When it comes to startups, Malta is a small test base compared to larger markets. This is why it is imperative for startups in Malta to immediately seek opportunities to expand internationally, even when they are still testing their models according to Paul Grech who heads GO’s Investments arm GO Ventures.

“In many ways, Malta is the ideal place to set up a startup. The island contains most of the complexities of bigger countries - both in demographics and business infrastructure maturity, all tightly compressed in just over 320 km². This makes it easier to roll out a product, get customer feedback and fine-tune the offering.”

“Beyond these obvious benefits, there are also other advantages that founders truly come to appreciate once they are here such as the closeness of the community which enables easier introductions to the most required important business contacts.”

“The beauty of it all is that if a product succeeds here then there is no reason why it should not succeed in other bigger markets and once the model is perfected in Malta, then the template is ready to grow elsewhere. This is not a simple theory but a model that has worked very well in the past with various home-grown success stories,” he added.

A case in point is that of Mindbeat, a company which helps companies upskill leaders, retain talent, and improve employee wellbeing by providing world-class personal and group coaching on a digital platform. Mindbeat launched their product in Malta and used the initial experiences to help improve their platform before moving on to the UK market where they have managed to quickly gain traction including with big-name clients like Specsavers.

If a product succeeds here then there is no reason why it should not succeed in other bigger markets

“There remains a lot of work to be done to foster a successful startup eco-system on the island but, as pitches to prospective founders go, that is quite an alluring one,” outlines Grech.

“It should also be all the encouragement that any prospective founders looking at Malta as their startup host need.”

“What Malta does not offer, however, is time. Startups with global ambitions need to be able to quickly outgrow such a small market as Malta’s. With startups, while cash flow remains a paramount concern, the pursuit of growth also holds significant importance. For any emerging business, exhibiting robust month-to-month expansion is crucial, especially when seeking to capture the attention of potential investors.”

“This has long been a fundamental truth, but in today’s market conditions, where capital is rarer than it has been in the last two decades, it takes on an even greater significance.”

“That is why any company that starts operating in Malta needs to start looking at new markets almost from the very beginning.”

Grech refers to nearby Tunisia where in recent months there have been two highly noteworthy deals involving Tunisian startups; that which saw BioNTech acquire the artificial intelligence firm InstaDeep in a deal valued at $682 million and also the one where Swedish software company Medius acquired the fintech startup Expensya for an undisclosed amount.

“What is even more noteworthy is that, whilst both deals involved companies founded in Tunisia, both startups predominantly had international customers.

“This was not accidental. In a recent interview, the co-founder and CEO of Expensya Karim Jouini was quoted as saying how Tunisia’s market is very small, so any company would very quickly move internationally.”

There are big differences between the Tunisian and Maltese markets but the underlying sentiment for any startup with global ambitions remains the same: once they use the domestic markets to get to a model that works, they have to immediately look beyond borders for growth.

“A startup whose founder has no ambition for internationalisation is bound to remain a domestic operation. Anything else will be out of reach,” concluded Grech.

Paul Grech is the Head of Investment at GO Ventures (https://goventures.com.mt/), GO plc’s tech-focus startup investment fund that has invested almost €2 million in ventures over the past two years.  He is also the author of the weekly publication Growth Expectations (https://www.growthexpectations.com/) where he shares ideas about startups and business in general.