Gartner Highlights Risks in First Geographic Expansion for Tech Startups

Thirty percent of first-time geographic expansions for software providers are still unprofitable two years after launch, according to a survey from Gartner, Inc. 

Gartner surveyed 302 software and SaaS providers across North America, EMEA and Asia/Pacific from June to July 2024 and found that there are several mitigating actions that tech CEOs should take to address pitfalls.

Expert Take:

“The first geographic expansion of a tech startup is, by definition, also its riskiest,” said Igor Marchal, Vice President Analyst at Gartner. “Emerging providers with limited resources are tempted to replicate their proven home market’s marketing campaigns, content, messages and sales techniques because it is more expedient, more economical or simply because they see no compelling reason to change them.

“Yet expanding into a new geography requires as much preliminary research and internal due diligence as that of launching a new business,” said Marchal. “Successful tech CEOs engage and navigate their first expansion with optimal timing, having properly localized their product, processes and go-to-market playbook to meet local buyer preferences. They often leverage local partners to overcome their insufficient reputation and poor local market awareness.”

Gartner Data Snapshot: 7 Actions for Startup Tech CEOs to Succeed in Their First Geographic Expansion