VCs regularly tout the “value added services” that they offer to their portfolio companies. For the most part this typically boils down to hiring, legal, PR, and other traditional professional services that a startup could contract externally, but which are just more convenience and less costly when provided by the investor. Next World Capital, however, goes well beyond these traditional offerings by helping its growth stage companies expand internationally, with an emphasis on Europe.
With offices in San Francisco, Paris, and Brussels and several European LPs (limited partners), Next World is better situated than most US firms to offer globalization advice. This advice comes in a number of forms, including identifying signals of when to invest in international expansion, where to locate and how to structure international operations, hiring, business development, and regulatory assistance, among other areas. The firm has raised $200 million and focuses on SaaS, cloud, big data, mobile, consumer Internet, security and storage.
The question becomes, how many startups are targeting Europe as their expansion market, and how necessary is Next World’s expertise?
“Europe represents a major piece of the world’s GDP,” says Next World Capital partner Ben Fu, adding that the continent is home to more than thirty percent of the Forbes Global 2000. “We think it’s a market that demands the attention of most companies. But because there’s so many countries and so many languages in the region, it can be more complicated than many companies anticipate.”
In addition to its own team of professionals, Next World has built up a roster of over 100 European advisors across categories like telecom, banking, and mobile carriers that aid its companies as they sort through the above decisions.
We’ve seen the perils of a poorly managed international expansion before. At Groupon, for example, poorly run and poorly executed international operations have been a constant source of trouble for the company. (The company expanded by acquiring the Samwer brothers clone CityDeals.)
As an expansion stage fund, Next World does fewer deals than a typical early stage VC would. The firm has made just eight investments since raising its first fund three years ago. “When we do invest, we put in significant amounts of money and work very hands on. Our view is that we like to roll up sleeves and help as much as possible with expansion – international or otherwise.”
Next World’s most recent deal was in the $45 million pre-IPO Series D round raised by DataStax in July.
Europe’s macroeconomic situation makes it a challenging time to be discussing expansion into the continent, Fu admits, but it’s this environment that makes the expertise and relationships of Next World even more valuable, he argues.
“The macroeconomic situation there is still ugly, yes, but was much worse two years ago,” Fu says. “We’ve seen somewhat of a slowdown in terms of CAPEX spending by the big corporations, but the indicators in the tech sector are still healthy. We see Europe stabilizing and think it will happen shorter than later. We’re past staring into the abyss.”
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