Market expansion - Target Markets

Market Expansion

Target Markets

Y O U B E T T E R WATC H E A C H A N D E V E R Y S T E P,
T H E S TA I R C A S E O N Y O U R WAY U P I S
S U B J E C T TO C H A N G E

Market Expansion Assessment Model

Market Risk
Market Opportunity
Political/Economic Legal Size, Growth, Revenue, Sales
/Regulatory

Distance
Cultural and Geography

Strategic
Pure Company, Merger Acquisition,
Licensing/Joint Venture, Franchise

The Hatchery April 19, 2010

What does it mean to be KOSHER?


Conditions for Market EXPANSION

•  Market must EXIST for expansion to occur.
•  Companies must EMBRACE the opportunity.
•  Timing is EVERYTHING, to be taken into account
•  Its all in the PLANNING, there is no turning back
•  Readily seek ADVICE, this is not virgin territory.
• 

Main Entry: ex·pan·sion
Pronunciation: ik-ˈspan(t)-shən
Date: 1611

1 : the act or process of expanding territorial expansion economic expansion
expansion of the universe
2 a : an expanded part b : something that results from an act of expanding the book is
an expansion of a lecture series


What do they all have in common?

•  Apple, Microsoft, Adobe, Symantec, Oracle and SAP
•  They all maintain international business divisions.
•  Combined, their international operations generate
more revenue than domestic.
•  It is not a coincidence.
•  And this does not happen overnight.
•  Decisions were made early on.
•  Actions were taken to make this happen.


Domestic Markets

•  There is no escaping the fact that emerging and early stage
companies must focus on local markets to build:

o  Revenue
o  Traction
o  Pipeline
o  Credibility

•  Positive movement in these areas please the investors (VC
and/or strategic), business partners and banks.
•  They are building blocks for growth and business
development which should be planned for and carried out
at as early as possible.


We create our opportunities

•  Success in the local domestic marketplace is a result of eating,
living and breathing that market and providing the goods and/or
services meet its needs.
•  Identifying those needs and delivering solutions is half the battle.
Making the world sit up and take notice of the results and
beneﬁts is the other.
•  Determining where in the United States an emerging company’s
solution set is applicable takes a good deal of research.
•  Most time consuming, any hope of successful international
expansion depends upon this market research.
•  Moving tried and tested domestic models to the appropriate
international scene is vital to achieve expansion success.


New York: The Global City

•  New York has something for every expanding company.
•  Prime for business development and sales. Manhattan’s
business district is laid out in a grid just to make things more
convenient.
•  The Hatchery is in process with HSBC to set up a specialized
program to facilitate global banking services for entrepreneurs
and emerging companies.
•  The Ofﬁce of the Mayor, City Council, and New York City
Economic Development Council are working to construct a
platform to engender growth and development in new
business for the City.


Huddle: Hatchery UK Gauntlet


Huddle – Case Study

•  Sensed the need from research and direct experience in the
business sector that their software was and is necessary.
•  Developed their software on Microsoft’s .NET platform taking
advantage of their Bizspark program to cultivate prospective
customers in the United Kingdom and the United States
•  Presented at the Hatchery and to investors throughout the
United States demonstrating their software and sales/customer
traction in the Enterprise and Government sectors.
•  Signed up huge bundling deal with HP/Compaq
•  In the process of closing their 2nd round investment round from
US investors
•  Continue to gain traction and sign up new customers.


Tim Hortons, A Canadian Institution


Tim Hortons – Case Study

  Arguably one of Canada’s best known brands founded in
1964.
  31 years later Tim Hortons merged with Wendy’s
International, Inc. in 1995.
  The merger provided resources and impetus for expansion.
  Tim Hortons locations are now in Michigan, Maine,
Connecticut, Ohio, West Virginia, Kentucky, Pennsylvania,
Rhode Island, Massachusetts and New York. Why these?
  The Canadian operation is 95% franchise owned and
operated, and plans in the U.S. call for the SAME key
strategy to be implemented as expansion progresses.


The Hatchery, Time and Place


The Hatchery – Case Study

•  Pioneered Venture Collaboration filling a void in New York
City in 2007
•  Its event series: The Gauntlet, Are You Serious and Hatch
Match gained popularity across the United States
•  Proximity to International consulate and trade offices in
New York City prompted global reach along with far flung
business networks of its founders. UK, NZ, Canada,
Australia, Italy
•  The Hatchery partners with Corinthian Partners Investment
Bank in order to directly participate in Private Placements,
Mergers Acquisitions and Turnaround Deals.
•  The Hatchery has expanded its market geographically, by
industry and by sophistication and worth of deals.


United States, It’s a BIG Country


Texas is a BIG State


Leaner and Meaner

•  Advances in technology have made things far more
convenient. It now costs far less for build out and as a
result has decreased time to market.
•  Convenience does not mean that things are easier. In some
cases quite the opposite. Timelines have been crunched to
where we operate in minutes/hours rather than days
/weeks. Much MORE is expected of you with LESS.
•  Venture Capital and present revenue must be spent even
more wisely, and resources stretched to their limit.
•  Flexibility and adaptability to changes in economic
conditions and market situations crucial to success in terms
of market expansion.


When is not an option

•  United States market expansion must always be top of mind
from the inception of any company looking to maximize
their ﬁnancial opportunities.
•  Those late to the game, might very well interested in
OWNING their domestic market, but in this present
economy, its simply not enough, especially if shareholders
are to be answered to.
•  Develop plans for United States market expansion early on.
They should be adopted by management and permeate the
company’s decision making processes.
•  Is everyone in management on the same page? Do all
divisions and sectors share the vision?


Managing the timetable

•  Getting on board early, means being truly committed
and invested in International market expansion.
•  This includes grasping the implications of choices made
and decisions to be made.
•  It may be that now is not the time to expand. But you’ll
never know when that time is without working
through the relevant business considerations:
o  Cultural
o  Market ﬁt for goods/services
o  Competition


‘You Know it Don’t Come Easy’

•  There are a number of things to come to grips with on the local
front:

o  Taxation
o  Legal Contracts
o  Accounting Practices
o  Terms and Conditions
o  Pricing
o  Language Localization
o  Collections

•  These are not to be seen as obstacles or barriers, just a reminder
that there is work to done. Nothing is insurmountable. Nothing
is impossible. Words New Yorkers live by. The Hatchery works
with companies on all these issues.


Entry Points

•  Country characteristics
o  Political, economic and legal risks favor non-equity forms of
market entry, rather than franchising as an example. The United
States does not pose such a problem.
•  Industry characteristics
o  Capital intensive industries look to reduce their capital exposure
by favoring non-equity forms of market entry.
o  Non separable entities, ie standalone restaurants would prefer an
equity mode of entry.
•  Firm characteristics
o  Larger ﬁrms would prefer to franchise, while smaller independent
ﬁrms would opt for an non-equity mode.

Are you ready? Is it time?

•  Setting up shop in a foreign country, is about more than airline
tickets and real estate.
•  Having done the research and taken costs and calculations of
time and resources into effect, are there sufﬁcient funds in
the budget for expansion to happen now?
•  You don’t get many chances to make a good impression.
Prospective customers, business partners will remember any
pitfalls you experience.
•  Your competition will not let them forget.
•  Its okay to alter your schedule. Its your company. Its your
timetable.


Need to, Have to, Want to, Should do.

•  Why are we expanding? What is motivating this momentous
decision? Is it a defensive maneuver?
•  Are you satisﬁed with being a success in your home
country? In your domestic markets?
•  Its okay to answer yes? If you and your team and your
investors are satisﬁed, then you’ve made your decision. Just
make sure that they ALL feel that way. And what is your
competition doing? Are they expanding?
•  Keep in mind the assertions you might have made along the
way about your company’s ability to be a player on the
international scene. It could come back to haunt you.
•  Market expansion and pitch presentations. What this all
means.


Money, Money, Money

•  Will it cost you more or less to maintain the status
quo? Or expand your market?
•  At the end of the day, expansion must be proﬁtable,
otherwise there’s just no point in any of this and it
becomes an academic exercise, if nothing else.
•  You do not HAVE to expand your market.
•  You HAVE to want to expand.
•  And it HAS to MAKE SENSE !!!


Step outside your box

•  You will not be the ﬁrst to expand to the United States, nor
will you be the last.
•  Others have successfully gone down this path and met with
success
•  Look to those who have successfully taken their companies
to the United States and ask them everything you want and
need to know.
•  Bring on specialists to manage and ease the transition. Team
members have day-to-day responsibilities.
•  Make it known to all team members and decision makers
that international market expansion is the course of action
and secure the resources to do so.

Thank You
Questions Answers

D AV I D M I C H A E L B LU M E N S T E I N
M A N A G I N G PA R T N E R / F O U N D E R

T H E H ATC H E R Y L LC

Market expansion - Target Markets

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