At the turn of the 19th century, Manchester became what is known as the ‘Cottonopolis’. A city at the centre of the British cotton industry, it industrialised the spinning and weaving of cloth, and in 1853, boasted over 108 mills.
Towards the end of the 19th century, the trade in cotton totaled 50% of British exports and stood at 80% of global cotton piece goods. In short, Manchester was a city of international clout.
So, how did Manchester become such a significant player in this market? The perfect environment. Through damp weather and ample power from the rivers flowing off the Pennines, it made for the ideal infrastructure to make cotton.
If you take a walk around the city today, you quickly notice old mills and warehouses, the HQ’s of global, modern-day businesses - including startups. The city is becoming a key player on the European tech scene. In the European Digital City Index, it ranks 16th of 60 for startups, attracting capital from international investors and government organisations. With just under 70,000 digital tech jobs, £3.2bn of turnover and over 500 tech business births since 2016, Manchester is the single biggest employer of technology outside of London in the UK.
But there is arguably a distinct lack of investment when compared with the capital. Last year, Manchester received just 2% of the UK’s tech funding and in the latest Venture Pulse report published by KPMG, Northern businesses saw a 30 per cent year on year drop in venture capital funding to £226.5m from £327.3m in 2017. Locally grown businesses crying out for capital to scale their operations. In fact, there is a reported £300m funding gap for scaling businesses in the North West that needs to be plugged.
But capital is only one piece of the puzzle. Talent, addressable market size, top notch advice, and a killer product are the ingredients needed to take a business global. Manchester may have been a fantastic location for 19th century cotton production, but does it have the ecosystem to power businesses of the future?
Molten (previously Draper Esprit), FieldFisher, and PwC joined forces to discuss just that. We gathered the tech ecosystem of Manchester to hear from the backers and builders of international companies grown out of Manchester. From developing an explicit culture at the birth of a company, to when and where to expand, the evening’s experts gave the low down on how to build an international business. We’ve put pen to paper to share their nuggets of wisdom, with you.
How to expand
Generally, it depends on your company and the amount of cash you have to play with. You can either grow organically or acquire competitors in the new market. But under either method, there is no one way to expand your company. But, to prepare for the jump, you must cover these six hot spots to make the move as seamless as possible.
“Develop reasons for cross border communication”
The early days are critical for cultural frameworks. The kind of people you have around you and the people you choose to hire will have a significant impact on defining your culture. In terms of hiring, you are looking for all-rounders. People who are flexible, passionate, smart, hardworking, and committed enough to get their hands dirty. However, as you scale, you need experienced execs who can immerse themselves and soak up the culture you have already developed. The mission, culture, and values of a business bonds the team, and that is essential for employee retention and company growth.
Every company has its own culture. But to remain consistent across borders, you must ask yourself “Why would people join this company?” Be explicit- define and codify your values. Give people a mission and a reason to apply and give them something to get excited about - this will attract top talent. Having your mission and values codified and clear, with constant re-enforcement of those values, is crucial. There’s no shortcut to company culture and it must be defined early on.
When expanding internationally, send people who have worked at the office HQ to instill the pre-defined culture and ensure it carries across borders. Develop reasons for cross border communication, so teams in differing territories don’t feel disassociated.
“…ensure a solid product infrastructure before raising investment”
The worst thing you can do is expand too quickly without technical systems in place. Get marketing automation, sales automation, and other backend platforms secure to make for a solid product infrastructure before raising investment and scaling internationally, especially for B2B software companies.
3. Product market fit
One of the biggest challenges is finding the right product market fit as you enter new markets. Fine tune and optimise the product to what local businesses really need, whilst remaining strong to your macro level offering. If you do this alongside consistent messaging, tailored to the country’s audience, you will achieve rapid scale.
4. Approach the right VC
“It is essential to find a long-term partner that will really help you in your journey
Figure out what you need, when you need it, why you need it, and pick the right VC to work with before approaching anyone. It is essential to find a long-term partner that will really help you in your journey. Building a business always takes more time and capital than you assume, and you won’t necessarily end up where you plan to, so choosing the right partner is essential.
5. When and where to expand
“…do not go international too soon. Be sure to make use of your home market and be patient”
Expanding to the US is a natural next step for UK entrepreneurs, but Asia is now on the cards for many. More than anything, international expansion is sector-dependent. If there is a significant addressable market for your product, with strategic partners that are willing to back you, then put a plan together.
But do not go international too soon. Be sure to make use of your home market and be patient - if you have great technology, a world-class team, and a large enough market, it will scale naturally. International expansion is expensive, so it is essential to be well funded.
Category experts, who act as local heroes are essential for growth in the new market. Hire a salesteam to land and expand, who are native speakers and who understand cultural exchanges.
A massive thanks to our speakers and partners, PwC & Fieldfisher, who helped pull this event together. Find their profiles and companies below.
Edel Coen – Investor at Molten (previously Draper Esprit)