Small business · Entrepreneurship

What is the best way to do a joint venture with another startup from another country?

sofia tabassum Attended Sarhad University of Science and Information Technology (NTI)

November 27th, 2016

We started a small company and our client base is slowly but steadily growing. We are in need of more people. Business is good for now but I am not sure we can still afford to employ people full time. Something can easily go wrong and I don’t want to risk it. Therefore I came to an idea to do a joint venture with another startup from one of the developing countries with cheaper but as qualified workforce. Has anyone done something like this? What is the best way to do it and what are the most common obstacles along the road?

Dane Madsen Organizational and Operational Strategy Consultant

November 28th, 2016

I infer that you want this to be a JV so you do not have to pay them cash but rather are exchanging IP for skills.  

Your biggest issue will be finding like minded people in other cultures that have the same economic and social compass you have, that you are confident will work in the letter and spirit of the agreement and, when a dispute happens, will work to compromise and work through the issues so you do not have a legal issue in a country you do not live and do not understand. So, a fairy tale.  

Your only hope this may work is is you have a personal relationship with a person that has a similar personal relationship in the other country. Any JV is based on trust and verification.  Unless you are ready to spend months if not years developing that trust, and are ready to expose your IP to a group that may use it without your permission, you are best served by not getting too far ahead of yourself. 

Mindy Barker Passionate executive working with entrepreneurial companies to improve profitability, value and cash flow

November 27th, 2016

Congratulations on the growth of the business! You need to make sure you have projected you cash flow week to week and can cover the costs you have committed to incur. You did not specify what type of talent you need so it is difficult for me to determine if this is an option - I would suggest you review your option to hire local consultants or part time employees rather than pursuing the joint venture. It is essential you control quality as your build your business and brand. If you do enter into a joint venture, make sure you are protecting your Intellectual Property and brand as much as possible. Make sure you have a legal document that describes the arrangement and you are comfortable and understand the terms.

Tom DiClemente Management Consulting | Interim CEO/COO | Coach

December 1st, 2016

I want to second one of Dane's points because of its absolute importance. You need to know the other people before you do a JV with them. Usually, a JV as you describe only occurs after working with the other company for some years. Thanks, Tom

Norbert Kiss Managing Director, Vice President, Board Member helping companies expand in Asia Pacific

November 27th, 2016

I am not in your industry but have done numerous JVs. Id be interested to know what country your company is in and what country the other party is in. This makes a huge difference when you are deciding what to do. Also, its important to know what your are bringing to the JV and what they are bringing. That needs to be discussed and understood upfront. Cheers