How to Make it in America According to Adam de Sola Pool
Adam de Sola Pool is an angel investor based in Cambridge, Massachusetts.
With over 20 years of experience as an early-stage venture capitalist in central European environmental, clean tech and renewable energy SMEs Adam knows how to provide capital (debt and equity) as well as coach management teams into becoming growth stage companies. Of the 20 environmental and renewable energy companies Adam has invested in and mentored, 6 have been listed, 4 have been sold, 3 remain private, 4 have been liquidated and 3 are still partially owned by Adam.
Today he is sharing parts of his expertise with you guys! He offers unique insights as an American angel investor who has made most of his investments in Central Europe.
1. What are your three tips for international companies entering the USA market?
1 – Know yourself.
The US market is not for everybody. There are many good companies that should not come to America. As an alternative, they can just be a very good local company on their domestic market. If you come to the USA, you need to be ready to be globally competitive. To be globally competitive, it means that you need to compete with Chinese, Japanese, Koreans, Europeans, everybody.
Consider an analogy to an “old-fashioned” business. If you run a very good local restaurant, it could a very profitable, very satisfying business. As the best restaurant in town, people come to you and love you, and you are providing a great service and you don’t have to compete because a Chinese restaurant in Shanghai is not competing with you for example in Warsaw.
So you really need to answer this question: Do I want to be the best in my local market with a strong position, and not travel all over the world all the time; or do I want to go Silicon Valley or Cambridge, Massachusetts and be aware of the competitions all over the world?
2 - Commit.
You really need to go into your global market up to your eyes, your whole body. You cannot go with only one leg or one arm of your company. So, it is a binary decision of leaving behind the old team and building a new team in America. You can still have your stuff back in your home country, but in America, you need to build a full-fledged office, not a temporary office with part-time staff. You need a full-time staff and full-time attention of the management team if you want to get the attention of any investors in America. There are of course exceptions to this rule, but I am saying in general for 99% of companies that if you are coming to Silicon Valley or Cambridge, Massachusetts in a “half-ass way” (pardon my expression), you will make no profit. If you make it a full-time commitment, you will have a chance to make a profit.
I will interrupt here. If a company is going global, would you recommend going country by country or going to several countries at once?
I would not recommend going to multiple countries at the same time. Just like in football where there are different leagues that you move up through, I would start with a less-competitive location than Silicon Valley. I would start for example in your closest neighbour’s countries or London or even Cambridge, Massachusetts. All of them are slightly less competitive than Silicon Valley and once you perfect your skill set there, then you can go to the most competitive leagues.
There is one caveat if you have a specialist product. Let’s say that you are in the automotive sector and you make sensors for automobiles. The automotive industry in the US is centred on Detroit, Michigan. I would urge you to go to Detroit as there are mentors and industry experts all around there who can help you. If you go to some other area with less automotive experience, you'll get inferior advice.
I have another great example of a biotech company that produces medicines for farm animals. They came to Cambridge, Massachusetts and no one was interested, but when they went to Kansas City where there are a lot of farmers and livestock, everyone was interested. Local interests and specialities can make a huge difference when choosing a location for a specialised product.
2. What makes an international company attractive to the US investor?
International companies have to answer the same set of questions that I ask domestic companies. And they have to answer them at the same skill level as a domestic company. The fact that you are coming from abroad is no excuse for not knowing the same things. The things that I look for are 1 - problem, 2- solution, 3- the size of the market, 4 – how is this solution protected from competitors, 5 – why is this team the best, 6 – what are the financial projections, and 7 what is the ask from the investors. So you need to be able to answer those 7 questions in about 10 slides and 10 minutes and know your stuff. Because if you don’t know your stuff, you are dead in the water.
3. Your most important advice for international startups
Learn the language and the customs. When you go to a town in the US (let’s say you are in auto parts and you plan to go to the Detroit area), find a champion who knows your business really well. Give him or her some equity and really bring this champion into your business. Have him or her introduce you to their network and share their knowledge. Too often foreign companies think that they know it all, but they don’t have local knowledge.