Russian business is increasingly conquering the world – in the last two years alone, Russia-based companies have opened 11,000 representative offices in various countries. The most popular markets for expansion included Serbia, the UAE and Armenia. Businesses that are pursuing foreign markets can have different motives. Some contemplate alternative jurisdictions with more favorable tax policies, others seek access to larger markets, and still others, which are already operating internationally, are interested in a bridgehead to facilitate building ties with foreign counterparties. Interestingly, IT projects are more inclined to seek international cooperation because they are not tied to a specific location and try to promote their projects globally, but many markets are distrustful of Russia-based companies, so they have to establish international presence.
What not to do
Many Russian entrepreneurs prefer to “shoot first, and ask questions later” when they decide to expand internationally. This is a mistake. The right proverbs to use here would be “never judge a book by its cover” and “so many countries, so many customs” – you need to thoroughly prepare your foray. Without an adequate assessment of your target market, you risk spending too much time and money to launch your projects, eventually reaping problems instead of profits. To avoid that risk, businesses establish entire departments for international cooperation, which thoroughly study foreign markets, including local laws, financial specifics, and leasing terms.
Here is a good tip on global expansion: start with the former Soviet jurisdictions. The Belarusian market is very similar to Russia in terms of mentality and consumer patterns. You can also try Kazakhstan – it will be more different, but it is a large and lucrative market. This should help you discover the weaknesses of your business model, if any, decide on steps to restructure your company, and identify spending priorities in a new foreign market.
Furthermore, if a company has been incorporated in Russia, and its initial business development strategy never included any international expansion plans, this may be another problem many companies face when they try doing business abroad. If that is the case, you will need to build your business anew, almost from the ground up in a new market. To avoid this, in recent years, many tech startups have been envisioning international scaling in their strategies, developing their products in a way to be able to adapt them to foreign consumers.
What’s really different
The competition landscape. Operating in the home market, where your company has one or two strong competitors, you get used to the local rules of the game. The situation may be very different in an international market, with players from all over the world competing with each other, and your strategy from back home may not work there. This is especially true of high-tech markets such as the United States, which are already full of large and strong players; one has to bear this in mind while making a foray into one of such markets.
Slow-paced processes. In Russia, many issues take a few days, and can be addressed remotely, which may not be the case in your new market. In many countries, the same process can take a month and require a series of long meetings and negotiations. The deal cycle can vary in length from country to country depending on the business climate. Indian companies can negotiate a deal for more than a year and keep postponing the signing of the contract for any reason, up to and including not being in the mood. In a country where the local cultural code is not even close to what we are familiar with in Russia, you are unlikely to be able to predict your partners’ behavior or understand their motives and way of thinking. Therefore, before expanding to countries with a completely different mentality, such as the United States, China or India, it is advisable to find a local partner, and use their help to establish connections in the new market.
Bias and distrust. Most foreign players are distrustful of a counterparty from Russia. A Russian fintech business will have to prove for a very long time that the project is serious, that it already has respected partners and it has come to stay.
It takes twice as long to see cash inflow. When you launch a project in Russia, you normally make first sales three to six months from the start. In other markets, this period will take at least six months to a year. Because it takes longer to launch a business abroad, the entrepreneur needs to have a substantial financial reserve before entering a foreign market.
Everything about your company may need to change. In an international market, you will need to learn how to switch gears abruptly to pull off a fundamental change of focus and direction known as a pivot. To find an effective business model that’ll work in a particular market, you might need to change your initial promotion plans, which means additional costs. For example, it took us two and a half years and four pivots to get going in the American market – we had to scrap several business strategies. On the other hand, once the company makes its first deals in a foreign market, growth begins very fast, and a “leap” in customer trust occurs about every six months.
Technical issues. IT businesses catering to foreign markets from Russia can be especially prone to those. Connectivity and data transmission and processing issues can cause unfortunate disruptions. To avoid this, you might consider renting IT infrastructure locally. However, you also need to consider the local level of digital penetration, as many countries are far behind Russia in this regard. The kind of IT systems that Russian entrepreneurs and users are familiar with might not be available there. This could hinder the promotion of your products and services in such markets.
Dealing with your local partners. In general, to gain a reputation with foreign audiences, the founder of a project needs to be present at the scene, actively participating in all processes for at least six months, establishing communication with local partners, writing hundreds of emails, attending meetings, making calls and tirelessly trying to bridge the cultural gap. This journey can be made a little easier by hiring local consultants to help you develop a roadmap for launching sales in the new market.
In any case, it is crucial to understand that a foreign market is an unpredictable business environment. You can’t simply enter it by increasing sales volumes and attracting new distribution channels. It is not just geographic expansion; it is a complex process that requires careful consideration and answers to key questions:
- Do we have sufficient resources for multiple product iterations to cater to new consumers?
- Have we thoroughly developed a go-to-market strategy, considering that our traditional tools may not be effective in this market?
This will help you determine whether you are truly prepared to pave the way for your business to cross borders and enter new markets.

By Ilya Dronov, CEO of Fundmates