Technology will have a profound impact on every aspect of our lives. What we have seen to date is just the beginning.

We are a venture capital firm spanning the US and European startup ecosystems. The entrepreneurs we work with are creating the next generation of iconic companies, and include luminaries such as Pieter van der Does (Adyen), Drew Houston (Dropbox), Samir Desai (Funding Circle), Ilkka Paananen (Supercell) and Stewart Butterfield (Slack).

Our eclectic experience, insatiable curiosity, and unique point of view are driven by a common purpose – to make a positive contribution to the world.

We love the process of exploring and understanding entrepreneurs’ ambitions – from seed, to venture, to growth. We help to harness and focus their energy, expand to the next level, and bring their visions to life.

We only back the hungriest and most aspirational startups. If you feel ready to join our international network of founders, investors, creators and operators call us, and let’s begin the conversation.

April 2017

Our unique insight

This handbook will help you internationalise from the US to Europe. It’s packed with useful information to get started, quotes from people who have successfully made the transition, and a selection of case studies.

Working in Europe is not just about work. It’s about identity, tradition, style, provenance, and socialisation that revolves around food and drink. You will need to learn the nuances of different cultures and languages which – despite globalisation – influence everything from communicating brand, to recruitment, to marketing, to legal issues.

The companies we invest in span multiple sectors and go-to-market models, including Enterprise Sales, Inside Sales, B2C, Business Services, Adtech, hardware, infrastructure and Fintech. While startups also hire developers or development teams in Europe, we have primarily focused on commercially oriented expansion.

And to help you get up to speed with the jargon, we include an acronym glossary covering US and European terminology in the appendix.

Successful expansions

Thirty one Index Ventures backed companies have successfully set up in Europe. 16 have EMEA HQs in London. Five in Amsterdam. Four in Dublin. The other six are based in Zurich, Paris, Brussels, Edinburgh, Stuttgart and Cambridge.

Why Europe?

Europe has 750 million consumers, mature innovation markets, and a love of new technology. There is a tremendous opportunity to do business in Europe and it’s a well-trodden path for US companies.

Timing and opportunity

Mature US tech companies typically make 30% of their revenues from Europe, so expansion is a question of – not if, but when.

Internationalisation most commonly becomes a strategic priority for companies post-B funding rounds. Companies sometimes work backwards from a potential IPO date, allowing three years to build out reasonable European coverage. They will already have European customers serviced out of the US, or a flow of Inbound Sales opportunities, so they need to assess the opportunities and risks of expanding.

Increasing sales

Roll out a successful sales approach across Europe to sustain and extend your revenue growth.

Land grab

Expand quickly to take control of new markets before competitors.

Servicing customers

Take advantage of time differences and offer 24/7 support to international customers.

Paradigms from our portfolio

Etsy

After a $40M fundraise, they expanded to gain a considerable footprint in the UK, Canada and Australia. Etsy’s strategy was to establish international markets by connecting local sellers to local buyers.

Dropbox

When Dropbox decided to focus on Enterprise clients, they already had a huge freemium user base in Europe, and the team knew that their second office would have to be there to continue scaling their customer base.

Elastic

Founded in Amsterdam, raised money in the US, Elastic was a distributed team from the start. They set up a UK entity in their first year of operation because they made a key senior hire in London.

Pure Storage

Pure Storage invested heavily in Europe to scale out fast and to be first-mover building out a network of channel partners. Within a year they grew to 120 employees with $40 million in revenues and opened offices in Paris, Amsterdam, Frankfurt, Munich, Milan, Johannesburg and Moscow.

Squarespace

Squarespace had been operating as a small business in New York for seven years before taking venture capital investment. This changed the scope and scale of the business and in 2013 they expanded to a Dublin office to effectively support customers.

Zendesk

Zendesk first built out a London office for Sales and Customer Support, then set up the Dublin office. The European offices helped service global customers by taking advantage of time differences. Local Account Managers were better able to help prospective customers trial and buy the software.

Stack Overflow

As the Stack Overflow Q&A platform grew, the company launched Stack Overflow Talent (originally named Careers) - a platform designed to fix the broken developer hiring process, and help software engineers find better jobs. Stack Overflow raised Series B funding, and set their sights on international growth; expanding to Europe to enter new markets.

The significance of International

For some companies, internationalisation is a key part of overall strategy and the Chief Executive Officer, Head of Sales, or Head of International may play a pivotal role in the region. For other companies, International can be seen as a bonus in the first few years.

Making that first key hire

Who you choose to lead your European team will be crucial to the success or failure of your business. They will represent your company, attract the best hires, build a stellar roster of clients, and execute your go-to-market plan. Invest time in finding the right person who can build strong relationships.

Experience or potential?

Hire a Senior Leader. Ideally someone who has built a company or led a European business. He or she will set your hiring bar, and speed up your route to market using existing connections within the industry. There is a definable cohort of a few hundred individuals who have experience expanding US software businesses into Europe, many of them making a career out of doing just this.

Culture fit will be critical. If you can’t find an experienced candidate you feel comfortable with, a rising star could be an alternative. To offset the risk, recruit a senior Board advisor within the country to help with connections, relationships and advice.

Do you need a captain or a player?

Larger companies with IPO aspirations tend to go for General Managers or Country Managers, while others may prefer a Vice President Sales to execute on a European go-to-market strategy. More cautious or less well-funded companies may take a more incremental approach, hiring a junior individual to test the waters, but hedging your bets in this way simply slows you down.

A General Manager or Country Manager will be given more autonomy and control over part of the strategy and local financials.

The ideal profile

Don’t compromise on entrepreneurialism or culture fit, but you may have to settle for someone without the scale or sector experience because European talent pools are thinner than the US.

It can be tempting to hire candidates from larger companies like Google, Salesforce, Oracle and IBM. However, make sure your candidate has had startup experience and is a hunter - not a farmer. In the beginning, leading Europe involves a lot of hustling and doing the job solo, so your candidate needs to be comfortable with that.

Depending on sector, you may look for a candidate who has lead large Sales teams, or a candidate with more of a product or marketing background. There is no ideal single profile.

What can you expect?

Before making the hire, ask candidates to design a business plan. This will give you an idea of their vision and capability. Speak to people who have worked with them. If you have doubts, reach out to us for advice.

Look to your General Manager for European strategy, and input into the broader budget and timelines. Hire for local impact. Find someone who has the profile or the business relationships that will help you succeed.

What will they expect?

An experienced candidate will want chemistry with the Chief Executive Officer. They will want to know how much support they will get from HQ: Is the HQ team aware of ramp up times and budgets? How does the product roadmap relate to Europe? Will European customers be able to speak to security and data teams at HQ? And how many HQ teams will be available during European working hours?

Onboarding

Your General Manager should spend as much time as possible ramping up at HQ after being hired. Involve them in the business so they get a feel for your operations and culture, and can build relationships with the rest of your team.

A landing team. Yea or nay?

Sending a landing team over from the US can have several advantages including building shared values, market credibility, and short-term cost savings. However, you may lose out on a regional go-to-market strategy, and will not have the local connections required to build out your business.

We recommend hiring a local European Leader and sending supporting team members from HQ.

Let's talk money

General Manager or Vice President Sales roles are typically $350K for an experienced candidate. The range is $200K-$450K based on experience. Compensation is generally split 65/35 between base and bonus for General Manager roles and 50/50 for Vice President Sales roles. Candidates will expect options and will have a good understanding of them. Offers vary widely, but for post-B the average is 0.3-0.45%. We can talk through your individual circumstances.

The search process

Search within your networks first, then try a European recruiter. Most will be based out of London with access to further markets. Make sure the recruiter maps out the potential candidate pool and be clear about which cities to search in.

A good recruiter will provide calibration candidates within a week, and a shortlist of at least five people within a month to six weeks. This should include three who fit the brief and two wildcards – perhaps a rising star with the ability to step up, or someone without domain expertise.

Take into account negotiation time and notice periods, which are between one and three months in Europe. This means that your hire may not start for four to six months.

Recommended recruiters

For General Manager and Vice President candidates talk to:

360 Leaders

B2C & B2B: Ben Markland
B2B: Jerry Maynard

Erevena

B2B: Dan Hyde
Fintech: Maria Josife

UP Group

B2C: Clare Johnston

Renaissance Leadership

B2B: Sebastian Kayll or John Smith

True Search

Nick Fairclough

Renovata

B2B: Thomas Jepsen

Natural Selection

Gaming: Julian Lynn Evans

Scaling up your team

Who's responsible?

The hiring plan for the rest of the European team should be the responsibility of the General Manager or Local Leader. He or she needs to decide with input from HQ, what roles are needed and how best to hire for them.

Many companies operate a matrix structure, where employees report into Europe but also have a dotted line to HQ. If so, local hires should also be interviewed by their functional Leaders in the US. This will ensure culture fit.

Balancing input from HQ with local autonomy to the European Leader is a tricky task. Ultimately, it depends on building a good relationship, great communication, and frequent travel to and fro.

Speed or caution?

You need to strike the right balance of building momentum without losing control, and the pace of hiring will depend on objectives, sector, levels of funding and commitment to growth.

Pure Storage with Steven Rose at the helm invested heavily to scale fast and grew to 120 people within 18 months.

Stuart Collingwood leading Anki Europe took another tack, choosing to work solo for the first year while he got to grips with the business and scouted out key hires.

The recruitment process

Ideally, your General Manager will have number of candidates willing to follow him or her into your company. Rely on networks as much as possible as you did in the US to build out the highest quality, most dedicated talent pool.

Hiring profiles and playbooks are usually modelled on the US versions with some amendments for local flavour.

Keep in mind that your hires will usually have notice periods and it will take several months before they can begin work. The more senior your hires, the longer their notice periods will be.

Order of hires

While this will depend very heavily on your business model and strategy here is a common order of hires we have seen:

1. Key local hire

2. Sales

3. Sales Engineers

4. Professional Services

5. Customer Success

6. Operations/Office Management

7. Marketing

Companies often regret not investing in marketing resource in Europe earlier.

Values, fit and culture

Remote offices can dilute company culture. Make sure European hiring managers screen candidates with your company values in mind. HQ employees should interview European candidates for cultural fit.

Onboarding, induction and training

Create onboarding programmes, preferably at HQ to give candidates a flavour of the company ethos.

Human Resources and management

A local Human Resources function gives employees someone to talk to in their office. One-to-one video calls with HQ are not enough to manage personnel problems that inevitably arise. If you don’t tackle these issues early on, they can grow into bigger problems. The local Human Resources manager will also be heavily involved in recruiting, so they should have blended experience. If you cannot justify a full-time or permanent hire, consider hiring a consultant.

Stock Options

Below the Leadership layer there are limited expectations for receiving options, and you rarely need to offer stock to close a hire. Most companies give stock to employees if this is their US policy, but it may be reduced for Europe. This can feel culturally challenging, but it’s a pragmatic solution.

Hiring across geographies

Labour law legalese

Dealing with legal issues across a multitude of European markets can be intimidating, however with the right advice and information you can create high performing teams in all geographies. The table below is a snapshot of the regulations you will encounter.

In the UK, beware of ‘consultants’ ahead of establishing an entity. If they are operating more like employees this can constitute a ‘presence’ before you are ready, and generate employment rights, tax liabilities, and intellectual property ownership issues.

You will need a formal employee contract in Europe which is different from at-will employment in the US.

The perception is that locating to France is problematic but many of our companies have managed the regulations and offset the risks.

On maternity leave

In Europe, maternity leave entitlement can be up to a year, and it’s illegal to ask a woman when she might be returning to work. During this time, employers are required to hold the mother’s position open for them to return (or an equivalent role), and to arrange for maternity cover during the period of absence. Many employers offer significantly enhanced benefits and return-to-work bonuses as opposed to the statutory minimum. Options will be expected to continue vesting during any period of maternity leave

Employment law: UK

Employment law: Ireland

Employment law: Netherlands

Employment law: Germany

Employment law: France

Where and why?

It’s no coincidence that the best places to set up are four of the most vibrant cities in Europe. London, Dublin, Amsterdam and Berlin are magnets for highly motivated and ambitious people.

London is the top choice for Fintech and Enterprise. Dublin best for Inside Sales, back office and support functions. Amsterdam is good for Inside or Enterprise Sales. Berlin is unlikely but up and coming - particularly post Brexit.

Deciding factors will be the location of your Europe Leader, location of clients and customers, and availability of talent profile. If you find somebody you really believe in, let them drive the decision, but be cautious about building your HQ in a city other than these four.

Target companies to hire from

London has by far the largest pool of about two hundred serial General Managers who have built out US software companies. It also has the deepest pool of B2C General Managers, with marketing and community-building expertise. London is the easiest European city to relocate people because of its language, culture, and schooling.

Dublin has talent from Salesforce, Google, Facebook, Microsoft, Oracle and LinkedIn networks, representing a growing pool of Inside Sales and Customer Success Leaders.

Amsterdam has a smaller pool of B2B Sales tech companies that you can draw from.

Berlin has strong B2C talent, often young but aggressive Leaders - particularly from Rocket Internet companies.

Who can help?

Cities are keen to provide information on setting-up and overviews of tech activity, neighbourhoods, office space and market conditions. They also give advice on tax breaks, investment schemes, visas, business support networks and trade organisations.

London

London and Partners is the official promotional company for London.
londonandpartners.com

Tech City UK is responsible for the Exceptional Tech Talent Visa.
techcityuk.com

Dublin

IDA Ireland is Ireland’s state agency with responsibility for inward investment support and development.
idaireland.com

Amsterdam

Amsterdam inbusiness or StartupAmsterdam for the official foreign investment agency of the Amsterdam Metropolitan Area.
iamamsterdam.com

Netherlands

Netherlands Foreign Investment Agency is an operational unit of the Dutch Ministry of Economic Affairs.
investinholland.com

Berlin

Germany Trade and Invest is the economic development agency for Germany.
gtai.de

Berlin Partner is responsible for marketing Berlin to the world.
berlin-partner.de

The political climate: In the wake of Brexit

Europe is experiencing political uncertainty, including the UK’s vote to leave the European Union in June 2016 (Brexit), but the situation is moving too fast for specific advice. When you’re ready to expand, please reach out to the Index Ventures team for the latest state of play.

There are no immediate changes to the way you do business in Europe. London retains its role as a key tech hub. The importance of London may diminish over time (especially in financial services), but if this happens, it will happen gradually. Tellingly, in the months following the Brexit vote, Google, Facebook, Apple and Snap all announced major investments and headcount increases in London.

For the foreseeable future London will remain the leading European base for startups and for US startups expanding into Europe.

Clustering significance

Location rankings

London

Why London?

Lots of factors in its favour. English language, cultural parallels with US, travel hub, deep talent pools, multilingual, packed with Enterprise-grade prospects and partners, particularly in financial services. Many US companies have built up a UK audience and clients ahead of formally launching in Europe.

The major US tech companies have major hubs in London - even if they retain their formal European HQ in Ireland for tax reasons. Google, Facebook, and Amazon have large engineering teams in London, as well as key Account Sales, and Business Development teams.

Salaries and cost of living are high and Brexit is generating political uncertainty – particularly for fintech companies.

Where in London

Locate your offices in central London. No question. It’s just a question of neighbourhood. There is an Enterprise talent pool outside London near the M4 corridor but central London is the tech hub. Consider your proximity to customers and whether your office should be a destination.

If it‘s near Heathrow, everyone drives in and drives out, and that doesn’t create a cohesive workplace culture.

Office space neighbourhoods

East London

The East End is London’s rapidly growing creative community on the edge of The City with many young businesses attracted by the vibrant mix of clubs, restaurants, bars and cafés. Clerkenwell, Shoreditch and Hoxton good for a consumer startup, or if targeting the startup or developer communities.

• Average £35-£65 per square foot

West End

The West End is London’s cultural and retail centre with many established HQs of global businesses. All the media and ad agencies are here, and the influx of new technology and gentrification is changing traditional neighbourhoods.

• Soho, Fitzrovia or Covent Garden
• Good for adtech
• Average £50-£90 per square foot

City of London

The City of London is the commercial heart. Almost a city state that has its own regulations and laws. It is the powerhouse of the UK economy attracting international corporate giants that sit alongside the ancient guilds and historic monuments.

• Good for financial services sector
• Average £40- £90 per square foot

West London

Close to M4 corridor out to the West. Massive regeneration is attracting head offices of major brands with high quality space and a wealth of places to socialise and chill out.

• Paddington
• Commuter links for sales people working in established software incumbents located in the Thames valley
• Average £55 - £80 per square foot

Recommended realtors

Colliers
DeVono Cresa
Gale Priggen
Hanlon Bennett

Dublin

Why Dublin?

The Irish government loves US companies. Ireland is Europe’s fastest growing economy and Dublin is a global services hub with a highly educated workforce of home grown and international talent. It also has the lowest corporate tax rates in Europe at 12.5%.

If you’re looking to build a large Customer Support or Inside Sales team, then economics favour Dublin due to its lower cost. Ireland has big talent pools thanks to Microsoft, Oracle, Apple, Salesforce, Google, Facebook, Twitter and LinkedIn.

When startups kick-off in London and get to scale in Europe, they often choose to open in Dublin and shift back-office functions there.

Paradigms from our portfolio

Dropbox sent a three person landing team from San Francisco to support the Head of EMEA. The team grew to 50 with Inside Sales and Support, before hiring a UK Enterprise and Marketing team, followed by French and German country managers.

In 2015 Slack sent James Sherrett from West Coast to grow the team to 30 Inside Sales and Customer Support employees. Then they hired an Enterprise team in London which grew to eight in five months.

Workspaces

If you’re bringing less than five people consider workspaces like The Digital Hub or Dogpatch Labs. Slack first housed a hundred people in The Digital Hub until they opened their European HQ in Dublin. Etsy started here as well. Highly recommended for the atmosphere, networking, flexibility of space and events.

If you’ve got the budget consider Glandore providing 5-star unbranded office facilities in the city centre. Twitter and LinkedIn started here before moving to permanent homes.

Neighbourhoods

Dublin isn’t divided into distinct neighbourhoods by tech industry. The city is small and walkable.

Silicon Docks

The South Docks are prime real estate. This is where the big tech giants and leading law firms cluster. Facebook, Google, Zalando, Airbnb have offices here, so space is tight and expensive. Upwards of €50 per square foot.

Sandyford – South Dublin

South Dublin is more affordable, and has a good transport network to the rest of the city. Microsoft has extensive operations ranging from R&D to Sales and Marketing. Vodafone has a large office in a business park with an expansive Customer Experience Centre.

Smithfield – North Dublin

Zendesk is here. Expect to pay €15-25 per square metre on the ring road, near the airport and 30 minutes from city centre. Ideal if your team will be frequent travellers.

Support for research, development and innovation

Two major supports available for multinational companies. A 25% tax credit achieved through scientific or technical advancement. And the Ireland Research, Development and Innovation Programme offers grants depending on project size, scope and strategic value.

Amsterdam

Pros and cons

Amsterdam is an intimate city with international outlook. Almost all residents speak English and it’s strong on quality of life. Schiphol Airport is a global hub and road / rail connections to the rest of Europe are effortless.

It’s a viable choice for Inside Sales driven businesses. Atlassian and Optimizely are creating a talent pool there. It’s attractive to junior hires, if you’re happy to build skills as opposed to hiring experience. It’s well placed for North European coverage because salary parity makes it more attractive to Germans and Nordics compared to Dublin.

It’s closer – culturally and geographically – to Germany and France than London so could be better placed to establish your European HQ. However there is less senior talent available.

The Netherlands has a special tax regime for expatriates, which provides a substantial income tax exemption of up to 30%. However, there is a distance requirement where incoming employees must have lived more than 150 km from the Dutch border before work in the Netherlands commences.

Berlin

Berlin buzzes with innovation and regeneration. It’s a magnet for creative thinkers and entrepreneurs. The city is still finding its feet post-reunification, but is driven by an upbeat and optimistic energy.

Berlin has no big industry such as banks, pharmaceutical and automotive, but there are lots of startups in the B2C and adtech space. The cost of living and office space is cheaper than other major cities. Berlin attracts a young international talent pool. The co-working scene is very active and many companies begin in a shared space such as WeWork before leasing long-term.

However, it has been much less successful to date in attracting the major US tech companies. It has less talent in B2B Software and Sales. It’s still the outlier as a choice for EMEA HQ, relative to our other three city recommendations.

Locations

Many of Berlin’s startups are in former East Berlin around Torstrasse, otherwise known as Silicon Allee. Pockets of startups are huddled around Mitte, Prenzlauer Berg and Friedrichshain and Kreuzberg.

Rents

Median rents paid by startups are currently around €13 monthly per square metre and only just below rents paid by traditional office tenants averaging €14 per square metre.

Talent

Berlin has many young Leaders with Rocket Internet experience. Management levels of successful startups are setting up their own companies. Salaries can be lower than in other parts of the world.

Strategy and segmentation

Before landing, work with your European Leader to highlight key accounts and sectors to sell into. This may be straightforward – or if your offering is for multiple industries – can be more complicated. Try to leverage existing customers and networks as much as possible.

Trying to sell into the whole of Europe is not practical. Europe is generally segmented into key regions because they have different purchasing behaviours and business cultures. Grouping territories maximises efficiency.

NEMEA

UK, Ireland, Nordics, Netherlands

SEMEA

France, Spain, Italy

DACH

Germany, Austria, Switzerland

CEE

Poland, Czech, Slovakia, Hungary, Baltics

Language: Is English enough?

You can sell to Europe in English but will do better with local language skills. Hiring people who speak several languages in your centralised hub will broaden your reach.

Most US startups begin with English speaking countries, and many use English to sell to early adopters in other markets. Scandinavia and the Netherlands in particular are comfortable with English language products and marketing. This will work up to a point but it does limit your audience, so expect to transition to local languages as you grow.

Compensation and ramp up

Compensation for Sales roles is broadly comparable to the US, but Enterprise Sales people may expect benefits or cash compensation in lieu of pension, healthcare, life insurance and car allowance. They will generally be less concerned about options.

Enterprise Salesperson compensation will be about $200K, 50/50 split base/ commission, for five to seven years of experience. Quotas will be comparable to the US, but getting up to speed in a new territory could take between three to six months. For a new Sales person, expect six months minimal revenue and build this into your compensation plan.

What's different in Europe?

Business cycles

There are major summer and winter slowdowns in business activity so forecast accordingly.

Cultural expectation

Britain and America are two nations divided by a common language, but the similarities outweigh the differences.

Traction peaks and troughs

Entering new markets can generate significant initial traction from early adopters. Since this layer is thinner in Europe than the US, you may experience a slowdown before regaining traction as you build localisation, brand and outbound activity.

Implementation partners and distribution channels in Europe

Europe has a larger number of potential implementation partners and indirect distribution channels than the US. This is particularly true in infrastructure and hardware. Vice Presidents of Customer Success may find it uncomfortable to outsource this part of the business, but your General Manager in Europe should be able to guide you and find the right partners. As a result, the shape of your team may look quite different to the US, with dedicated resource in channel Sales and Marketing and in smaller, non- English speaking markets in Eastern and Southern Europe.

Average order value

These may be smaller in Europe so look at them in aggregate.

Remote implementation

You may have to spend more time on site in Europe than in the US, based on client expectations and levels of internal expertise.

Paradigms from our portfolio

Zendesk

Zendesk was receiving inbound interest from across Europe with 70 - 80% of new business arriving organically. They built a multilingual, multinational Sales team out of their London offices, hiring Sales and Account Management and staffed up two people per quarter. The hiring profile was foreign nationals who were fluent in English plus their native language. The hires were typically entrepreneurially minded, a few years out of college with a little sales experience. Half the total hires had relocated to London to join Zendesk. Hires were sent to the US for an onboarding programme.

As time went on, the company began to see larger deals with more complex procurement processes coming through the pipeline. The Head of Europe handled these deals initially before hiring a specialist and building out a strategic accounts unit.

Elastic

In US Elastic built up a core hub in San Francisco, whereas in Europe they divided their Sales structure into North EMEA based in London and South EMEA based in Amsterdam. Pre-sales is essential because it’s a technical product so there is a 1:2.3 ratio of pre-sales to sales staff. In Europe, the deal sizes were significantly less than the size of the US in terms of annual contract value. Elastic found that the very largest customers required reps to engage face- to-face, whereas smaller customer could be transacted via video-conferencing and screen sharing. The team also runs public developer meet-ups and bespoke marketing events for individual enterprises.

Getting to grips: Germany, France, Spain

Show clients that you are serious about their market. Provide them with local language support or take a large group of people to your meetings.

Germany

France

Spain

What does localisation mean?

Localisation extends well beyond the language of your user interface. For some companies it involves translating a core product offering. For others it’s a landing page in local language. It also encompasses payments, pricing, contracts and payroll. You need to assess what localisation means for your company, and to what level to invest.

How to get local

You can get going in Europe with minimal localisation, but full localisation to maximise your addressable market will take years to achieve.

1. Core product / user interface (UI)
2. VAT compatibility
3. Marketing collateral
4. Customer Support
5. Pricing and go to market strategy
6. Local market Search Engine Optimisation (SEO)
7. Customer contracts – US or English law generally accepted
8. Multi-currency (£ and €)
9. Local payment methods
10. Data centres – model contract clauses still generally accepted

If your audience requires a strong local presence create a local language website and support team. First-line Customer Support from the US isn’t sustainable beyond the short-term due to time zone and language differences.

Translation terrors

Translation is as much about culture as language. Beware of web translations and translation service businesses which tend to translate word for word. Have your materials checked by a native speaker before release, either internally or crowd sourced from customers.

Some of our portfolio companies have used in-house employees for first translations and created tone of voice guidelines with glossaries for external agencies such as Sajan and Beluga Linguistics.

As International expansion gathers pace, shift to a user interface Content Management Systems layer, where changes are possible by local teams.

Processing payments

You can begin by accepting dollar payments but may have to make exceptions for larger clients. Eventually you will have to bear the cost of processing payments in Euros and sterling.

Contracts

You can operate through your US entity and forward contracts via the parent company. We can guide you to the right service provider for more advice. However, timeliness of response can become an issue and frustration for local Sales teams, so agree standards for internal response time. Once you have hired a European finance lead, they will generally monitor contract issues more autonomously.

Central or distributed?

Balancing centralised marketing versus localised marketing can be tricky. The European office will want marketing flexibility but your global branding and messaging must be standardised.

Many well established US companies are unknown to European consumers. To break through will require a mix of PR, online, above-the-line, events, content, and Sales collateral, depending on your go-to-market plan. Much of this advertising will have to be developed for local markets.

Marketing collateral

Initially English speaking consumers will be okay with US collateral but increased market share will require empathetic translation. Adapt 50% of existing content and create 50% new content. Of particular importance is the creation of local case studies using local client logos.

If you are building an Inbound Sales funnel, strong local marketing is important to drive awareness and demand.

Online marketing

Determine a few key metrics early on and segment by country. Compare to your US markets to get a baseline. Online marketing should be run from a single hub. Decide whether you need a local market social feed or one for all your European operations. Social feeds will need regular updating. Paid digital channels can be managed centrally for the UK or if in English, but local pay-per- click (PPC) agencies or internal resource will be needed for running non-English campaigns.

PR and launch

Start with a freelancer or small agency. Scale-up by hiring a local internal marketer. Your PR agency can liaise with the US HQ or with the European Marketing Lead. Balance an agency’s experience with their hunger to prioritise you.

Relationships with journalists are crucial. European media is trends and insights led. Your company may get featured as part of a larger story but there could be less Forbes-style front page opportunities. Create a narrative that your target audience can relate to. Keep in mind that it can be difficult to get good press coverage with only a marketing/sales local spokesperson.

The media landscape across Germany, Switzerland and Austria can be treated as a single market, but adjust for local variation.

Events

Hold launches when you have already established a network of local Customer Advocates. Tie in your launch story with larger company milestones. Disrupt existing markets with road-show events that build awareness and close deals.

Hires

High profile hires generate publicity. Hiring from a competitor tells the market you have arrived and this will attract a bigger talent pool.

Who can help and how?

If using an agency, test the waters with a three to six month project. Following on, pay a retainer fee which could be an entry point of around €5,000. This should cover a press office, media and analyst relations and some additional support.

Product and Engineering

The European role in product

Your International Office can be used as a testing ground for new ideas.

Anki tested different advertising models. For example, they found TV advertising on The Simpsons was particularly successful because the audience drew in children and parents, who were both critical to the buying cycle. This learning has proved useful for the US.

We have seen multiple models of team structures. Some companies allocate dedicated resource to International. However, Etsy found after trialling both models it was more efficient to share resource because isolated engineering teams may not have the specialist expertise required across all aspects of the business.

Some European Leaders like to be involved with overall product decisions, while others prefer to focus on Sales. Irrespective of the strategy you adopt, make sure the product is good enough for Europe’s diverse markets.

Engineering teams in Europe

Companies may have remote engineers in Europe but this is very different to setting up a separate engineering team, which requires more infrastructure and support. Whether to have engineering teams in Europe is usually a separate consideration to setting up a Sales or Commercial Office as the locations may be different.

Commercial hubs are generally in Western Europe while engineering centres may be in Eastern Europe due to lower costs and availability of talent. However, Google, Facebook and Amazon have built engineering hubs in London, and Dropbox and Zendesk have engineering teams in Dublin.

Offshored engineering centres should own a definable product or set of features. For example, Amazon’s engineering team in London takes the lead on video, and Zendesk’s team in Dublin is focused on mobile and live chat.

A single hub or multiple offices?

Inside Sales

You can effectively service 80% of Europe from a single multi-lingual hub in Dublin, London or Amsterdam.

Field Sales

You can start with a hub and some remote Sales people, but scaling-up will require feet on the ground.

B2C

You can run digital marketing and staff multilingual talent out of a single hub. If you are building a marketplace or need to build community establish local presence.

Strategy and timeline

The three primary markets in Europe are the UK, Germany and France.

You can achieve 80% penetration of Europe from these locations. The UK can service Netherlands and the Nordics, and Germany can service Switzerland and Austria.

Only at significantly greater scale does it make sense to establish further local offices. If you do, the market presence order is generally Netherlands, Nordics, Spain. Very few companies go beyond this.

If starting in London, you might build some operations out of Dublin as you scale but will need to have over 50+ headcount for cost-effectiveness.

For some companies, scaling to new locations will not make sense.

How fast is too fast?

If you expand too fast and need to unplug, it can be a huge drain on management resources. Don’t grow faster than you can handle. You may need coaching as Board members may not have International experience to guide you. The Head of International must add depth to this discussion. It’s critical to gauge market sentiment and closely monitor customer and Sales team feedback, and to build deep confidence in your product readiness.

Keeping your team connected

Allow extra time and effort to make sure remote teams are cohesive and connected. Build relationships early and strengthen them through video calls, joint projects, and face-to-face visits.

Ensure your European team have access to the wider business through training and exchange programmes.

All-hands meetings help everyone to connect. Time differences can make global calls difficult. Afternoon calls US time can be too late in the day for Europe so keep this in mind when scheduling.

Video conferencing is better than phoning. You can sync up a video conferencing tool to calendars and screens in meeting rooms. Slack is especially good for global communication and onboarding.

You cannot underestimate the human issues that will arise from running a global team. Developing and communicating with Leaders outside HQ can be a challenge. Establish appropriate levels of autonomy and avoid fluctuating policies as this can create local frustration.

Decisions and reporting

Things change fast at a startup so a champion for International at HQ helps with communication and prioritisation prevents your International Office falling off the map. This may be the Chief Executive Officer, Chief Revenue Officer or a dedicated Vice President of International. Ideally this individual should have a cross functional remit, rather than it falling to the Vice President of Sales.

Decide whether the European office is a satellite office executing on US decisions, or if local teams have autonomy. Whatever you decide, communicate often and consistently.

Maintaining culture across continents

Don’t try to create identical companies but make sure everyone understands your values, and decide what qualities you want to see driven through your company. Hire for cultural fit and carry the brand identity through all office fit-outs. Dropbox sent over a Head Chef from San Francisco for the European operation in Dublin.

Embrace new cultures. For instance, there is more of a drinking culture in Europe than US, and Christmas parties are a major focal point to end the year.

Data and privacy

This is a sensitive and unsettled issue in Europe and can turn into a problem as you become successful. For the early stages, getting legal advice and including model clauses in your contract should suffice.

Without model clauses, it is illegal to transfer European data to the US. Even if you are using Amazon Web Services and Google Cloud check compliance with lawyers. Data residency (where data centre is located) and data access (who can access it) are the two key issues.

Regardless of what you do elsewhere in Europe there are particular sensitivities and legislation in Germany, where you should get specific local counsel. Likewise, there are particular legal issues regarding data touching on health or children.

The state of affairs in Europe

Safe Harbor was an agreement between the United States Department of Commerce and the European Union to regulate the use of European citizens’ personal data.

In October 2015 the European Court of Justice declared the Safe Harbor provisions invalid. The European Commission published a new set of reforms in May 2016 which will enter into force May 2018.

In February 2016 the EU Commission and the United States agreed a new framework called the EU-US Privacy Shield. This is currently facing its first legal challenge.

Regulation

The first consideration is whether your business is in a sector that needs to be regulated. If you are a financial services, sharing economy or gig economy company there will be some key issues to consider.

Applying for a licence is fairly straightforward, but things may get complicated if your business is a fringe case.

Early Days...

Work with your lawyers to assess what licences you need and what regulation you will be subject to. You will need to start from scratch unless you can piggy back on someone else’s regulation. Obtaining a financial services licence can take six months.

Later days...

As you become successful you may encounter more regulatory friction, driven by consumer groups or traditional competitors. In the UK we have seen high profile and damaging cases with Wonga (sub-prime lending) and Uber (employee versus contractor status) to name a few.

To analyse your risk assess your pricing and business model to see if it could be considered anti-competitive, or if it relies on legal or ethical/social ambiguity.

There are major differences across Europe in how close incumbents are to politicians. Try to understand the landscape and your levels of risk. For example, in Germany industrial companies and car makers are close to politicians so if you are doing something that upsets them, watch out.

Stock option planning

In the UK an Enterprise Management Incentive (EMI) scheme is extremely tax efficient and applies if you have less than 250 staff worldwide. It will cost $5-10K to set up, and is worthwhile if you are below this threshold. In other geographies, companies issue options out of their US or UK option plan.

Outside the UK, stock options are not as attractive as they are in the US. They are taxed as income in Germany, Spain and the Nordics. They are particularly difficult to issue in France, and we have seen several companies choosing to forego them entirely.

Office space

Keep it simple for as long as you can. Set up in a co-working space such as WeWork. When you have more than twelve in the team commit to a leased space. It is also possible to sublet or re- assign a lease from another startup which has outgrown its offices. This will shorten your term commitment.

The right advice

Radius Worldwide can help with back office expansion, but you will pay a premium for the single point of contact.

Legal

Go for International coverage. Engage a full service law firm who can advise you across multiple geographies. Your existing US law firm might have European coverage or partners in Europe. We also recommend Taylor Wessing (talk to Adrian Rainey), who offer a $10K starter package for all the basics plus six hours free advisory. They have advised numerous startups and US companies expanding into Europe, and have offices in the UK, France, Germany, Netherlands and elsewhere.

You will need to cover:

• Immigration
• Contracts
• Terms and conditions
• Data and privacy law
• Domain registration
• Stock option planning
• Regulation
• Trademarks and intellectual property

Visas

Visa rules change frequently so check with the appropriate authorities before making plans.

UK

If you want to bring across an existing employee who doesn’t hold an EU passport and has no employment rights in the UK, you can get a ‘sole representative’ visa quickly and easily. But apply before creating a subsidiary, otherwise it’s harder to do.

US passport holders can travel to the UK without a visa, but no longer than six months in twelve-month period. Watch out for fuzzy rules about what you’re allowed or not allowed to do.

Once you’ve established the UK office, apply for a sponsor licence to transfer employees to the UK under Tier 2 ICT work permits.

Look into the Tier 1 Exceptional Talent Visa for Digital Technology to see if any of your employees are applicable.

You can get visa support from TechCityUK (Maria Palmieri).

Germany

Citizens of the European Economic Area (EEA) and Switzerland have the right to work in Germany.

Citizens of the USA and Canada may enter Germany without a visa and then apply for a residence permit within three months.

Citizens of all other countries must apply for a visa to enter Germany.

Look into whether you/your employees qualify for an EU Blue Card which can be processed more quickly and also allows family members to work.

Netherlands

You may need a Schengen visa to stay in the Netherlands for a maximum 90-days in any 180-day period (short stay visa). If you wish to stay longer than 90-days you need an authorization for temporary stay.

Ireland

Nationals of states outside the European Economic Area need either a Critical Skills Employment Permit or Work Permit in order to work in Ireland.

Intra-Company Transfer Visas allow for the temporary assignment of senior management, key personnel with specialist knowledge or trainees to the Irish operation.

Accounting

Different firms are good for different purposes. Engage a large firm for upfront tax planning and corporate structure. A local firm for ongoing payroll, VAT and accounts. Natalie Langley at PwC can provide accounting guidance. iHorizons is a good local London accounting firm who specialise in startups.

You will need to cover:

• Corporate setup
• Tax relief programs
• Options programs
• Transfer pricing
• Cross-Europe VAT registration
• Client Contracts, adjusting T&Cs for International markets
• Employee relocations - tax, compensation & options adjustments

Most US startups establish a Limited Company in the UK rather than a branch office. There are extra disclosure requirements and liabilities for branches.

Many US startups use their UK Limited subsidiary as the holding company for all other European or Worldwide subsidiaries they subsequently create. However, this approach may change depending on the outcome of Brexit negotiations.

Banking

If you are setting up in the UK we recommend banking with Silicon Valley Bank if you already have an account with them in the US. They offer discounted rates to Index Ventures companies, but do not have a banking licence elsewhere in Europe. Alex McCracken can provide guidance. Otherwise, consider Barclays, HSBC or a new hungry entrant such as Metro Bank.

When opening UK accounts consider that client due diligence is potentially more onerous than the US. You may have to verify details of the business beyond simply identity - notarised address proof for owners. Requirements elsewhere in Europe will vary but are generally more onerous than in the UK.

Company profiles

1stdibs

1stdibs is the leading marketplace for luxury antiques and vintage goods. Originally inspired by Parisian flea markets, today the website brings together more than 1,500 of the world’s most prestigious international dealers of antiques, vintage furniture and design, fine art, estate jewellery, vintage couture and fine homes.

Anki

By building on decades of scientific research to take artificial intelligence out of the lab and into people’s lives, Anki is at the forefront of a consumer robotics revolution.

Bitpay

The leading payment service provider (PSP) specializing in the peer-to-peer virtual currency Bitcoin which provides for instantaneous transactions from anywhere in the world with no risk of fraud or chargebacks.

Boku

Boku, the leading operator billing and cross-platform mobile payments company, brings bank-grade payments technology and mobile users together, creating a trusted, accessible platform for consumers, merchants and operators alike. Based in San Francisco with offices in Europe, Latin America and Asia, Boku reaches nearly 4 billion consumers worldwide, across 70 countries with more than 270 operators.

Centrify

Centrify secures identities against cyberthreats that target today’s hybrid IT environment of cloud, mobile and on- premises. Its Identity Platform protects against the leading point of attack used in data breaches – compromised credentials – by securing enterprises’ internal and external users in addition to privileged accounts.

Collibra

Collibra is the trusted data authority that provides data stewardship, data governance and data management for the enterprise business user.

Confluent

A Stream Data Platform powered by Apache Kafka.

Culture Amp

Culture Amp is a culture-first software company that is building the world’s leading People Analytics platform for people and culture.

Datadog

Datadog is a SaaS-based monitoring and data analytics platform for IT, Operations and Development teams who write and run applications at scale, and want to turn the data deluge produced by their apps, tools and services into actionable insight.

DoubleDutch

DoubleDutch is the leading developer of mobile event technology and the first to bring a data-driven approach to the live events industry.

Dropbox

Dropbox is a file sharing solution trusted by over 500 million users, businesses, universities and non-profits. It enables photos, documents and videos to be stored and shared seamlessly.

Elastic

Founded by the people behind Elasticsearch, Elastic provides software products for developers, startups and enterprises to make complex structured and unstructured data usable. By focusing on scalability, ease-of-use, and ease-of- integration, Elastic’s products are used for real-time search, logging, analytics, and security to power internal and external applications for Cisco, eBay, Goldman Sachs, Groupon, Microsoft, NASA, Netflix, OpenTable, Yelp, and Wikipedia.

Etsy

The marketplace for handmade and vintage items, art and supplies, Etsy has created a global community of like-minded people, who are powering a sustainable new economy by using the internet to reconnect makers with buyers.

Flipboard

A personalised magazine, Flipboard’s mission is to transform the way people discover, view and share content by merging the ease and beauty of print with the power and spontaneity of social media.

Hortonworks

Hortonworks is a leading distributor, developer and vendor of Apache Hadoop, the open source platform for Big Data storage, management and analytics. Hortonworks employees have amassed more Hadoop experience – and collectively contributed more lines of code to the platform – than any other company.

Lookout

As smart-phones go global and tablets overtake PCs, Lookout harnesses the power of millions of users across 400 networks in 170 countries to be at the cutting edge of cross-platform, cloud- connected device security for the post- desktop era.

Novus

Novus is a portfolio analytics company founded by a group of investors, engineers and data scientists. The company works with top hedge funds, sovereign wealth funds, endowments, pensions and other institutional investors, managing almost $1 trillion, to help them generate higher returns.

OANDA

OANDA Corporation transformed the business of foreign exchange through an innovative approach to forex trading. The company’s industry leading online trading platform, fxTrade, introduced a number of firsts to the marketplace, including immediate execution; instant settlement on trades; trades of any size between one unit and 10 million units; and interest calculated by the second.

OpenX

A global leader in digital and mobile ad tech, OpenX enables digital media companies to unleash their full economic power by maximising ad revenue. OpenX solutions provide a unique SaaS platform which combines ad serving, a real-time bidding exchange, yield optimisation and content valuation.

Optimizely

Enterprise-level A/B testing and personalisation for web and mobile apps.

Outbrain

Outbrain is the Internet’s leading personalised content discovery platform. By recommending news, blogs and other content to a receptive reader, at the right moment, Outbrain enables publishers to boost traffic and marketers to reach audiences at their most engaged.

Pentaho

Pentaho is delivering the future of business analytics. Pentaho’s open source heritage drives our continued innovation in a modern, integrated, embeddable platform built for the future of analytics, including diverse and big data requirements.

Pure Storage

Pure Storage, the all-flash enterprise storage company, enables the broad deployment of flash in the data center. When compared to traditional disk-centric arrays, the Pure Storage FlashArray is 10x faster and 10x more space and power efficient, for less than the cost of mechanical disk per gigabyte stored.

Rightscale

RightScale Cloud Portfolio Management enables leading enterprises to accelerate delivery of cloud-based applications that engage customers and drive top-line revenue while optimizing cloud usage to reduce risk and costs. With RightScale, IT organizations can deliver instant access to a portfolio of public, private, and hybrid cloud services across business units and development teams while maintaining enterprise control.

Slack

Slack is a messaging platform for teams which brings all communication together, creating a single unified archive accessible through powerful search.

Sonos

The leading manufacturer of wireless music systems, Sonos has re-imagined home audio for the digital era.

Squarespace

Squarespace empowers individuals and companies to design, build and maintain bespoke websites that raise the bar for online publishing. By fusing elegant design with robust engineering, the company’s mission is to provide the creative tools that power the future of the web.

Stack Overflow

Stack Overflow is the largest online community for programmers to learn, share their knowledge, and advance their careers. Developers all over the world trust Stack Overflow to help solve coding problems and use Stack Overflow Talent to find job opportunities. The platform has more than 40 million unique visitors every month.

Zendesk

Zendesk is transforming customer service for the digital age, by delivering category defining cloud-based customer service software. More than 100 million people around the world now receive support from Zendesk-powered customer service departments and helpdesks.

Zuora

Zuora is the global leader in subscription commerce and billing, helping companies in every industry transition to the Subscription Economy.

Zend

Zend partners with businesses for the rapid delivery of modern apps across mobile and cloud, having helped establish the PHP language which today powers over 200 million applications and websites.

Directory of resources

Recommended recruiters for GM and VP candidates

360 Leaders

Ben Markland
Jerry Maynard

Erevena

Dan Hyde
Maria Josife

Renaissance Leadership

Sebastian Kayll
John Smith

True Search

Nick Fairclough

The Up Group

Clare Johnston

Asari Partners

Karrin Niccol
Julia Redfern

Renovata

Thomas Jepsen

Natural Selection

Julian Lynn Evans

Work Spaces and realtors

cresa.com
wework.com
workspace.co.uk
regus.com
secondhome.io
interchange.io
collierslondon.com
devono.com
galepriggen.co.uk hanlonbennett.co.uk

Banking, accounting and back office

Silicon Valley Bank

Alex McCracken

Radius Worldwide

Sam Barnes

Atlantic Leap

Evan Rudowski

PwC

Natalie Langley

Legal and visa

Taylor Wessing

Adrian Rainey
For Germany: ‘Building the Bridge’
For the UK: ‘Across the Pond’

Networking

The Chemistry Club
(Senior executives FTSE 100 companies)

Trade associations

London

London and Partners
Tech City UK

Ireland

IDA Ireland

Amsterdam

I Amsterdam
Netherlands Foreign Investment Agency

Berlin

Germany Trade and Invest

Acronym glossary

Thank you

Contact

Index Ventures

5-8 Lower John Street
London W1F 9DY, UK
Telephone +44 20 7154 2020

139 Townsend Street, Suite 505
San Francisco, CA 94107, USA
Telephone +1 415 471 1700

Copyright © 2017 by Index Ventures.
All rights reserved.

Researched and written by Dominic Jacquesson, VP Talent and Thought Leadership at Index Ventures, with contributions and insights from the Index Ventures investment team.

The information provided in this handbook, in particular the employment law section in Chapter 2, is a general guide and specific legal and tax advice should always be sought.