As I write this, I am sitting in a hotel in Moscow, Russia. I was recently invited to speak at an event called Startup Village, a 15,000 person strong summit encouraging tech and entrepreneurship in Russia. The organizing team at the Skolkovo Foundation reached out to me several months ago offering to fly me to Russia to give a keynote speech about our global investment approach at Fresco Capital. What can I say, I’m a curious character and have the tendency to say “Yes!” to new and strange experiences, so… here I am.
Now, as I sit here alone and slightly intimidated in a new, strange city I never even knew how to imagine, I thought it would be a good moment to reflect on why and how I ended up here. While that’s a fun personal exercise, the point is really for you, Dear Reader, to understand exactly what is the point of venturing out of your comfort zone. Why take a global approach if your market is right in your own backyard? Whether it’s for your life, for building your startup, or for your investment strategy — what are the reasons why taking a global strategy is worth the trouble?
By way of background, let me tell you a little about Fresco Capital, the global, early stage venture fund where I am a Managing Partner. We are different from other VC firms in that our core focus is helping companies expand globally. All of our partners have built cross-border businesses. We have all lived in different parts of the world. We have ventured far away from what we know, both personally and professionally.
We know first hand why it makes sense to take a global approach. We also know how fucking hard it is. Moving beyond where you came from takes a lot of guts, perseverance, and help. So, that’s exactly what we do. We invest in companies and help them expand globally.
In order to do that, our team is global at its core. We have team members in Silicon Valley, in Oakland, California, in Dubai, Hong Kong, Singapore, and I am based in Tokyo, Japan. We have more than 45 portfolio companies in California, Canada, Utah, New York, Texas, London, Barcelona, Estonia, Hong Kong, Shanghai, and Manila. Over the past few years, I have been lucky enough to spend time with startups and looking at companies across the United States, South America, India, Asia, and New Zealand. And now, Russia apparently!
I guess I feel a bit egotistical telling you all this, because frankly, I never thought I’d ever be qualified to be talking about international opportunities. In fact, who I am and where I came from is actually the opposite of global.
Yep, I’m from a boring (sorry Mom and Dad, but it’s true), suburban town in Illinois. Below, you will find a picture of me playing with corn, because the area where I grew up used to be farmland. I went to a big, public high school. The same one that my parents went to. And even some of their parents went there too! When we went on family vacations, we loaded up our car and drove out West to Colorado, Wyoming, and Montana. Don’t get me wrong, I had a wonderful upbringing for which I am eternally grateful — but my point is that it was very American, and not very global at all.
Why then? Why go through all the trouble of not only building a global business myself, but now raising a global venture fund, from LPs all around the world, that specifically invests in businesses and helps them expand globally? Lucky for me, the number one thing I’ve learned is being “global” is not about where you’re from. It’s not even about where you’ve been. It’s about how you think, and what you do about it.
Here are the TOP 5 REASONS why you should be thinking and investing globally, no matter where you are from.
What are the largest companies in the world? In fact, the largest companies are global. They are selling internationally because no mater where you live, even if you live in China, I 100% guarantee you that there are more people in the world outside of your country than there are in it. Apple now derives 25% of it revenue from China, +170% growth over the past 3 years. Facebook is seeng its fastest user growth in Asia. Amazon. Uber. Airbnb. All worth billions and billions of dollars and all have expanded globally to fuel their continued growth.
Setting up global operations can allow you to keep costs low and leverage the best talent globally. Many of our portfolio companies have kickass engineering teams in Canada, India, Costa Rica, or Taiwan, all at a fraction of the cost of one Silicon Valley engineer. Manufacturing out of Shenzhen can save hundreds of thousands of dollars vs. doing it domestically. Leveraging global partnerships and distributors can help you keep sales teams lean and mean. Lower costs, better talent, longer runway means you have more time to find product market fit, you can adapt to market needs more quickly, and you don’t have to rely on money-hungry VCs like us to keep growing!
If you’re trying to build or invest in the next unicorn, let me tell you one thing. You’re not the only one. Once you start to see traction, to see success, there will be copycats. Grabbing marketshare while the field is still green can allow you to not only get a headstart on your competition, but also to gain mindshare and brand capital with future customers, suppliers, and investors. We all know this isn’t a sprint, it’s a marathon, and starting first significantly improves your odds.
Let’s face it. Markets have changed. Successful companies stay private longer. Instead of going public, we’re seeing companies like Uber, Didi Kuadi, Airbnb, and Palantir raise billions of dollars in private fundraising rounds instead of going to IPO. Whether its governments, VC firms, strategic corporate investors, family offices, or Private Equity funds, a global reach and a global brand will open up access to pockets deeper than you ever could have imagined. And if you play your cards right, your later stage investors can also add significant value to your business by acting as trusted partners in their part of the globe. There’s nothing better than aligned incentives for ensuring mutual success.
Whether you’re looking for liquidity in public markets, or via M&A, opening yourself up to cross-border exits increases your likelihood of exiting, as well as your potential valuation. We have portfolio companies that have found themselves in discussions with multiple potential acquirers, from both the US and Asia. In each case, the awareness of other players involved has drastically affected both the timeline and the valuation of the transaction. We had a Hong Kong based company IPO in Australia. Chinese investors spent US$15 billion last year on US-based transactions and that number is set to double this year. Your options get a lot more interesting once you start thinking outside of the box.
Bonus Reason: Meeting different types of people, being exposed to different ideas, opportunities, and challenges, opens your mind to things you never thought possible. I don’t know about you, but I’m in this whole technology and startup thing to change the world. It so happens the world is a pretty big place, so it’s a damn good time to get started exploring it.
