In their never-ending search for capital to help grow and sustain their companies, U.S. business owners might do well to look beyond American shores.
Many investors and large companies overseas are looking for attractive opportunities to invest in U.S. businesses with strong financial and management track records, unique ideas and patents, or cutting-edge technology. If this describes your company, you might be able to attract venture capital or private equity funding from overseas investors, a type of financing that’s known as foreign direct investment, or FDI.
Doing business with foreign investors, however, is a little different from working with domestic investors and venture capitalists. Here are a few pointers to keep in mind when it comes to dealing with overseas investors.
Provide a High Comfort Level
In the same way that many U.S. firms are apprehensive about doing business overseas for the first time, overseas investors can be skittish when investing in companies abroad. Do everything you can to set them at ease and make them comfortable with the transaction. Take extra time to educate them about your company and industry, for example. Be patient in answering all investors’ questions to the best of your ability. In short, be willing to bend over backward and hold their hands every step of the way, if necessary.
You can only get so much of a feel for each other via phone calls, e-mail, and video conferences. At some point you and your potential overseas investor should plan to meet in person. Most investors will want to come visit your place of business to “kick the tires,” especially if they’re investing relatively large sums of money.
Don’t Rush It
The pace of business in the United States is faster than in most other parts of the world, where executives and investors like to get to know each other in a more relaxed and social setting before getting down to business. Not taking the time to develop a relationship with a potential overseas investor before moving on to more serious business talk might be considered a serious breach of etiquette that could squelch a deal before it even gets off the ground.
In China, for example, building strong relationships with partners is essential and requires a long-term commitment. Don’t necessarily take politeness or compliments as a sign that all is well. In some cultures it’s against business decorum to tell a visitor that he or she won’t be receiving funding, even if the decision has already been made.
When in Rome …
One of the biggest mistakes U.S. business owners make when dealing with overseas investors is not understanding and respecting the distinct cultural subtleties that exist from one country to the next. An innocent faux pas that violates social mores in a particular culture can undo months of groundwork that has been laid in building a relationship with a potential investor.
For example, in India, men should generally try to avoid touching women, even to shake hands. A slight bow with palms placed together is more appropriate. In Japan, you should never address an investor by his or her first name. Instead say his or her first name followed by the word san (which is similar to Mr. or Mrs.). And in Islamic nations, remember that everything stops five times every day for prayers. Visitors aren’t expected to pray, but they shouldn’t interrupt or be impatient while their host does.
Don Sadler is a freelance writer and editor specializing in business and finance.