The Challenges Startups Face When Expanding Internationally Too Early

When I started my entrepreneurial journey, building an international business was always the dream. My consulting company, Coritsu Group, based in Adelaide, Australia, attracted international clients early on, which opened up incredible opportunities. But my real ambition was to create a startup with a truly global footprint. That ambition became a reality with Zegami—a spin-out from the University of Oxford in 2015. We raised multiple funding rounds and set our sights on international markets from day one.

Looking back nearly a decade later, I can see how na?ve I was. The challenges of expanding globally—from navigating regulatory frameworks to cultural nuances—were far more complex than I imagined. Add in the human effort required to make it all work, and I quickly realised that "going global" was not as simple as it sounded. Over the years, working across the UK, US, Europe, Australasia, and Japan, I’ve learned some invaluable lessons—often the hard way. So, what advice would I have given my younger self? What do I wish I’d known back then? ?

The Risks of Expanding Too Early

1. Operational Overstretch Expanding too soon can push your startup to breaking point. Limited resources across sales, delivery, and cash flow often lead to inefficiencies that damage growth and quality. I learned this the hard way. While chasing Zegami’s global ambitions, I lost focus on the development of Coritsu Group back in Adelaide. It was a costly mistake that led to the company’s eventual closure. Without a solid foundation, spreading yourself too thin can be fatal.

2. Cultural Differences I used to assume that Western countries operated much like Australia. Big mistake. Every market has its own cultural, legal, and operational quirks. The US isn’t one market—it’s a patchwork of regions, each with unique needs and regulations. The UK’s hierarchical business culture was an adjustment, especially post-Brexit. Europe required localisation for each country, with its language and cultural barriers. And Japan? That’s a whole new ball game, with its emphasis on hierarchy, relationships, and long-term trust. Assuming "one size fits all" is a fast track to wasted time and resources.

3. Financial Strain International expansion is expensive. Between compliance, marketing, research, legal fees, and travel, the costs pile up quickly. In Zegami’s early days, I spent a fortune flying from Australia to pitch at events around the world. While exciting, it drained resources that could have been better spent strengthening our local position. Many startups I’ve worked with repeat this pattern—burning through cash without a clear strategy for sustainable growth.

The Investor’s Perspective

Startups often try to impress investors by pitching their global ambitions, but VCs don’t always see this as a good thing—especially if the timing is off.

• Risk Aversion: Venture capitalists are naturally cautious. Expanding internationally introduces extra risks, like currency fluctuations, geopolitical uncertainties, and differing regulations. To earn their trust, you need to show strong traction in your home market and a clear plan for scaling globally.
• Dilution of Focus: Expanding too early can suggest a lack of focus, which is a red flag for investors. They prefer startups to dominate their home market before venturing abroad. A scattered approach can make you look unprepared for the complexities of international growth.
• Operational Challenges: Managing operations across multiple time zones, legal systems, and cultural landscapes isn’t easy. Startups without experienced global leadership risk burning out, which only reinforces VC doubts.

A Real-World Example

Recently, I advised a Japanese health tech startup keen to break into the UK market. Their product had potential, but it was still early-stage—limited in features and focused more on patents than a finished solution. Their initial plan was to present to UK healthcare professionals, hoping for feedback to guide their product development.

Here’s where they were going wrong:

• Credibility Issues: Engaging stakeholders with an incomplete product risks undermining their trust.
• Established Competition: The UK market is already saturated with mature, locally tailored solutions. Without a clear edge, breaking in would be nearly impossible.
• Regulatory Differences: The regulatory environments in Japan and the UK are worlds apart, making direct translation costly and complex.

My advice?

• Collaborate for Insights: Talk to UK competitors and potential partners to understand the market and explore opportunities for collaboration.
• Refine the Product: Use these insights to tailor the solution and assess if the UK market even needs it.
• Focus Presentations: Highlight successes and insights from the Japanese market that align with global trends, rather than showcasing an incomplete product.
• Plan for Compliance: Build a roadmap for meeting UK regulations before diving in.

This approach saved them valuable resources and positioned them for a future UK launch without jeopardising their standing at home.

So, Should You Expand Internationally?

Expanding internationally is exciting, but it’s not without pitfalls. Nail your home market first and take the time to understand the legal, cultural, and economic nuances of your target market. Overstretching yourself, burning through resources, and delivering a subpar product in multiple markets is a sure way to sink your startup.

That said, there are exceptions. Sometimes, a market is so desperate for a solution that the usual rules don’t apply. These rare opportunities can be game-changers, but they should be treated as the exception, not the norm. For most startups, the smart move is deliberate, well-researched steps. Remember, it’s not about being first—it’s about being ready.