In these past few months there has been an increase in the number of Brazilian entrepreneurs contacting BayBrazil for advice on expanding their companies into the US. Market.
We brought some of their questions to the experts! Here is our conversation with Matt Svetich, Partner at Drummond Advisors, who has extensive experience working with both large public companies with market capitalizations above $1 billion as well as companies that are in the start-up environment looking to scale.
BayBrazil: United States and Brazil represent two big opportunities for many companies: access to a huge consumer market and potential investors. What are the main challenges faced in bridging these two worlds, specially involving the Silicon Valley?
Matt: When a Brazilian company is expanding their footprint into the US, it is often easy to get distracted with the details instead of focusing on why the expansion is occurring in the first place. Expansions into the US market occurs for three primary reasons; to obtain additional investors, to diversify the Company’s portfolio, and/or to increase the customer base. In addition, an important benefit that is also often lost in the process is the benefit of having a brand with a presence in the Silicon Valley. A product branded under the Silicon Valley umbrella often supports sales back in Brazil as well.
BayBrazil: You recently took part of a delegation of government officials and entrepreneurs that visited Brazil for a business mission promoted by the city of San Francisco. What were the main deliverables of this initiative?
Matt: Drummond has seen a significant increase in the number of businesses both in the US and Brazil that would like to expand their footprint to the counterpart’s countries. There are several recent successful examples and the purpose of the delegation was to expand our effort by reaching out to likeminded individuals in Brazil.
BayBrazil: From your experience, what kind of mistakes Brazilian entrepreneurs need to avoid in order to be successful in the US market?
Matt: The Drummond Team is asked this question all the time and to some extent the response varies by industry. However, we do see some common mistakes that often prevent a Brazilian company from moving forward in the US. One of the most common mistake is the lack of research and preparedness. Even if a Brazilian company is bringing unique product to the market Day 1 in the US, by Day 2 or 3, it is likely that someone else will see what they are doing and begin competing. The US market has many competitors and as such, it is important to always error on the side of over-preparation.
BayBrazil: In which situation should a Brazilian company consider to set up an office in the US?
Matt: The determination as to whether to setup an office in the US is a very complicated as the decision can be based on many factors. For example, a start-up may be looking for funding or a larger company want to expand their footprint. The way I would respond to this question though is to ask the Brazilian company if they plan to sell their product in the United States. If so, do they know the US market well enough to be able to determine if there is not only current demand or, even more importantly, will this demand change over time.
BayBrazil: In case being in US is the way to go, what are the main to do’s to keep in mind while doing this?
Matt: Here are my top 10 to-dos!
- Do you have someone in your company that is a very good public speaker who can clearly communicate the value of the company in English and Portuguese?
- Do you have a teaser presentation that illustrates the value proposition of your company? This is often one of the most significant issues we see.
- How is the company planning to distinguish itself from in the highly competitive environment in the United States?
- Has a business plan been written along with a supporting budget? Written plans make for tangible plans.
- Have you selected a service provider(s) that can facilitate your transition into the United States from a Legal, Accounting, and Tax compliance perspective
- Do you have a reasonable timeline in place? Does the timeline agree with your investors’ expectations? Once you have made the decision, that doesn’t mean you push a button and it happens within a month or two.
Many factors can contribute to the extension of the timeline;– so be prepared! It is a marathon not a sprint!
- Do all individual have the appropriate Visas?
- Do you know how to license your product and is there a written customer agreement in place. Do not wait until you are about to close your first customer deal!
- Do you have process in place including a bank account to pay expenses and receive deposits?
- Do you know what you really want to accomplish?
BayBrazil: On the other hand, could you comment on some trends you have noticed from US businesses regarding their interest in Brazil?
Matt: US companies are interested in doing business in Brazil and we get asked questions all the time. As expected, the most common questions are around the bureaucracy and the political situation. Our respond is that it is important to understand that if the correct process is followed there is a way to dramatically limit much of the risks involved.
BayBrazil: What are the main tasks Brazil should fulfill in order to attract more investments for Brazilian companies?
Matt: Silicon Valley is full of excellent examples of companies that have attracted large investments. Get to know these companies and understand what they are doing right and replicate the process for your own company. For example, look at your teaser and compare it to the teasers you are seeing in Silicon Valley. Does your teaser deliver a clear message? What about the quality of the graphics? Have you communicated how the product will make month at the per unit level? Do you have a clearly defined pitch?