The topics of tariffs and uncertainty come up regularly in almost every discussion we are having with companies wanting to expand to the US market. These questions often boil down to “should we wait” until the uncertainties around US tariffs and the related economic effects before pursuing a US expansion strategy.
I thought it might be helpful to share my thoughts on these topics more widely with the broader community to hopefully create dialogue that may prove helpful to UK and European founders contemplating US expansion.
Tariffs
If your company relies on importing physical goods into the US market, the tariffs will have a materially negative impact on your business in the near term. With fluctuating tariff announcements from the US administration, it is extremely difficult to even know how to price a physical product that relies on a global supply chain for components and manufacturing. The hardships the hardware industry faces are very real.
If you’re a founder in a digital technology sector such as AI, Fintech, Healthtech, Martech, Insurtech, Cybersecurity, or DevOps, your company will not be directly affected by the tariffs at this point. However, the companies you want to sell your solution to may very well tighten their budgets and slow new purchases. Updating your company’s pitch to focus on ways your solution can help your clients save money, improve efficiencies, and reduce headcount will help better align your positioning with the current market conditions.
The Uncertainty Will Continue
I often hear startup founders say “we are waiting for the uncertainty in the US market to clear before we actually begin our US expansion process.” It’s important to understand that this uncertainty will not be clearing up anytime soon.
Don’t listen to prognosticators predicting that tariffs will perfectly propel the US economy to unprecedented heights, or conversely, those warning of an imminent worldwide economic depression. Such extreme predictions almost certainly reflect political bias rather than economic reality.
The US and global economies are such massive complex systems that there aren’t reliable forecasting models or techniques given the total number of inputs and assumptions required for accurate prediction.
The Trump Administration has established a pattern of announcing policy changes through social media, quickly rescinding or modifying policies, then rapidly making several follow-on announcements on the same topic. This communication strategy will likely continue for the next several years.
If you’re waiting for uncertainty in the US market to “clear,” you’re going to be waiting a long time and will ultimately miss the opportunity to establish leadership in your target industry segment.
The TAM Promised To Your Investors
If your company has already raised venture capital, one of the primary reasons you successfully secured funding is because you convinced your investors that your company has a legitimate shot at capturing a significant portion of a huge Total Addressable Market (TAM). It’s almost certain that a material amount of your overall TAM exists in the US market. If your company is going to ultimately produce venture-sized returns for your investors, you’ll need to capture significant US market share.
Your VC investors expect substantial returns on their investment because the Limited Partners who invested in the venture fund expect the venture-sized Internal Rate of Return (IRR) that was promised to them by the General Partners of the funds that invested in your company.
In short, to deliver on the TAM opportunity you pitched to your investors, you can’t afford to delay capturing US market share.
Access to US Venture Capital
There are thousands of venture capital firms in the US with over $1 trillion in Assets Under Management (AUM). Venture funds in the US historically invest in larger rounds and at higher valuations than venture funds in the UK or Europe, making it common (if not essential) for founders to raise later-stage funding rounds from US venture capital firms.
If you want to raise capital from US VCs, they will focus intensely on the specific TAM opportunity for your business. Given the size of the US market, US investors will expect your company to aggressively pursue US market share.
Having already demonstrated traction with US customers and consistent revenue growth in the US market is far more compelling than merely stating that you “plan” to expand to the US after closing your next funding round.
If you’re serious about wanting to raise US venture capital, you need to be winning US market share now.
Building a Generational Business
If you’re a founder on a mission to build a category-defining, billion-dollar, generational business, you cannot wait for obstacles in your path to clear themselves. Accepting that you don’t have control over global macroeconomic conditions while continuing to relentlessly focus on building great products, hiring exceptional talent, and delighting your customers will give you the best opportunity to accomplish your mission.
Truly transformative companies are often built during periods of economic uncertainty. These challenging times can create unique opportunities for innovative solutions and allow agile companies to capture market share while others hesitate. The founders who push forward despite uncertainty are typically the ones who build lasting enterprises.
US Competitors Won’t Wait
If you’re considering delaying US expansion until political or economic conditions improve, understand that your US competitors are not waiting. They are actively and aggressively building awareness, developing sales pipelines, and winning market share in your space.
The harsh reality is that the best product doesn’t always win in the US market—the product with the most market demand does. Every day you delay building US market share is another day your company falls behind your US competitors, who have the home-field advantage of proximity to customers, cultural understanding, and established networks.
By the time conditions seem “right” for your entry, US competitors may have already established dominant positions that become increasingly difficult to challenge. First-mover advantages are real, especially when it comes to building brand recognition and customer loyalty in new markets.
Summary
The current uncertainty in US markets and global trade isn’t a valid reason to postpone US expansion plans. For digital technology companies, the impact of tariffs will be largely indirect, and successful expansion strategies will involve positioning your solution as a way to help customers navigate these uncertain times.
Rather than waiting for perfect conditions that may never arrive, forward-thinking founders should recognize that:
- Economic and political uncertainty will persist for the foreseeable future
- Capturing US market share is likely essential to delivering on the TAM you’ve promised investors
- US venture capital firms prefer to invest in companies already demonstrating US traction
- Building a generational business requires pushing through obstacles rather than waiting for them to disappear
- Your US competitors are actively building market share while you consider whether to enter
The most successful UK and European tech companies will be those that adapt their strategy to the current reality rather than waiting for conditions to improve. By focusing on how your solution helps customers navigate uncertain times, you can turn the current environment from an obstacle into an opportunity for differentiation and growth.
We have created an online US market readiness assessment tool. If you want to check your company’s readiness to enter the US market, take our free online assessment here or book a time to talk with our team.
