At the LendIt Fintech Europe event in London, a panel of experts from lending platforms and companies shared their advice on how to enter new markets around the world
From left to right, peer-to-peer lending marketplace Funding Circle's chief strategy officer Lisa Jacobs, founder and CEO of SME lender Spotcap Jens Woloszczak, consumer credit firm Younited Credit's CEO Charles Egly, founder of Latin American fintech company Alfuenta Alejandro Consentino and COO of Europe's leading SME loan platform October Patrick de Nonneville
Entering new markets is an inevitable process for any business looking to go global, and now experts have offered their insight on international expansion.
Speaking at the LendIt Fintech Europe 2018 event in London, the five-strong panel discussed the importance of knowing your market, understanding the local culture and effectively navigating regulation.
It included peer-to-peer lending marketplace Funding Circle’s chief strategy officer Lisa Jacobs, founder and CEO of SME lender Spotcap Jens Woloszczak, consumer credit firm Younited Credit’s CEO Charles Egly, Latin American fintech company Alfuenta founder Alejandro Cosentino and European SME loan platform October COO Patrick de Nonneville.
Here we take a look at their advice on how to enter new markets.
Funding Circle’s Lisa Jacobs: “Understand the culture”
Funding Circle acts as a platform for investors to lend money to businesses across the world in order to help them grow and generate returns.
To date, the company has worked with more than 56,000 companies and facilitated more than £5.6bn in lending globally.
Chief strategy officer Lisa Jacobs says: “When we look at new markets, we tend to start by looking at what the opportunities are rather than the difficulties.
“We’ll take some time to really understand the market and what it wants, then we try and find the best possible answer to that market need.
“We want to find great businesses and those with international cultures – you have to have to have that because companies are global now.
“To do that, you really need strong teams that have established market connections and can evaluate the best way forward.
“We have a pretty solid business model that usually stays the same no matter which market we take it to, but you always have to make adjustments.
“You want to be very focused when it comes to your core product, but you might have to tweak some bits and you need to be prepared for that.
“I also think the cultural aspect is something that often gets overlooked when it comes to international expansion, but it’s really important.
“In the US, people tend to want to refer to others by their first name, in the UK it’s more of the last name, or in Germany they like to use job titles. There’s a lot of variation and not understanding that can cost you.”
Spotcap’s Jens Woloszczak: “Partner up”
Spotcap serves as a direct lender to SMEs in the UK, the Netherlands, Spain, Australia and New Zealand.
Founded in 2014, it has since raised more than 100m euros (£90m) for SMEs, and grown a team of 120 finance, tech and small business experts.
Founder and CEO Jens Woloszczak says: “We successfully moved into three new countries in less than a year and we can report that preparation is key.
“You have to build a network of local experts on the ground who can feed you information about what the market is like before you go there.
“There are lots of studies, which show in the markets we operate in that the addressable market pool is something like 20bn to 100bn euros (£18bn to £90bn) each – it’s quite a lot and it shows the potential that comes with international expansion.
“You can’t get there overnight, however. You need to work out your distribution networks, and get some larger enterprise partnerships.
“You don’t necessarily need to go and stand alone building everything from scratch in completely new markets to actually grab its full potential as a global company.”
Younited Credit’s Charles Egly: “Diversify your business”
European crowd-lending platform Younited Credit is seeking to become the largest of its kind on the continent, and currently serves France, Italy and Spain.
Co-founder and CEO Charles Egly says: “We study the market and the way it is segmented, and we study the regulation as well.
“Really, it helps to make the most of all the online tools we have available to us these days – you can virtually run a business from abroad.
“Since we launched, we originated one billion euros in loans, but still this is just 0.6% of the market share in France, our home country, 0.2% in Italy and 0.1% in Spain.
“So the market is so big that even in France we still have plenty of opportunity.
“But if you want to go beyond 2% or 5% of the market share, you have to change the way you acquire clients.
“As of today, we only do direct acquisition through direct marketing channels, but we are moving towards a more B2B model.
“So now we engage with the likes of [German digital bank] N26 to provide loans to consumers – it’s more like B2B2C – it shows that if you don’t diversify your business model you can only grow so far.”
Afluenta’s Alejandro Cosentino: “Analyse the variables”
Afluenta is the first collaborative finance network in Latin America and facilitates credit investment with no intermediaries involved in the process.
Founder, president and CEO Alejandro Cosentino says: “You want people with real experience of the market you are going into.
“The trick is too really analyse all the variables – How will the media frame your expansion? How will local people react? How will other businesses react? How will the government react? And so on.
“In Latin America, we see the entire region as one market and we developed the technology thinking about that, it’s really important to build the foundations of your company in that way.
“And shareholders like the idea of a company that is looking to take its business model abroad to different markets – they’re going to want to support that.”
October’s Patrick de Nonneville: “Pick the right team”
October, formerly Lendix, is billed as the leading SME loans platform in continental Europe.
It acts as an online marketplace for lenders, enabling investors to lend money directly to small and medium-sized enterprises.
COO Patrick de Nonneville says: “We have a specialised team that’s in charge of international development.
“You want to frame your thinking very specifically to the market you’re looking at and make sure it’s completely in line with the regulation.
“There’s all kinds of data at your fingertips so make sure to use that.
“Analyse your own funding as well and make sure you’re going to be able to maximise its potential in your new market.
“And of course the key thing is finding the right team to handle the expansion.
“You need someone leading the project who has a really intimate understanding of the local culture and business identity, and you don’t want to go with someone too commercial.
“International expansion shouldn’t come in lieu of domestic investment – you have to keep both going at the same time, you would be crazy not to.
“There are rich opportunities in funding and operations overseas and why would you leave that for other people to grasp.”