Market Expansion �Target Markets

YO U B E TT E R WATC H E AC H A N D E V E RY S T E P, T H E S TA I R C A S E ON YO U R WAY U P I S

S U B J E C T TO C H A N G E

Market Expansion Assessment Model

April 19, 2010

Market Risk

Political/Economic & Legal/Regulatory

Market Opportunity Size, Growth, Revenue, Sales

Distance Cultural and Geography

Strategic Pure Company, Merger & Acquisition, Licensing/Joint Venture, Franchise

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What does it mean to be KOSHER?

April 19, 2010 The Hatchery

Conditions for Market EXPANSION

April 19, 2010

•  Market must EXIST for expansion to occur. •  Companies must EMBRACE the opportunity. •  Timing is EVERYTHING, to be taken into account •  Its all in the PLANNING, there is no turning back •  Readily seek ADVICE, this is not virgin territory. • 

Main Entry: ex·pan·sion Pronunciation: \ik-ˈspan(t)-shən\ Date: 1611

1 : the act or process of expanding <territorial expansion> <economic expansion> <expansion of the universe> 2 a : an expanded part b : something that results from an act of expanding <the book is an expansion of a lecture series>

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What do they all have in common?

April 19, 2010

•  Apple, Microsoft, Adobe, Symantec, Oracle and SAP •  They all maintain international business divisions. •  Combined, their international operations generate

more revenue than domestic. •  It is not a coincidence. •  And this does not happen overnight.

•  Decisions were made early on. •  Actions were taken to make this happen.

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Domestic Markets

April 19, 2010

•  There is no escaping the fact that emerging and early stage companies must focus on local markets to build:

o  Revenue o  Traction o  Pipeline o  Credibility

•  Positive movement in these areas please the investors (VC and/or strategic), business partners and banks.

•  They are building blocks for growth and business development which should be planned for and carried out at as early as possible.

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We create our opportunities

April 19, 2010

•  Success in the local domestic marketplace is a result of eating, living and breathing that market and providing the goods and/or services meet its needs.

•  Identifying those needs and delivering solutions is half the battle. Making the world sit up and take notice of the results and benefits is the other.

•  Determining where in the United States an emerging company’s solution set is applicable takes a good deal of research.

•  Most time consuming, any hope of successful international expansion depends upon this market research.

•  Moving tried and tested domestic models to the appropriate international scene is vital to achieve expansion success.

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New York: The Global City

April 19, 2010

•  New York has something for every expanding company.

•  Prime for business development and sales. Manhattan’s business district is laid out in a grid just to make things more convenient.

•  The Hatchery is in process with HSBC to set up a specialized program to facilitate global banking services for entrepreneurs and emerging companies.

•  The Office of the Mayor, City Council, and New York City Economic Development Council are working to construct a platform to engender growth and development in new business for the City.

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April 19, 2010 The Hatchery

Huddle: Hatchery UK Gauntlet

Huddle – Case Study

April 19, 2010

•  Sensed the need from research and direct experience in the business sector that their software was and is necessary.

•  Developed their software on Microsoft’s .NET platform taking advantage of their Bizspark program to cultivate prospective customers in the United Kingdom and the United States

•  Presented at the Hatchery and to investors throughout the United States demonstrating their software and sales/customer traction in the Enterprise and Government sectors.

•  Signed up huge bundling deal with HP/Compaq •  In the process of closing their 2nd round investment round from

US investors •  Continue to gain traction and sign up new customers.

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Tim Hortons, A Canadian Institution

April 19, 2010 The Hatchery

Tim Hortons – Case Study

April 19, 2010

  Arguably one of Canada’s best known brands founded in 1964.

  31 years later Tim Hortons merged with Wendy’s International, Inc. in 1995.

  The merger provided resources and impetus for expansion.   Tim Hortons locations are now in Michigan, Maine,

Connecticut, Ohio, West Virginia, Kentucky, Pennsylvania, Rhode Island, Massachusetts and New York. Why these?

  The Canadian operation is 95% franchise owned and operated, and plans in the U.S. call for the SAME key strategy to be implemented as expansion progresses.

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The Hatchery, Time and Place

April 19, 2010 The Hatchery

The Hatchery – Case Study

April 19, 2010

•  Pioneered Venture Collaboration filling a void in New York City in 2007

•  Its event series: The Gauntlet, Are You Serious and Hatch Match gained popularity across the United States

•  Proximity to International consulate and trade offices in New York City prompted global reach along with far flung business networks of its founders. UK, NZ, Canada, Australia, Italy

•  The Hatchery partners with Corinthian Partners Investment Bank in order to directly participate in Private Placements, Mergers & Acquisitions and Turnaround Deals.

•  The Hatchery has expanded its market geographically, by industry and by sophistication and worth of deals.

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United States, It’s a BIG Country

April 19, 2010 The Hatchery

Texas is a BIG State

April 19, 2010 The Hatchery

Leaner and Meaner

April 19, 2010

•  Advances in technology have made things far more convenient. It now costs far less for build out and as a result has decreased time to market.

•  Convenience does not mean that things are easier. In some cases quite the opposite. Timelines have been crunched to where we operate in minutes/hours rather than days/weeks. Much MORE is expected of you with LESS.

•  Venture Capital and present revenue must be spent even more wisely, and resources stretched to their limit.

•  Flexibility and adaptability to changes in economic conditions and market situations crucial to success in terms of market expansion.

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When is not an option

April 19, 2010

•  United States market expansion must always be top of mind from the inception of any company looking to maximize their financial opportunities.

•  Those late to the game, might very well interested in OWNING their domestic market, but in this present economy, its simply not enough, especially if shareholders are to be answered to.

•  Develop plans for United States market expansion early on. They should be adopted by management and permeate the company’s decision making processes.

•  Is everyone in management on the same page? Do all divisions and sectors share the vision?

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Managing the timetable

April 19, 2010

•  Getting on board early, means being truly committed and invested in International market expansion.

•  This includes grasping the implications of choices made and decisions to be made.

•  It may be that now is not the time to expand. But you’ll never know when that time is without working through the relevant business considerations: o  Cultural o  Market fit for goods/services

o  Competition

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‘You Know it Don’t Come Easy’

April 19, 2010

•  There are a number of things to come to grips with on the local front:

o  Taxation o  Legal Contracts o  Accounting Practices o  Terms and Conditions o  Pricing o  Language Localization o  Collections

•  These are not to be seen as obstacles or barriers, just a reminder that there is work to done. Nothing is insurmountable. Nothing is impossible. Words New Yorkers live by. The Hatchery works with companies on all these issues.

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Entry Points

April 19, 2010

•  Country characteristics o  Political, economic and legal risks favor non-equity forms of

market entry, rather than franchising as an example. The United States does not pose such a problem.

•  Industry characteristics o  Capital intensive industries look to reduce their capital exposure

by favoring non-equity forms of market entry.

o  Non separable entities, ie standalone restaurants would prefer an equity mode of entry.

•  Firm characteristics o  Larger firms would prefer to franchise, while smaller independent

firms would opt for an non-equity mode.

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Are you ready? Is it time?

April 19, 2010

•  Setting up shop in a foreign country, is about more than airline tickets and real estate.

•  Having done the research and taken costs and calculations of time and resources into effect, are there sufficient funds in the budget for expansion to happen now?

•  You don’t get many chances to make a good impression. Prospective customers, business partners will remember any pitfalls you experience.

•  Your competition will not let them forget.

•  Its okay to alter your schedule. Its your company. Its your timetable.

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Need to, Have to, Want to, Should do.

April 19, 2010

•  Why are we expanding? What is motivating this momentous decision? Is it a defensive maneuver?

•  Are you satisfied with being a success in your home country? In your domestic markets?

•  Its okay to answer yes? If you and your team and your investors are satisfied, then you’ve made your decision. Just make sure that they ALL feel that way. And what is your competition doing? Are they expanding?

•  Keep in mind the assertions you might have made along the way about your company’s ability to be a player on the international scene. It could come back to haunt you.

•  Market expansion and pitch presentations. What this all means.

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Money, Money, Money

April 19, 2010

•  Will it cost you more or less to maintain the status quo? Or expand your market?

•  At the end of the day, expansion must be profitable, otherwise there’s just no point in any of this and it becomes an academic exercise, if nothing else.

•  You do not HAVE to expand your market. •  You HAVE to want to expand. •  And it HAS to MAKE SENSE !!!

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Step outside your box

April 19, 2010

•  You will not be the first to expand to the United States, nor will you be the last.

•  Others have successfully gone down this path and met with success

•  Look to those who have successfully taken their companies to the United States and ask them everything you want and need to know.

•  Bring on specialists to manage and ease the transition. Team members have day-to-day responsibilities.

•  Make it known to all team members and decision makers that international market expansion is the course of action and secure the resources to do so.

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Thank You�Questions & Answers

DAV I D M I C H A E L B LU M E N S T E I N M A NAG I N G PA RT N E R / F O U N D E R

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