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Funding International Growth

When looking for expansion beyond borders, one of the constraints to growth is funding. Typically, expanding into new markets requires setting up a structure to support the new business; at least sales, customer support, delivery, and administration require local resources. Thus, one of the critical parts of international expansion is securing funding for growth.

In this article, we will look into different options available for funding the international growth and what kind of considerations should be taken into account when looking funding for international growth.


Funding Sources for International Growth

Cash Flow

Cash flow is the greatest source of funding: It does not bear interest; it does not require you giving up equity in the company and every euro added to the cash flow increases the company value by a multiple. However, cash flows are limited and supporting your growth only with cash flows hinders your growth rate.


Loans are the most common way to finance growth. There is a common understanding that loans are only available for financially sound companies and, thus, that loans are not necessarily suitable instruments for growth companies.

However, there are also instruments that make loans available also for these companies. These instruments include e.g. ESIR-loans, which are provided by banks and secured by a guarantee by European Investment Bank.

Loans can also be obtained from other investors than traditional banks, e.g. some family offices. These investors are more able to take into account the specific features of growth companies and provide suitable funding for the case; though typically at higher interest rates.

Public Funding

There are quite a few public entities involved in the funding of growth companies, but for international growth two main players stand out: Finnvera and Business Finland.

For international expansion, Finnvera provides growth companies with internationalization loans and internationalization guarantees. They also provide export financing and export guarantees. Also, without being directly linked to international operations, Finnvera guarantee can be used to obtain loan financing.

Business Finland also has some instruments aimed specifically for international markets. Tempo grant is available for companies aiming for international growth and Explorer grant can be used for market research. Both of these instruments cover only part of the costs of the project and require sufficient equity funding.


When companies talked about “raising capital” they typically refer to equity funding. Equity funding can be obtained from several sources: early-stage investors such as angel investors, VCs, family offices, through crowdfunding and in later stages from private equity investors and from the public through IPO.

One of the benefits of the equity investors is that since their returns are driven by the growth in the value of the business they invest in, they are incentivized to support the company also in other ways than providing just funding. This can include e.g. introductions to key market players, customers, cooperation partners, and key employees; mentoring and coaching; assistance with strategy and so on.

When looking for equity investors, it would make sense to check does the investor provide such services that would benefit you in your growth path. Investors that provide services suitable for your needs are also more likely to have such an investment strategy that would include your firm; making the opportunity of obtaining financing from the investor more likely. (And if your company does not fit the investment strategy of a potential investor, save your time and contact instead of an investor that is relevant for you.)


Be Ready to Scale…

In order to obtain funding for international expansion, the company needs to be ready to scale. For the early stage investors, this is a requirement, but it is also critical in obtaining loan funding as well. And while not necessarily required for public funding, going abroad without the readiness to scale makes very little sense.

Being ready to scale means that you have already demonstrated the product/market -fit as well as your ability to grow the operations. Also, the more expertise you can demonstrate on your next market the better, especially if this is the first foreign country you are expanding into.

As in everything in life, the first time is the hardest in setting up foreign operations as well. Thus, entering into new markets should be approached like starting the business: Things will not just roll forward as in the existing operations, but there will be challenges like getting the first customers, learn the best go-to-market practices, getting the operations running smoothly, dealing with different business culture, etc.


While your proven operating model from home market works as the core building block for the foreign operations, it most likely needs to be tweaked to tackle the local challenges and make it more suitable for the foreign markets. Only once you have found an operation model that tackles the challenges you are ready to scale in the new markets.

When planning for the funding for the international expansion, you should plan both for the challenges of entering into new markets as well as for scaling in the new markets. Be conservative on your sales plan and careful when estimating your expenses. (A rule of thumb is that it takes three times as long to get the sales running in the new markets than what the company is expecting.) It is better to have too much runway without using it than end up raising funding when you have no runway left.

…And Show You Can Scale Further

From a funding point of view, it is important to ensure that the funding is sufficient in achieving the goals in the new markets. If you need to raise additional funding before meeting your goals, raising further funding becomes a challenge.

On the other hand, once you have proven your ability to scale your business to foreign markets, obtaining funding for further international expansion becomes a lot easier. Once you are in a point where the investors can see that injecting cash to the company generates more cash you can reach out later stage investors. At this point, you are running a company that is ready to conquer the world.

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