What do U.S. online ticketing company Fandango and Peruvian delivery startup Urbaner have in common?
Both used an accelerator to facilitate their international expansion. Urbaner leveraged the networks and resources of Startup Chile, a leading global business accelerator, to scale into Chile and other parts of Latin America. Fandango expanded into Peru through the acquisition of Cinepapaya, a startup supported by innovation hub Wayra.
Accelerators, incubators, and other types of innovation hubs aren’t just for entrepreneurs anymore. They’re valuable resources to leverage for expansion into a new country or region, especially for international investors seeking the next “unicorn” or multinational corporations seeking an “entrepreneurial ecosystem.”
Innovation hubs offer a preview into the future
Where can globally expanding businesses find the next Silicon Valley?
The answer could be:
- Barcelona, home to a 500-member Tech City representing the metropolitan’s tech and digital communities
- Buenos Aires, an innovation ecosystem that has overcome economic challenges to produce startups like Mirai 3D printing for the medical community
- Any of dozens of cities, countries, and regions—from Kuala Lumpur to Lagos and beyond
The location of accelerators, incubators, and other hubs provide a guiding star to where innovation is happening today—and where it’s likely to happen tomorrow. Just as the presence of a strong innovation hub (or several hubs) in a market is a promising sign for international expansion today, such a resource is proof of a region’s commitment to growth and progress, as such hubs only happen with investment by private businesses, the public sector, and other important stakeholders.
Innovation hubs accelerate market entry
As Schneider Electric CTO Prith Banerjee told Harvard Business Review, “The pace of innovation has completely changed. You need to innovate faster, and there are all kinds of new players in your ecosystem.”
Accelerators and incubators provide community outreach, educational programs, pitch events and more. These organizations have conducted much of the research and made many of the connections an internationally expanding business would otherwise have to do on its own.
Established networks: A venture capitalist introduces a founder to the local manager of a multinational company. Within days, introductions, conversations, and relationships are being forged. By bringing together the many business players, innovation hubs make interactions like this happen—and they’re particularly valuable to companies in the high-stakes, fast-paced work of international expansion.
“The lack of a robust entrepreneurial ecosystem makes it harder for multinational companies to identify high-quality startups,” professors Shameen Prashantham and George Yip wrote in the MIT Sloan Management Review. Furthermore, it can take years to gain a foothold in a new market. An innovation hub provides access to such an ecosystem and foothold—the innovators, the regulators, the influencers, and beyond—and delivers it ready to go.
“Ecosystem enablers”: Especially in emerging markets, expert mentors and resources can be scarce, which puts local companies—and the businesses they partner with—at a competitive disadvantage.
Innovation hubs fill in the gaps. Most incubator and accelerator programs equip participating companies with a full range of resources: legal and financial guidance, mentorship, access to an advisory board, cross-pollination of ideas and creativity with other innovators. Local innovators also benefit from perks like reasonable rents and financial incentives—accelerating their time to market, and their strength as a potential partner.
Access to capital: Startup Chile hosts an investors club with more than 140 proven private investors and VC funds from around the world. Barcelona’s Tech City includes a “payment innovation solution center” with La Caixa Bank, Global Payments, and Visa.
Because innovative startups can’t operate without funding, innovation hubs often provide a critical mass of investors and institutional funders. This streamlines the searching, vetting, and relationship-building process for a globally expanding company.
It pays to look beyond the usual markets, too. According to CB Insights, frontier markets—“the long tail” of 50+ countries that collectively comprise 5% of VC deals (Kuala Lumpur, Buenos Aires, Lagos, etc.)—have been gaining strength since 2012. These markets are on investors’ radars as well. “Unicorn” startups in these frontier markets have received funding from such top capital sources as Sequoia Capital, KKR, Khosla Impact, and Goldman Sachs.
Finding the right hub for you
With innovation hubs across six continents, the world is a big place. Consider places with a concentration of talent and resources in your business focus area—for example:
- Software and gaming: Frankfurt, Hangzhou, Lithuania
- Blockchain: Singapore and Toronto/Waterloo in Canada
- Fintech: Buenos Aires, Edmonton, Jerusalem, Montreal, Taipei City
Is the hub a culture match? Some accelerators and incubators operate under a mission of social justice. Others aim to build tomorrow’s STEM talent or future entrepreneurs.
What does the surrounding ecosystem look like—do your vendors and tech leaders in your field have an established presence? For Seattle-based IT consultancy Slalom, an affirmative answer to this question led to the choice of Vancouver for its second Canadian office. You may find corporate innovation labs as well—as is the case with the Ericsson Garage facilities scattered across Europe and expanding to the Middle East and Africa.
Finally, don’t overlook capital. What financing sources (banks, private equity, VC firms) are present in the business community? What’s their history of funding companies like yours?
Ready to get started?
Specialist consultants and advisors can help you evaluate innovation hubs worldwide then bring your expansion strategies to life. For more information, contact us.