Most founders will agree that timing can be everything when it comes to business success. What fewer people are talking about is how crucial location can be. Not all business ideas are born in the cheap. And while you can’t win if your business wasn’t born at the right time (I’m looking at you, pre-Google search engines), you can control where you’re based.
In April 2013, I accepted Richard Valtr’s offer to join his startup, Alley. We were building a cloud-based property management system to handle hotel operations, reservations, payments, and guest management, and given my decade of experience in various hotels, I thought we had something special. Between hands. But for three years we couldn’t gain momentum, and it started to creak in the team. We couldn’t raise the funds to grow, and we couldn’t grow enough to expand our pool of potential investors.
And so, five years ago, we moved Mews from Prague to Amsterdam – and we haven’t looked back. We were just in the wrong place to make our business a success.
Here are my takeaways from Mews’ move to the Netherlands, and some food for thought for founders who think they might have the right company in the wrong place.
Our culture has clashed with local investors
In 2013, we began the process of raising seed money for Mews. After three years, we had a few sheets of terms from Czech VCs. However, at that time the Czech market was not ready for the cloud and the level of automation we were working on. Western Europe has long been ahead of Central and Eastern Europe on this front, an issue that leaves many promising startups by the wayside.
Czech venture capital firms were looking for B2C startups that could quickly achieve hypergrowth, as opposed to B2B investments like Mews. Our main goal at the time was to continue to develop the product. The conditions that were proposed to us were not pleasant, in particular on the rights of protection of minorities.
Most of our clients were based in Prague, but our plan has always been to build a global business
The Netherlands has been a much better match in terms of investors. The country is a cloud and payment business paradise, so investors are familiar with the landscape and aren’t so focused on start-up business income. As the market is quite developed, Dutch VCs are more confident in leveraging the potential of complex technologies.
Our customers called us at home
At this point in Mews’ journey we had around 40 clients and a monthly turnover of Â£ 30,000-40,000. Most of our clients were based in Prague, but our plan has always been to build a global business.
About a third of our clients were in the Netherlands and they gave us the most support. As a customer-centric company, it made sense that we were close to a community that âhasâ the product and wanted to help us make it even better.
It’s time to lower the barriers to startup success
Moving a startup across borders is painful. It was necessary for us to sell our own intellectual property to our new entity in Amsterdam – but after that our biggest big budget expense was our lawyers. Trying to draft your own agreements will waste more time and money than it saves (I tried) – but a legal professional with expertise in technology and intellectual property will make it easier.
The Western European startup ecosystem should do more to support technology start-ups in under-represented regions.
The longer you wait to move to a new country, the more complex and expensive it becomes
Social media has no boundaries – and for founders planning to move abroad, this is a great place to test the waters. I’ve been active on LinkedIn throughout my career and have found it pays to play for the long haul. By the time Mews landed in Amsterdam, I had established some local connections that got us started, directing us to potential clients and employees in the Netherlands.
Always look ahead
The longer you wait to move to a new country, the more complex and expensive it becomes. With just a few employees and a first release of our product, we didn’t have much to lose.
We now move on to the next step: talent first, location second. It means being a fully distributed company that hires talent all over the world. This year, we are committed to becoming a fully distributed global company. And while location becomes less and less important as we evolve, getting it right from our early days was essential. I would challenge more start-up founders to ask themselves, am I the right company in the wrong place?
Matt Welle is CEO of Mews.