New Zealand’s vibrant start-up scene is bursting with potential. But for ambitious entrepreneurs, the domestic market can feel limiting. Europe, with its diverse economies, vast population, and growing appetite for innovation, is an attractive market for New Zealand based start-ups, explains Jason Cooney.
Tenders and bids are excellent avenues for breaking into the European market as are developing alliances with existing companies already established in Europe.
Public procurement, or tenders, offer a lucrative entry point for start-ups in Europe. The European Union spends trillions annually on innovative solutions across various sectors. The go-to avenues for identifying contract opportunities in Europe are:
- TED (Tenders Electronic Daily): This website displays European Union tender opportunities. It is best to use the “Participant Search Service” to filter tenders based on your industry and expertise.
- National Tender Platforms: Each European country maintains its own tender platform. Explore these for a more granular search and identify tenders specific to your target nation. Many start-ups use a specific country as a ‘launch pad’ country within the EU with Greece and Austria proving popular due to local regulatory support and incentives.
The importance of understanding regulatory requirements
While brimming with potential, the European market presents a complex regulatory landscape. Unlike New Zealand’s unified system, each member state has its own set of regulations governing business operations and in addition to European Union regulations that apply. A key point to consider prior to selecting your target country to expand is licensing and approval requirements.
Depending on your industry, you may require specific licenses to operate in Europe. Research the necessary licenses for your sector well in advance. For example, agricultural technology companies might require phytosanitary certification, while software companies might need GDPR compliance certifications. Whilst ISO certifications are helpful and generally recognised globally, there are often EU specific certifications that are required.
In addition, you need to research and understand the regulatory requirements in the specific country you which to operate. On some occasions, where there are blanket EU requirements, it can be beneficial to establish operations in an EU country you do not intend to target – and then use these operations to operate in your target country. This is generally due to lower regulatory costs, speed of approvals and the mutual recognition clauses in place.
Developing local partnerships and alliances to break into the European Market
Expanding into the EU can be exciting but also daunting for start-ups from New Zealand and even established companies experienced in international business. Where speed, and ease of entry into the market are critical, local partnerships, distributorships, acquisitions and alliances can speed up market entry. The benefits of local partnerships include:
- Regulatory approvals already being place. This is helpful and it’s important to research that your potential partner has the exact regulatory approvals required.
- Distribution Channels: Partnering with a European company grants you access to established sales channels and distribution networks, accelerating your market reach.
- Collaboration Options: Strategic alliances can take various forms. Consider joint ventures for resource sharing and risk mitigation, distribution partnerships for broader reach, or collaboration with research institutions for advanced technology access or localized market research.
The key point is to identify the barriers to entry and ensure the potential partner has the sales and regulatory infrastructure in place to overcome the barrier. It’s also important to note that developing partners is generally best looked at from a country-by-country perspective as opposed to a Europe as a whole perspective.
Diverse opportunities for various NZ start-up and business sectors
Europe has established industries across many different sectors such as Defence and pharmaceutical. Examples of businesses sectors that present opportunities for New Zealand start-ups and businesses include:
- Agricultural Technology (AgTech): With Europe facing challenges in sustainable food production and resource management, Kiwi AgTech start-ups offering solutions like precision agriculture, vertical farming, or AI-powered crop management can find a receptive audience. Some Australian fertiliser and pesticide manufacturing companies have seen significant success expanding into Europe over the past decade and there’s certainly nothing stopping Kiwi companies from doing the same.
- Clean Technology (CleanTech): Europe is a leader in sustainability initiatives. New Zealand’s expertise in renewable energy solutions like geothermal or wind power can be highly valuable in this market. This is not only from a technology perspective, but also from an innovation and consultation perspective with potential clients across Europe for many New Zealand based consultancies.
- HealthTech: The aging European population creates a demand for innovative healthcare solutions. Kiwi start-ups with telehealth platforms, remote patient monitoring tools, or wearable health tech solutions can cater to this need. This market / opportunity extends to the pharmaceutical and healthcare sector with opportunities for medicinal honey such as New Zealand’s Manuka Honey in a growing health-conscious market in Europe.
- FinTech: Europe’s well-developed financial sector presents opportunities for secure and efficient financial technology solutions. New Zealand’s expertise in online payment processing, blockchain technology, or alternative lending platforms can be a game-changer. Start-ups in this area will be right to consider Europe as a potential market and large European based companies as potential investors.
Pre-Flight checklist: Essential steps for a smooth launch into Europe
- Market Research: Conduct thorough research to identify your target market, understand customer needs, and assess competition.
- Localization Strategy: Don’t assume a one-size-fits-all approach. Adapt your product or service to local regulations and market preferences.
- Building Your Team: Consider assembling a European team with experience in the relevant sector and cultural knowledge.
- Expert Guidance: Utilise resources from organizations like NZTE (New Zealand Trade and Enterprise) or local business chambers for support with market entry, navigating regulations, and potential funding opportunities.
What can go wrong
A lot can go wrong when expanding into Europe through bids and tenders or strategic alliances. Potential pitfalls include:
- Bidding for contracts you have no chance of winning. A thorough bid / no bid process is required before bidding for an EU contract. Tendering is resource intensive and it is critical that you ensure you have the appropriate expertise and experience before deciding to bid. This ensures you avoid unnecessary disappointment in the long run.
- Delays in acquiring regulatory approvals. Depending on your product or services, securing regulatory approvals may take months (and sometimes years). It’s important to get the process started early, select the easiest country to enter through, and develop a local partnership if necessary.
- Not localising your product. Localising your product or service is also critical to successfully launching in the EU. You need to understand the consumer or business/corporate market you are operating in on a country-to-country level and a European level.
Proceed quickly and carefully when pursuing growth opportunities in the European Market to unlock a large, mature market that can help New Zealand based start-ups gain market share and increase revenue.
