Recently, 15 startups from Greece and Poland, all winners or finalists in the MIT Enterprise Forum startup competition, participated in an intensive entrepreneurship “bootcamp” at MIT. During the weeklong workshop, professors and researchers provided insightful lectures on topics such as how startups can think more innovatively, build advisory boards, and conduct business more effectively.
Introducing the Startups
The startups participating in the June event represent diverse technologies, from biomedicine to Internet of Things, from scuba gear to wheelchairs, and from materials to online marketplaces and enterprise software.
In the medical field, InSyBio quickly identifies biomarkers for personalized medicine, and PolTREG is working on treating the cause of juvenile diabetes. On the medical-devices side, PolTiss delivers a liquid-tissue scaffolding during surgery, while Hussartech produces antimicrobial services. Laddroller helps wheelchair users stand up and travel, quickly and easily.
Meanwhile, Internet-focused startups like Yodiwo help non-programmers to design Internet of Things apps using a “drag-and-drop” approach. StreamOwl allows video content-delivery companies to optimize system infrastructure, and PlantIT helps gardeners improve their yields even when they’re traveling. ARK Analytics helps businesses save money through intelligent credit-risk analysis. Vesselbot, Event Reception, and Workathlon are improving critical operations in the shipping, event, and hospitality industries, respectively. Contadd is even working to make online advertising more engaging and less annoying.
For those who couldn’t participate in the bootcamp, David Birnbach, a lecturer in the Global Economics and Management Group at the MIT Sloan School of Management, shares the following five tips for foreign startups looking to expand into the U.S. market:
1. Understand that doing business in the United States doesn’t mean you have to incorporate in the United States.
There are many ways of doing business in the United States without incorporating there. If you set up a physical presence with either staff or an office in the United States, you may want to consider incorporating, which brings certain advantages. For instance, if you create a C corporation, you can generate capital by selling stock and attracting potential talent by providing equity in your company.
However, if you intend to sell your product online or through a partner, you may not have to file to incorporate in the United States. Also, having a U.S.-based manager doesn’t mean your company needs to incorporate in the United States.
2. Choose your partners carefully and deliberately.
Look for the partner that best fits your needs. There are many types of partnerships, and the one that’s right for you may be different from the best one for another organization.
“Companies spend a lot of energy on their partnerships, [A company] can spend six months to a year working with a partner without much progress, and wonder why the partnership didn’t take off,” Birnbach says. “One reason may be that they didn’t ask the questions up front to identify whether the relationship is one that drives equal value.”
So how do you choose the best partners? That’s an important question, and the answer can make a big difference. Birnbach suggests that you:
- Ask your target customers which companies they hold in high regard. Find out which firms they trust and respect.
- Ask industry associations which firms are most active. An active company with strong marketing and visibility in your industry may be a good partner.
- Partner with the technology companies on which your product is based. For instance, Google Glass-based startup Brain Power has received funding and technological support from Google itself.
3. Decide whether you will be using your own sales team or working through a partner.
Birnbach cites three options for foreign companies looking to sell their products. The first is to sell through a partner—for example, an online marketplace like Amazon.
The second is to have a partner sell with you. The key to this type of partnership is identifying a symbiotic relationship where the sale of one product clearly integrates with the sale of another. (That’s why, for instance, peanut butter is placed next to jelly in the supermarket.) The partnership between restaurant-delivery service DASHED and online food-ordering service Foodler serves as a clear example of this form of selling. Each time customers order through Foodler, they receive the option to upgrade their orders with DASHED, which provides faster delivery with real-time updates.
The third option is to have a partner sell for you. “With this option, the partner uses marketing and sales resources to promote your products, and you take home a percentage of revenue from deals the partner makes with its clients,” Birnbach says.
4. Reach out to industry groups.
Such organizations can help you build connections in new locations. In Massachusetts, for instance, Software-as-a-Service companies may want to contact to the Massachusetts High Technology Council. Life sciences companies may want to reach out to the Massachusetts Life Sciences Center, biotechnology companies to MassBio, and medical device companies to the MassMEDIC.
“All of these groups have robust staffs that are there to help new companies, especially companies from other countries, get connected to Massachusetts. And that can apply to any state,” Birnbach says. “Don’t be afraid to reach out these industry groups. They can accelerate your U.S. presence dramatically.”
5. Choose U.S.-based advisors who can open up their networks.
“Foreign companies can create U.S.-based advisor groups. These advisors can identify and reach out to experts in industry and academia,” Birnbach notes. “Having a good advisor physically based in the market you are trying to break into opens up lots of potential connections through their networks.”
Learn more about the MIT Enterprise Forum Accelerator Program and international entrepreneurship bootcamp at http://bootcamp.mitef.org. The MIT Enterprise Forum will soon be accepting applications for the next round of our startup accelerator program in Greece, Poland, Thailand, and the Middle East in October 2016. Visit www.mitef.org to sign up for updates.