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Business strategy

Australian startups are targeting overseas government contracts for growth – here’s what you need to know to succeed

- April 5, 2024 4 MIN READ
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With overseas markets such as America, Europe and Asia providing substantial growth opportunities for Australian startups, overseas government tender opportunities are becoming a popular choice for founders to penetrate new markets and grow.

There have been many stories of mixed success – from big contract wins to proposals being binned from the outset. In each stories the many of the same challenges seem to appear.

Let’s explore how to overcome them.

Understanding local regulations in tenders

This is the tricky part where you think you’ve nailed your bid, only to find out your product or service needs to meet a number of local rules you didn’t even know about.

A recent survey showed that navigating these regulations is a top concern for 68% of Australian startups eyeing international expansion. The first step is to understand the different levels of government regulation in the country you are bidding in.

For example, if you are a Defence Industry startup from Australia, looking to bid for a defence contract in a European country, there will be European Laws, country specific laws as well as laws in the local municipal area you would like to operate in. You need to read through the mandatory criteria, ensure you have the certifications and licences in place, and if not, have a plan and have commenced the process for ensuring your product or service complies with local regulations.

This is no different to international pharmaceutical companies bidding for Australian Government contracts and being required to apply for TGA approval for their products.

In addition to ensuring they comply with the relevant local regulations to submit the bid, startups also need to consider the impact of workplace and migration laws on their operation. Let’s continue with the European expansion example and assume the startup is bidding for a Greek Government Contract. Under EU regulations, it is difficult for potential workers from Australia to get visas to work in Greece as there is a strong focus on hiring locally.

In order to hire overseas workers you need to prove that there is nobody in Greece that has the skills to fill the role. The country has a market of great local talent, so this generally doesn’t present an issue.

However, it does need to be taken into consideration and the costs and time involved for training needs and global mobility of your workforce needs to be factored in.

Startups need to thoroughly research the local laws and regulations, start the application process early for any certifications, and ensure they investigate all the regulations referred to in the tender criteria including all levels of government.

Selecting a suitable local joint venture partner

With many (nearly all) foreign governments preferring to engage with a local entity, a joint venture with a local partner, or establishing a foreign subsidiary, are two obvious choices for giving Australian startups the best chance of winning overseas government tenders.

However, the choice of a strong and suitable local joint venture partner is not as simple as choosing the best qualified, most experienced partner who you are comfortable doing business with. Sometimes, even if the potential JV Partner is looking to make a capital investment, they may still not be suitable.

The key issue which needs to be addressed is simple – does the potential local Partner have the credibility with government to win the tender. This credibility may be in the form of currently delivering or having successfully delivered other government contracts or holding key licenses and regulatory approvals.

In most Government tenders in Asia, Europe, America and Africa, there is a requirement for previous experience delivering similar services. Any experience from another Government department in the same country is generally viewed favourable upon.

A careful review of the Request for Proposal questions, including what previous experience is required, and what licenses and other regulatory approvals are required, will enable you to make a well-informed decision around an appropriate local joint venture partner.

Complying with financial requirements is another key roadblock with governments often requesting financial reports from the past three years as evidence of financial stability. Many startups are unable to provide this type of financial history, particularly in a new country, and a well established local joint venture partner is crucial to complying with financial requirements.

Localise your bid

Some startups get so caught up in their own hype that they forget it’s about the client and not them. Governments release tenders when they are looking for a solution to a problem, a service or a product. It’s about the Government and their needs.

Writing a submission that focuses on a startups success and brand and story is often not enough to do the trick! You need to focus on the Government and talk about how your product or service is the right solution.

Startups need to put in the work to localise their bids and submit a proposal that reflects the context of the individual country, culture and government. Illustrating the downstream economic, social and environmental benefits of your solution to the local community is also important in any government bids.

Foreign governments don’t want to know that awarding a contract to an Australian startup will enable them to expand their existing offices in Australia – they want local investment and local jobs.

Wrapping up

Heading overseas with your startup is no walk in the park. But it’s not an insurmountable challenge either.

By tackling these common hurdles thoughtfully—understanding local rules, adapting your product, choosing the right partners, securing funding, and communicating effectively—Australian startups stand a much better chance of winning those bids and making a successful international leap.

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