As of late, many emerging companies have decided to enter the US market. While international expansion is an important business milestone, there are multiple legal and cultural considerations companies must reflect on. In this two part series, we will discuss why companies choose to come to the United States to do business and what companies need in order to do business in the United States.
Why the United States?
Credentials. Companies can be extremely successful in their own geographic area, or even in a variety of international markets, but establishing a successful business in the US market demonstrates a level of sophistication and maturity that is valued by customers, partners and employees alike. Young companies must be aware that the US market is very sophisticated and highly competitive, but if a company can succeed here, it can succeed anywhere.
Management and marketing. While excellent research and development capabilities, customer support and logistics are available all over the world, American management, sales and marketing expertise remain highly valued. This expertise can be best harnessed through a US entity, which offers familiarity and important tax and financial advantages to US employees.
Access to capital. Venture capital remains a critical source of funding for emerging companies in the United States. While American VCs are prepared to invest all over the world, many find it easier and less risky to invest in a US entity. Given the other risks posed by high growth companies, a US presence offers to de-risk at least one aspect of the investment decision.
Partners. Many international companies find it easier to establish alliances with US based businesses. This is mainly due to the predictability of US laws and corporate governance requirements.
Transparency and business ethics. The general reputation of American corporations remains highly positive. Financial and management transparency, compliance with legal and ethical standards, and an overall culture of ethical business dealings constitute key pillars of the success of the US economy. Non-US companies can benefit from this culture through the establishment of US operations.
For more information on the legal and cultural challenges facing emerging companies, check out Financier Worldwide. Check back next week for “Coming to America Part II” where we’ll discuss a range of factors companies must consider in order to do business in the United States.