Expert advice on how to internationalise your company in Spain and Latin America

When a startup begins to scale up, one of the preferred options to continue growing is to open up to other national markets. The ties between Spain and Latin America have led many startups to begin this expansion by crossing the pond in one direction or the other. In addition, Latin American companies also receive capital from Spanish investors: according to a recent ecosystem report prepared by Dealroom in collaboration with BBVA Spark, they participated in 141 investment rounds of startups in the region in 2022, a figure only surpassed by rounds from U.S. investors.

But when is the best time to internationalise? What strategy should an emerging company follow in order to succeed, and what key allies can it count on? Experts from different areas have explored these issues in the most recent Open Talks, held under the theme “Key ways to successfully internationalise your company.”

The event was moderated by María Agustina Ramírez, head of Strategy, Product and Marketing at BBVA Spark, and included the participation of Daniel Bilbao, co-founder and CEO of Truora, a Colombian startup focused on anti-fraud solutions; Eduardo González, country manager of BBVA Spark Colombia, and Benoit Menardo, co-founder of Payflow (an app that makes payroll collection more flexible and which won the 2022 edition of South Summit, the most important event for entrepreneurship and innovation in southern Europe).

When: choosing the right time for expansion

Internationalising without having adequately validated the product beforehand or trying to open up to too many markets at the same time can be the kind of mistakes that lead to failure. Knowing what point of maturity a startup should be at before considering cross-border expansion is the key to success and also the main challenge, since all experts agree on one thing: there is no fixed formula.

According to Truora’s David Bilbao, “the muscle of internationalisation develops over time.” In the end, it is only by launching into different markets that you learn. But it all depends on the sector, as some products (such as Truora’s software solutions) are more likely to scale faster and require fewer resources to do so. “My bias is: the more market the better,” he summarised at the meeting.

Eduardo González, of BBVA Spark, also believes that opening up to other national markets quickly is key: “Entrepreneurs have to learn to run before they walk.” Among the factors to be taken into account when internationalising, he drew attention to:

• The regulation of the industry in which the startup operates and how strict it is.
• The size of the local market, as entrepreneurs from smaller countries, such as Uruguay or Peru, must export their solutions to new markets sooner in order to grow.
• The available capital, especially in the face of the cautious attitude that investment is experiencing in the current context of economic slowdown.

Why: objectives that drive cross-border growth

Growing their customer base and profits, accessing untapped talent pools, stabilising the company’s position by eliminating dependence on a single market, etc. There are many reasons for entrepreneurs to scale up their startup across borders. But the experts who participated in the Open Talks go one step further: opening up to new markets may be the only way for a solution to reach its full potential.

“You never know if your market is the best one you could trade in,” noted Benoit Menardo of Payflow. Therefore, in his opinion, opening up to a new one is the only way to confirm that a startup has found the right audience and the right circumstances to develop its activity.

How: key ways to successfully internationalise your business

Acquisitions, joint ventures, setting up an office or an on-site business leader… There are numerous mechanisms for opening up to new markets, and some help mitigate the risk associated with international expansion. Payflow, for example, was launched in the Chilean market through a franchise-like system (a local fintech, Buk, subsequently acquired the company’s Chilean operation): “We gave total ownership to the home team,” Menardo explained. “It’s a good way to test a new market without having to put in capital, just the know-how.”

Relying on local talent, he added, is a key strategy for adapting a solution to special regional characteristics: “You have to accept that the differences [between countries] are much bigger than you think at first.”

Truora’s growth was driven by the acquisition of the Brazilian digital signature company ZapSign. A strategy that helped them strengthen their position in a country where they faced great challenges. “What we did wrong was to start developing the local product without having developed relationships there, without having a local team embedded in the ecosystem nor any of the founders living in Brazil.” Therefore, in addition to relying on strategic partners, Bilbao points to the importance of operating directly on the ground in order to successfully expand internationally, as they later went on to do.

With whom: the importance of alliances

Bilbao also recognises the contribution of the venture capital funds that support its solution, such as Propel, BBVA’s fund focused on the fintech sector. “Because of their portfolio and because of their experience, they have the ability to look at what has worked in the past and show you a roadmap,” he said. In addition, “they have a lot of relationships, which gives access, for example, to B2B [business to busines] sales; and they help you raise the next round.”

Menardo points out that another great asset of the funds are the investees, i.e. companies in which another company holds a stake of less than 50% of their capital, without there being a direct business relationship between them. “We use these companies a lot, because in a sense, we’re from the same family,” said the Payflow co-founder. These networks are a valuable source of both information and business opportunities: “Every time I’m in a new market, I talk to the founders within the same [investment] portfolio to understand what its specificities are. In addition, these companies may be your first customer.”

A matter of resolution?

“The success of an expansion is 95% in the founders,” said Eduardo Gonzalez, of BBVA Spark Colombia. “We have seen that when entrepreneurs really learned from their mistakes in their first area, when they go to other countries they become profitable in half the time.”

“It sounds like a catch phrase, but half the problem is attitude,” added Truora’s David Bilbao. While there is no single roadmap for internationalisation, there is expert consensus on some of the things that help entrepreneurs navigate their way to success: dedication, strategic thinking, allies and a firm commitment to this new stage of the journey.