Don't run out of money when expanding your startup into the US. Here's how.

For international startups looking to expand into the US, do the following:

• Take your estimates for how long it’ll take, and double it.

• Take your estimates for how much it’s gonna cost, and double it.

That’s the recurring advice given by founders who’ve taken their companies into the US from other parts of the world.

The time element is partially a planning consideration, and partially a psychological feature that founders just need to have when thinking about the move.

The money, on the other hand, is never enough.

Especially when many funding options in the US are very domestically focused, founders often find themselves caught with a decent amount of their business just written off by potential financing options in their new market.

We dive into this topic in this edition of Silicon Jungle Chronicles, where we explore the journeys of startups navigating from Southeast Asia and South Asia into the US market.

Today, we are thrilled to introduce a special guest who's intimately familiar with this journey—Kaustav, from Efficient Capital Labs. As the sole non-dilutive financing option for startups operating in the South Asia-Southeast Asia-US corridor, Efficient Capital Labs aims to reshape the financial landscape for emerging companies.

Meet Kaustav from Efficient Capital Labs

"Excited to have this conversation with you," Kaustav says, highlighting the importance of making accessible knowledge available to founders in South Asia and Southeast Asia. With a rich history in the risk domain, including a stint at American Express and pivotal roles in fintech startups like Kabbage, Kaustav has leveraged his expertise to co-found Efficient Capital Labs in early 2022.

The Genesis of Efficient Capital Labs

Kaustav's journey into Efficient Capital Labs is one of curiosity and innovation. With years of experience in risk management and fintech, Kaustav recognized a critical challenge—disparities in the cost of capital across geographies. A conversation with founders in India or Singapore about borrowing costs starkly contrasts with discussions in the US or UK. This realization sparked the creation of Efficient Capital Labs.

"What if I fund them in the US to their US entity, and they transfer the money back to their local geography?"

This concept of cross-border arbitrage on the cost of capital not only lowers expenses for startups but also treats companies globally, acknowledging their multinational revenue channels and risk factors.

Going Beyond Cost Arbitrage

While the initial focus was on cross-border cost arbitrage, Efficient Capital Labs quickly recognized the importance of treating companies as global entities. Traditional revenue-based financing often overlooks international revenue and complexities. Efficient Capital Labs stands apart by:

• Giving credit for global revenue

• Fair risk assessments considering international dynamics

This allows international startups to leverage their global financial footprint for securing capital in the US.

Overcoming Challenges in Cross-Border Expansion

Cross-border expansion presents its own unique challenges, many of which Kaustav has observed firsthand:

1. Formation of Entity: The birthplace of many hurdles, understanding tax implications, and structuring parent-subsidiary relationships can be daunting.

2. Opening a Bank Account: Navigating the intricacies of bank requirements, especially when dealing with digital banks in the US, requires insight into various restrictions and needs.

3. Go-to-Market Strategy (GTM): Deciding whether to base sales teams in local markets or in the US is key. Variables include product, market, and target customer.

Access to Capital - Look broader

Kaustav emphasizes that understanding the types of capital accessible across geographies can be game-changing for founders:

• Customer-Driven Capital: Leveraging business revenue to grow.

• Venture Capital: Offers significant funding but is dilutive.

• Venture Debt: Piggybacks on venture capital, often inaccessible to bootstrapped companies without VC backing.

• Alternative Financing: Quick and non-dilutive, though more expensive than venture debt.

The Cost of Capital Across Geographies

Understanding the cost differences across regions is crucial. For example, in India, alternative capital can have an effective APR ranging from 19% to 24%. In contrast, the US offers a more competitive range of 15% to 20%. This differential is what Efficient Capital Labs aims to bridge.

"Access to capital is not restricted to the region you are in."

Advice for Aspiring Founders

Kaustav's advice to founders looking to expand into the US is clear: Explore beyond regional capital solutions. The global financial landscape offers numerous options that can be strategically utilized.

Getting in Touch with Efficient Capital Labs

For startups eager to learn more, Kaustav is accessible and welcomes inquiries through:

Email: kaustav@ecaplabs.com [tell him CT sent you!]

Check them out at their website here. [Yes, this is an affiliate link]

In Kaustav's words, "Information is power", and understanding all available financing options is crucial for any founder considering US expansion.