their first years, deep tech ventures mostly need a guide to work with the core team—someone who knows the market very well and has a pre-built international network. They’ll provide knowledge about markets, prospects and the capacity of competitors at a global level. Over time, startup founders can bring in more and more talented professionals, particularly senior local hires in targeted markets with long-time company employees.

In conclusion, navigating the complexities of deep tech commercialization necessitates that founders strategically manage cross-border relationships and professionalize their internal processes at an early stage. Success is contingent upon adopting a global mindset, leveraging best practices that are often elusive in the deep tech sector and recruiting executives with robust networks. The cultural, institutional and logistical challenges inherent in these ventures must be approached with humility, determination and unwavering dedication. This is how companies can secure long-term success.