Exporting made easy:
How Canadian businesses can set their sights on international markets
Having a game-changing product is one thing; the ability to successfully navigate the international marketplace is another. Just ask David Coode, CEO of Sera4, a Waterloobased technology company founded in April 2014 focused on keyless access control.
“Even as recently as a year ago, if you would have told me we’d be doing business extensively in Paraguay, I wouldn’t have believed you,” he said.
The brainchild of former Blackberry engineer Jerod Klink, Sera4 provides an end-to-end suite of software and hardware solutions to help companies in industries ranging from telecommunications to mining, natural gas and beyond keep their infrastructures secure. Klink understood how Blackberry’s products, known for their security control systems, could be taken several steps further to give large-scale, industrial customers even more assurance. Though they now serve many different verticals and are embedded within South America, things were less clear in the company’s earlier days.
“We went from a couple of guys in a basement to facing a massive purchase order to fill in Mexico,” Coode said. “As a young company, it’s tough enough to actually secure that big early purchase order — but when it finally arrives, nobody tells you how challenging the next steps can be.”
The ability to respond to export opportunities in international markets is complex and often downright daunting. From language barriers and cultural idiosyncrasies to tax laws and logistics, nearly every element of a traditional business transaction can become a major challenge in a foreign market.
The first steps are often hardest for smaller, founderrun companies looking beyond the Canadian borders. Startups naturally have minimal credit history, collateral and liquidity; securing significant financing on the basis of a Mexican purchase order is likely to leave the average Canadian bank skeptical.
“The banks wouldn’t finance us, and we faced the possibility of being unable to fill our purchase order,” Coode said.
So he quickly found another route. Export Development Canada (EDC) helped bridge the gap between conventional financial institutions and Sera4, assisting them in securing the funds they needed by leveraging EDC’s Credit Insurance. Thanks to EDC’s ability to insure their purchase order and future receivables, Sera4 was able to close the deal with their Mexican client and begin the first phase of their expansion into Central and South America.
EDC was founded on the mission of allowing Canadian companies to become competitive internationally. Their goal? Helping entrepreneurs understand all that comes into play when looking to do business abroad — and the challenges that Sera4 faced are not unique.
“It’s common for small businesses to need help accessing working capital as they start their exporting journey, and Sera4 was no different. EDC was able to partner with their financial institution to get them access to more working capital, which allowed them to take on a contract that has propelled the business’ success internationally,” said Jessica Markic, Sera4’s EDC account manager.
Working capital, the short-term liquid cash that’s necessary to fund inventory and deliver product, is always a challenge when purchase orders are large, when transactions are long, and when customer cheques aren’t rolling in anytime soon. It’s a hurdle for any Canadian business looking to expand cross-border. So EDC’s services help with things like accessing more working capital, credit insurance and direct lending. Sera4 also used EDC’s Export Guarantee Program to help increase their operating line.
Customers across the globe will race to purchase a product to remain competitive once a particular market, like technology, matures. If you’re Sera4, market maturity requires access to working capital, quickly, because it can decide whether or not a company can respond to demand.
“NAFTA, tax payments into Mexico, logistics — the list of ‘unknowns’ can be long,” Coode said.
Sera4 tried using air transport to fly products into Mexico, but that went “spectacularly badly,” leading them to find the right routes to Mexico via ground transport. Complex logistics aside, financial fraud, money laundering and corruption in international marketplaces remain even trickier to navigate — issues on which EDC continues to educate Canadian businesses regularly.
Having doubled in size every year since their inception, things seem clearer today for Sera4. The company maintains its headquarters in Waterloo, or “Silicon Valley North,” but is now firmly present in Brazil, Mexico, Paraguay and Colombia, while continuing to look further toward South Africa. Once they become ready to actively transact within new international markets, Coode confirmed Sera4 would turn to EDC for support and solutions once again.
Capital, credit and insurance are fundamental when it comes to expanding operations into the international market, but Coode suggested that success is about much more than money.
“EDC provides excellent resources in the form of knowledge and data about the specifics of international trade,” he said. “Companies need to regularly digest this information in an active way to grow their business abroad.”
For more information, visit edc.ca.