US market entry is almost always on the agenda for UK/European based B2B SaaS start-ups when trying to raise money and at Board meetings.
I ‘ve seen many passionate founders trying to convince VCs and the Board about the “great” opportunities in the US. Agreed, US is a massive market. But it is not easy. Entering the US market can be both exciting and challenging.
I had my own fair share of challenges and failures when trying to accelerate the US market entry: too soon, unprepared for the differences in product/market fit, not enough growth capital to support the entry, hiring the wrong people in the region… and the list goes on.
Based on my experiences and observations exploring these 3 questions will help founders increase the chances of a successfully US market entry.
1. Are you ready?
Assessing the readiness of your business to enter the US market is a step you can’t miss. Seems obvious but driven by the excitement and the sheer entrepreneurial energy founders often underestimate the importance of this step.
The fundamental question needs to start with the WHY. Why do you want to enter the US market and why is now the right time?
Big warning bells go off for investors and Board members when they sense that the failure of gaining traction in the home market is the main driver for the US expansion. Just because the opportunity is bigger it does not make it right to pursue it at any cost. The hope and believe that because of the sheer size of the US market it will be easier to gain traction which has not happened in the home market is almost always a recipe for a disaster.
You must prove product – market fit and scalability in your home market first. Each business and circumstances are different, but before achieving ARR of $3-5M in your home market with annual growth of at least 20-30% it is best to stay away from a serious attempt to enter the US market.
Once the why and the proven home market position are clarified you need to assess the readiness of the business for the US market such as as product fit, market knowledge, required resources and needed cash to make it happen.
2. Do you know the market?
The readiness assessment will give you a clear picture of any missing aspects for a successful US market entry. Doing research about the market and competitive landscape is obvious.
But as a B2B SaaS business you can go much further than that. You can test the market, with very little to no investment.
Create landing pages and experiment with localised positioning.
This is the best way to learn, collect data helping to analyse the product-market fit, understand differences in the buyer’s journey, localise marketing strategy and identify best channels to market. In short: test, learn and adjust. There are great tools like Semrush and Similarweb which can help you in gaining insights into what works and what doesn’t, and how you compare to competitors.
It is important that you do this test phase directly, not via possible channel partners. Channel partners might play an important role in the future but for testing and learning is best you go direct. To learn and understand you need to communicate directly with your targeted segment.
Not all SaaS products might be suitable for a product led growth (PLG) strategy but what would be helpful at this stage is to test a product led sales strategy (PLS). With the PLS you use the product as the primary sales driver. The product itself becomes the main touchpoint for collecting valuable data that inform iterative marketing and sales strategies.
In essence: acquire prospects efficiently through self-serve (freemium/trial) and convert them into paying customers through a sales led approach.
Harsh Jawharker from Openview Partners wrote an excellent article about this PLS go to market approach. Well worth a read.
At this stage any sales and support are still done from your home territory, so make sure you have the required resources to cover for time zone differences.
3. Are you committed?
When you do decide to enter the US market don’t do it half-heartedly. It is easy to underestimate the required human and financial resources to make such a move.
Based on the readiness assessment and the findings from the testing phase you need to develop a comprehensive launch plan, highlighting the key miles stones and required funding.
Only when you know you have enough funds make the move.
Just having enough cash to find a top salesperson isolated in the region will seldomly work. The chances they will succeed in such circumstances will be slim and results will take much longer than you expect.
If you use this momentum to raise additional funding it is very worthwhile to consider a US based VC. They can be extremely helpful with your US entry, in particular for finding the right talent.
The best success stories I have witnesses is when a well-funded company sends one of the co-founders and/or senior executives from the home market to the US and start building the core them on the ground.
Obviously, this can all be accelerated with an acquisition but that is not an option in most of the cases, at least not initially.
Entering the US market can be both exciting and challenging. Increase your chances of success by doing it for the right reasons (proven product-market fit) and experiment to understand the market (test, learn, adjust) first. Only if you have a launch plan supported with some serious funding take the leap. Once decided do make the move, don’t do it half-heartedly, go all in.