WHEN THERE'S A CHANCE TO JOIN FORCES,TAKE IT
Howard Rosen, manager of U.S. business development for two-year-old GenPharm International, says that by going overseas his company has become greater than the sum of its parts. With 20 people working in Mountain View, Calif., 25 working in Leiden, the Netherlands, and $10.7 million in U.S. and European venture capital, GenPharm has a competitive edge over others in the young field of transgenic animal technology.
The company was started after venture capitalist Kevin Kinsella at Avalon Ventures gathered an advisory board of scientists in the field. The board's task was to develop a strategy for commercializing a technology that enables the genetic altering of animals for the purpose of safe scientific experimentation. When the board heard about a similar venture in the Netherlands, the two operations merged.
In addition to sharing lab techniques, equipment, and access to research, GenPharm has tapped into the European investment community early, paving the way for further financing.
The company has gained its competitive edge by cultivating international contacts with researchers, Rosen says. "It's definitely an advantage having equal access to the research communities in both places. You find out what's new and learn the latest techniques before they're widely available." And if there's an opportunity to license an idea the researchers generate, GenPharm may get first crack at it.
WHEN DOMESTIC MARKETS ARE DOWN, LOOK ABROAD
When Yu Zheng, a 29-year-old graduate of The Art Center College of Design in Pasadena, Calif., devised a foldable fabric-and-metal shade for car windshields, he chose to manufacture and distribute it himself rather than license his idea to another company.
The typical demands of a start-up could have been challenge enough: since it began operations in 1989, Posit Plus, in South El Monte, Calif., has subcontracted manufacturing in its home state, then Taiwan, and then China, where Yu has family. The company is self-financed, and Yu and his sales manager, Dave Herman, had to make cold calls to line up accounts with the likes of Target discount stores and the Sharper Image catalog.
So why did Posit Plus go into Europe, Japan, and Australia? Why did it pile the additional pressures of international marketing on top of all that?
"The more we move the product, even with different margin percentages, the more possibilities and recognition we'll get because it's still young and new," says Yu.
Moreover, foreign markets can pick up the slack when markets slow down here -- for instance, when it's winter in the States, it's summer in Australia. That means the summer buying cycle by retailers will be repeated twice: from October to March in the United States, and from June to August (in time for the Christmas rush) in Australia. The payoff? Yu expects sales for 1990 to top $10 million, with $5 million coming from overseas accounts.
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WHEN NEW MARKETS SEEK YOU OUT, CAPITALIZE ON THEM
Why set up a second factory in Luxembourg when you can set one up in Louisiana?
For Interlink Electronics, a Santa Barbara, Calif., R&D contractor and manufacturer of touch-sensitive control pads, establishing a base in the tiny country just north of France was part of a strategy for tapping into strong European demand and a welcome source of capital.
The company, founded in 1985, now receives some 20% of its R&D work from European companies. And when Interlink decided it wanted to establish a second manufacturing site, Grace Venture, which had provided some of its seed money, linked the company up with the Luxembourg government, which was eager to sponsor a U.S. high-tech venture.
The result is a 50-50 deal between Interlink and InvestAR -- itself a partnership between the Luxembourg government and $7-billion Arbed Steel -- in which Interlink received a $2-million technology-transfer fee and a $2-million factory investment. The California company's 70,000-square-foot factory with 30 employees is slated to be up and running by the end of the year.
WHEN IN DOUBT, DON'T
While spotting and taking advantage of global opportunities is a straightforward prospect, smart companies don't forge ahead when common sense tells them not to. That's why The Starting Right Co., a Seattle baby-food maker, has stayed out of the European market so far.
Linda Dootson and Cameon Ivarsson founded Starting Right on a European concept: all-natural, balanced meals, frozen for microwaving at home. In the United States, where most parents feed their babies packaged food, Starting Right offers a more healthful alternative. In Europe, where many parents cook fresh food for their infants every day, marketing Starting Right as a convenient alternative would seem to be a logical next step.
"But since they're already making their own," says Dootson, "maybe they don't want ours." That's partly what's holding the cofounders back, at least until market research gives them a better sense of what customers want. Dootson and Ivarsson are also leery of the financial pressures that rapid growth would put on their fledgling venture. "We're just becoming a regional company," says Dootson. "We need to concentrate our capital."
While Ivarsson oversees quality control and Dootson cares for a new baby along with her new company, they're still sneaking peeks at the foreign arena, waiting for the right moment.
