What we’ve learned from our portfolio companies

XAnge has already enjoyed many success stories in helping its portfolio companies set up the US. Starting with Neolane, a marketing automation software company, which made that move back in 2007 and later got acquired by Adobe in 2013 on the back of a strong American commercial presence. More recently, in 2019, AB Tasty and 360 Learning opened their offices in New York, while Dolead launched its US operations from Boston. They will probably soon be as successful there as Dynadmics was, as it now generates more than 50% of its revenues in the US having started there in 2014, or Odoo, which now has 100+ employees in San Francisco & New York.

1. Do you have a US ambition ? We suggest you test it early

We have noticed that European VCs tend to advise their startups to wait for the Series B financing round before launching their company in the US. At XAnge, we believe the move should be considered much earlier, and can be done as soon as the Series A stage. The reasoning behind this is to avoid taking some early product strategy or recruitment decisions that will be harder to reverse later on. Common mistakes might include branding that is not ‘compatible’ with an International/English expansion or positioning the product marketing in a way that makes it harder to launch in the US. Having the opportunity to be confronted with the US market early on requires the startup to be extremely focused on its uniqueness and its messaging, two key differentiating factors.

2. US product localisation

Spoiler, translating does not work.

You need to think of your product and of its roadmap as being international from the get go, in line with your global ambitions. Think modular and adaptable to as many geographical areas. It can be simple things such as multi-language support, English taglines, or much more subtle topics such as fitting into the local culture.

"To sound like an American, it’s not just about the accent, it’s about the cultural codes. To be one of them, you have to spend time in the USA, even before settling down, to immerse yourself in the American culture (sports, TV channels, shows, food,...). This is especially necessary for recruiting, as French entrepreneurs will be implicitly tested on these aspects by the best candidates." - Emmanuel Schalit, ex-CEO & cofounder of Dashlane

3. Don't kid yourself on the budget required

You need to be realistic! The US is a single unified economy, yet as a country it is the size of Europe, roughly 4x Germany or 5x France’s population, with a large talent pool that is used to generous compensation packages and marketing budgets in proportion to its size. Making it with less than 1 million euros, is therefore not an option if you want to make a big splash there. The cost of setting up there has to be appropriate to what is at stake: In a way it’s like having a chance to play and win the Champion’s League !

Here are an overview of the amounts of the fundraisings completed prior to US expansion by our portfolio companies for their first year in USA:

“The US is twice more expensive than the UK but the ROI is 50 times bigger.” - Arthur Saint-Père, CEO of Dolead

4. Traction needed before moving forward

The path to getting US commercial traction is very different from company to company. This is due to different competitive environments in each space, but also varying product positioning (from a “Low touch” approach to a “high touch” one, a direct sales vs an indirect one,...). In all cases, you must localize the product and the website very early on, as well as tune the marketing message with a distinct US flavor. Better to do this with native English speakers, preferably American. For early stage B2B Software companies, it is possible to bootstrap accessing the US market, by performing the localization & marketing while still in Europe as you can get US customers and inbound leads even before settling in the US. We have seen early customer traction and marketing surveys being down successfully in this way. Once you set up the US subsidiary, you are a step closer to a product-market fit !

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Here is a podcast dedicated to French Tech in the US, launched by Business France:

Episode 1 - J'y vais, j'y vais pas ? by Impact USA

Partir à la conquête des États Unis lorsqu'on est entrepreneur, c'est une décision radicale qui donne une nouvelle échelle à son business et qui change une vie. Dans cette série que vous allez découvrir, nous suivrons l'histoire de 3 entrepreneurs français partis à la conquête des États Unis : Christophe Ménard, Alix de Sagazan et Jonathan Benhamou.

anchor.fm

5. Who gets to go?

From our experience and our portfolio’s, we know that to succeed there, one of the founders has to be physically present in the US. Period.

"The first difficulty is that the gap between France and the US is big. The second one is that the first is always underestimated by the CEO.” - Nicolas Hernandez CEO of 360 Learning

6. East coast or west coast?

"Even if there are fewer and fewer penalties for going to the West Coast, I would recommend to be as near to the European teams as possible. On a day-to-day basis, it has a huge impact on the ability to maintain the corporate culture." - Emmanuel Schalit, ex-CEO & cofounder of Dashlane

Decision matrix

Here are important factors to consider when choosing where to land:

7. Admin stuffs, don’t do it quick & dirty

Choices that you will make today can have huge impact later.

For example:

• Incorporation of your subsidiary : You can do it in 3 clicks today online but it will take 3 months to change it later,...
• Bank account: Contrary to what you might think, the US banking Market is not as mature as the French one is. Having a commercial Bank advisor IS important to untangle stuff. Check our Bank Checklist here: 🎙️Bonnes pratiques et échecs lors de l'ouverture du marché U.S.
• Intellectual property: How do you exchange value created between France & US? It can be massive in terms of tax if not addressed from the beginning.

8. Playing hard on the hiring game

Before saying anything else, just assume that you WILL make hiring mistakes. It’s inevitable.

"Americans are outstanding salesmen of themselves, during the interview the most introverted accountant is standing on the table.” - Stéphane Bonjean, CEO of Dynadmic

But good news, there are ways to make fewer mistakes by multiplying cases studies, reference calls, and scorecards ...

And remember that local hires will help you clear the cultural gap and sound like a local company.

9. Be bold on selling and marketing

The act of “selling” is much more straight to the point than in Europe, using your unique selling process as a guiding light. Sales teams are organized according to the sales funnel (BDR, SDR, account management, ...).

That’s why you must use the best methods and techniques to drive leads and sales, such as having ample impactful content, mastering outbound calling, sharpening your SEO results to near perfection, adopting social selling techniques, using sales chat on your website, train your team to succeed in the fast US environment, and aligning your sales and marketing teams.

((Le métier de commercial aux Etats-Unis n'est pas le même qu'en France : les méthodes et les profils des commerciaux sont différents.))

• Sales of up to 50K€ can easily be done remotely ;
• Meetings last only 20 minutes so you need to be very focused;
• Sales teams are not multi-tasking. Sales team are fragmented according to the sales funnel (BDR, SDR, account management, ...) ;
• Sales teams need sales materials: case studies, call & demo script, social proofs, ... an entire sales playbook.

“In the US, there is business everywhere! You should not hesitate to move away from the big cities. You have to explain to your prospects that you are the best, show them that it would be a professional mistake not to work with you. During a Sales pitch, we only talk about efficiency and money, we never explain how it works. Prospects don't change for the sake of change, they clear needs ROI/benefits.” - Stéphane Bonjean, CEO of Dynadmic

And successful marketing is the same! A US website style must be short, straightforward and crisp. Branding is also key because US people are very sensible to it.

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Here are Caetan Gachet CSO @ Algolia and Florian Douetteau CEO @ Dataiku’s advice to set up in the US!

Scrappy tactics for non-US founders targeting the enterprise market

We were lucky to have Gaetan Gachet, Chief Strategy Officer at Algolia & Florian Douetteau, CEO at Dataiku, come spend some time with the founders of The Family's batch this week. Their stories were interesting for many of the startups we are working with because while most of them are based outside the US, for many the early addressable market is there.

thefamily.substack.com

10. Switch from being HQ-centric to becoming a global company

You have to think international from day 1: if you know your company will expand internationally one day, then your team, your product, your marketing, all have to be planned as international from the onset. That means:

• Hiring English speakers even if they work in Europe ;
• Adapt you product to be compatible with several languages and different country needs ;
• Listen to your US employees, they know more than you on how to sound local ;
• Don’t think your HQ country as the center of your company. Your management has to be a mirror of your international presence.

"In the New York office, we asked the entire team, French speakers included, to speak only English. As soon as someone spoke in French, they had to put $1 in a piggy bank. This is very important to maintain the company culture and team atmosphere. Employees who don't speak French may worry about French discussions and misinterpret them. I myself was very careful not to speak French and to try to appear as American as possible to set an example." - Emmanuel Schalit, ex-CEO & cofounder of Dashlane.