Cross-Border Funding for Venture Capital & Private Equity Firms

Cross-Border Funding for Venture Capital & Private Equity Firms

It’s no surprise that the pandemic accelerated the digitalization of businesses across industries, digitizing customer, employee and at-home experiences. But digital transformation is no longer a novel idea but rather an expected strategy from organizations worldwide.  

The global tech market is a testament to that expectation – growing at an incredible pace. Now venture capital (VC) and private equity (PE) firms are continuing global investment plans.

Opportunities and Challenges in Cross-Border Funding

Fintech, artificial intelligence, cloud security, e-commerce, health and medicine are just some of the booming spaces for VC and PE firms to consider for their investment plans.

However, certain issues like navigating taxes and regulations, legal and administrative policies or even cultural barriers in different countries continue to be roadblocks for many VC and PE firms looking to invest beyond their borders.  

Compliance and Due Diligence

It takes time and money to understand and manage complex regulations and policies in different countries, and often a tall order for many companies. In France, US tech giant Google was fined $57 million in 2019 for breaching online privacy rules under Europe’s General Data Protection Regulation (GDPR) policy. Large corporations usually have robust compliance systems in place, it is not hard to see how small- and mid-sized could be caught in these costly pitfalls.

Local Entity Challenges

Setting up a legal business entity in a foreign country is often both time-consuming and expensive. It can take up to 20 weeks or more to create a local entity in most countries. Initial costs can surpass $20,000 – everything from local registration fees and entity tax compliance to in-country capital requirements and local legal and financial advice. Navigating legal entity structures, complying with local labor laws, and providing documents in multiple languages also require immediate attention.

Cultural Differences

It is important to understand how to communicate with foreign contacts, but the nuances in cultural differences require a more delicate approach. Forming business relations in China often require a relationship-based approach, rather than task-based. Known as ‘guanxi’, building personal trust and strong relationship with the counterparty is crucial in business negotiations; a common practice reflecting that is spending time at the dining table over food and drinks.

While this is a core part of doing business in China, it could be easily mistaken as borderline corruption in the lens of Western businesses. When navigating cultural differences, it is important for companies to grasp the significance of cultural sensitivity to ensure successful ventures in local markets.

While it is tempting to leap into a promising startup in another country, it is important to understand the significance of having the right framework to help achieve cross-border investment goals. Failure to comply with local regulations and laws would only result in penalties and fines that could hurt the business from a reputation and financial perspective. Understanding the nuances in cultural differences is equally important.

Holistic Global Solutions

A partner who understands your needs and the unique circumstances of your target market can mean the difference between success and failure. Venture Global is Atlas’ signature offering for companies looking to grow and expand their assets.

Employer of Record

As an Employer of Record (EOR), Atlas will tap into our existing infrastructure and expertise to overcome HR challenges when you expand into countries where you lack an entity. We handle all the administrative aspects, complying with all local legal regulations, while you focus on your employees’ day-to-day work and the wider business.

Payroll and HR

The Atlas platform is customized to meet your needs. It streamlines HR and payroll processes to enable the execution of compliant global payroll and benefits worldwide while delivering effective Human Capital Management.

Consulting

Our team of experts provides guidance and expertise that will help you navigate the tricky complexities of global tax, labor laws and compliance that come with expansion:

• Local HR, legal, payroll & benefits expertise to ensure compliance & data protection

• TUPE, GDPR & other data protection laws compliance

• Transition

• Transfer pricing support

• Acquisition and divestment

• Project financing

• Scaling onboarding processes & project management

• Accessing a diverse global network of M&A partners

Startup Support

Agility and flexibility are critical needs to a startup’s success. We offer support that is tailored to the needs of small- to medium-sized startups and VC portfolio companies, with innovative solutions such as hybrid payment options and specialized Human Capital Management and consulting services.