“Should I test my product on the local market, before scaling internationally?” it’s a question I frequently get.
Local markets are always easier to address, but if they are fundamentally different from your target market you should skip them.
Here’s how to evaluate that:
Remember early revenue is mainly an indicator of product/market fit – if the revenue comes from a test market with a different context than your target market, it does not say too much about how it will eventually perform.
It all comes down to your client’s needs, alternatives, and decision process.
1) Do users in the local test market have the same alternatives, same fundamental economics, same technology platform as the ones in your target market?
2) Do they take the decision at the same level in the company (ex. Western European / US companies are more decentralised)? Do the users/decision-makers have the same position in the company?
3) Are there any regulatory frameworks which create barriers or stimulants that are nearly identical in the local test market and target market?
If yes, then your product value and GTM strategy will be highly similar in both your local test market and target market, and expanding from your local market to an international market can be easily done.
If not, pay attention – your selling on your local market will not prove product/market fit, will not de-risk your startup, and your startup will not have an improved valuation on your next round with respect to your international growth strategy.
What you’ll be doing is de-risking your startup for the local investors – and, as revenue has gravity, you’ll opt for a local market-centric growth approach.