Last Wednesday, I opened the deck of a Spanish startup. A market worth tens of billions of euros in Spain. Their current revenue: hundreds of thousands of euros. And in their business plan, they’re planning to expand internationally in 2027 in Europe and 2028 in Latin America.
Does that strategy make sense?
Let’s break it down.
First, we need to understand the motivation behind internationalization. Often, it doesn’t make much sense when there’s still a massive market available within your own country. You not only have to prove that you can have a presence in several markets, which is crucial in the long term, but also that you can conquer your local market. Internationalization is probably going to be relevant in more advanced stages of a startup, but not in the early stages. First, you need to establish a significant presence in your local market before thinking about opening other markets.
Secondly, internationalizing is much harder than it seems. On paper, it sounds relatively simple: your product has worked in one market, so why wouldn’t it work in another with the same inefficiency? Technically, that may make sense. But the real challenges of internationalization are often less tangible: legal issues, cultural differences, or the contacts you’ve made in your industry, which are often difficult to replicate when you enter the target market.
This becomes even more complicated when the startup is based in a country like Spain. This is where the concept of the size trap comes in. If your home market is huge, like the U.S., China, or Brazil, succeeding in your local market can be enough for your company to become a unicorn. But if you come from a smaller market, like Estonia or Israel, you’re forced to think globally from the start, which minimizes the “pain” when expanding to other countries.
Spain has a large enough market to build a business of considerable size, but often this is not enough for venture capital. Conquering the local market is already a challenge in itself, and internationalization is even harder because it involves transforming the company and its culture in the process.
That’s why my recommendation is always to reflect deeply before embarking on internationalization. After speaking to many people with experience in expanding to the same markets, we’ve come to realize just how tough this experience can be, and honestly, we’ve lived through it ourselves.
In the end, they say the best lessons come from experience, and that’s certainly been our case after making many mistakes.
