5 Mistakes European Founders Make When Crossing the Atlantic

Expansion into the U.S. is a key milestone for European founders on the path to creating a global champion. Yet, we often hear companies looking to jump from Europe to the U.S. say, “Why do we need to put someone permanently on the ground? New York’s a short trip; we’ll just have our UK representative come over and do the work.” These companies often underestimate the complexity of entering the U.S. market—it's about far more than establishing a representative office or hiring a single local lead. Successfully making this transition requires demonstrating a deep, tangible commitment to the market, especially when selling to businesses that expect long-term presence and investment.

Startups can burn tens of millions of dollars, only to trip over errors like these, struggling with local product-market-fit and threats from more disciplined players in their home markets. It’s easy to get this wrong.

Since we opened our WestCap London office three years ago, we’ve spoken with dozens of founders striving to expand to the U.S. These are the five of the most common pitfalls we tell them to avoid.

1. Treating the U.S. as a monolith

Europe spans dozens of countries and languages and a diverse set of histories and cultures. So, it's understandable that some founders expect the U.S. to be a more homogenous customer landscape. Yet that can mean they ignore the considerable regional differences across the country in purchasing power, technology adoption rates, and consumer preferences.

Income levels vary by state, which is important for pricing strategies, or compensation models for hiring. For certain types of B2B businesses, being close to key clients and partners can be strategic, such as the developer ecosystem in San Francisco and Austin or large healthcare firms in Boston. For B2C companies, it may be more impactful to understand the local norms and consumer tastes to drive marketing and branding activities, versus being physically located near customers.

Time zones are another key consideration, both from the perspective of employee collaboration between offices but also in terms of go-to-market strategies and customer support. A 3-hour time difference between coasts could be detrimental in the context of responsiveness to customers relying on a mission critical product.

2. Not identifying anchor customers or partnerships

Founders tend to want to be highly opportunistic in sourcing their first U.S. customers because it feels important to get traction. However, American customers want to see credible American companies as clients and are often unfamiliar with European blue-chip names.

Being more intentional about key anchor clients drives long-term outcomes, even if these deals take more time or resources to close. An ideal and common scenario is leveraging an existing blue-chip American client currently served in Europe, and expanding across to the U.S. as a flagstone customer. Nonetheless, with or without the benefit of existing clients, it is key to identify priority anchor customers or partners ahead of time, combined with a concrete go-to-market plan to unlock them. These marquee clients will serve as the beachhead for a successful market entry, creating validation, momentum, and the credibility needed to scale further.

3. Not having a regulatory roadmap for all 50 states

Founders of regulated companies often underestimate the degree that each state’s regulations differ and don’t spend the requisite time drafting a clear regulatory roadmap that aligns with their commercial objectives. One important first step: finding local partners to help navigate regulations, legal issues, and taxes and audits. Those partners will ensure you avoid a misstep as you go to market.

In some cases, this regulatory fragmentation is a tactical issue that can be solved through good execution and those key partners. But in others, it will require being more thoughtful and letting it shape where a company focuses its time. Are you offering a product that needs to compete nationally right away? Or are you fine going state by state, with your work in each area sustaining your growth until you can apply for the next set of local licenses? If you’re in the payments business and you need a money transmitter license, you might not need to license in all 50 states, since New York will be your core market. But if you’re an online, multi-state business, your situation will be very different.

4. ‘Dipping a toe’ in the market

It’s natural to want to test product-market fit and to be disciplined on cost. Nevertheless if you haven’t fully committed, prospective clients will be disappointed by your lack of local presence and inability to meet their pace. That can ultimately tarnish your reputation, even if you make a more concerted expansion effort later. Thus, it’s very important you come into the market at the right time, with an execution plan that includes hard metrics and points where you might pivot or refine. Don’t be afraid to incorporate a lighthouse, design, distribution, or third-party collaboration partner in your plans.

This does not mean that expansion should be a binary ‘all or nothing’ endeavour. You can still absolutely stage-gate your investment if you need to wait to see how you’re progressing. The key is to have thoughtful, realistic goals that are both time-bound and measurable. These should be combined with live learnings on the ground from marquee customers and prospects. There should be a clear sense of what success looks like, and when to arrive at a ‘go or no go’ decision.

Often, scale-ups will look to launch in the U.S. by sending over one of their top salespeople. They might have a lot of really interesting conversations—and no business, even several months later. While a new product or offering is exciting to learn about, it’s unlikely prospective clients and customers are willing to take big bets on a company that isn't fully “here.” That’s where a lighthouse account or a design partner with specialist knowledge around the U.S. market can help.

5. Not being prepared

Crossing the Atlantic represents an incredible opportunity for growing European companies. We absolutely support them taking advantage of that opportunity once they’re ready. That means waiting until they have the time, capital, resources, network, and supportive investors, plus a robust expansion plan covering organization structure, regulation, competitive landscape, product localization, and budget.

It's essential that companies invest in this foundational work before they move. Does your talent understand the market, the competitors, and why have they succeeded? Do you have the right external partners to set you up for success? Do you understand your regulatory hurdles? So often, we ask founders what success in the U.S. looks like for them, and their answers are vague. You need deep conviction and a research-based plan to get your investors, board, employees, and management team fully aligned on your new American vision.

At WestCap, our goal is to support our founders at every step as they “cross the pond.” Our Strategic Operators Group helps them navigate the myriad complexities that arise while scaling in a foreign context. Our in-house creative team, CōLab, provides our portfolio companies with a deep understanding of their position, reputation, and opportunities from the earliest stages of expansion. Our Talent team supports them as they hire big to drive the brand in its transition. And our Go-to-Market team assists with everything from sales hiring to early success metrics.

Reach out to our team if you’re looking for a partner to help you scale.

About the Contributors

Kevin Marcus leads WestCap’s Strategic Operators group. He has a distinguished career building and operating highly successful financial technology businesses. Most recently, Kevin served as co-founder, President, COO and board member of Ipreo, helping to create a global enterprise known for its operational excellence, innovation and winning culture. Along the way, he architected and integrated numerous acquisitions and oversaw successful outcomes for four distinct ownership groups, culminating in the sale of the business in 2018 to IHS Markit for just under $2B. He began his career at The Carson Group, where he helped scale a startup into a fast growing, highly sought-after business that was acquired by Thomson Financial. Kevin stayed on as President of the Corporate Group at Thomson Financial, where he led the integration and strategic transformation of several disparate businesses.

Karn Dasgupta is a Vice President on the Investment Team, based in London. Joining in early 2022, Karn covers investment opportunities across Europe. Most recently, Karn was on the Investment team at Providence Equity Partners, conducting due diligence on new investment opportunities across the TMT sectors, and supporting portfolio company management teams with numerous acquisitions, organic capital allocation decisions and other operational initiatives.

The above is provided as an illustrative example and designed to demonstrate the benefits to portfolio companies of partnering with us. The information is aimed at prospective portfolio companies and not intended to solicit investors, or an offer to purchase any securities. The experiences highlighted may not necessarily represent or be indicative of current, past or future results and experiences with portfolio companies.