When partnering abroad, it’s vital that the partnership is perceived as having strategic business importance, stressed Anand Govindaluri, CEO of Go-Vin Holdings. Forming an alliance in the hope of attracting capital is bad business strategy. Therefore, “don’t custom make a plan just become a company has money. It must make smart business sense in order to work in Asia.”
Cytori Therapeutics, for example, considered the Japanese market strategic. “For a deal to be accepted, the technology has to be relevant to the potential partner’s market,” Mark Saad, CFO, emphasized. “It’s a long time from ‘hello’ to signing a deal.” By patiently courting several Japanese firms, Cytori found a good match with Olympus that fit the strategic goals of both companies. The arrangement infused about $50 million into Cytori.
“This wasn’t a one-off deal, but a strategic decision,” Saad explains. “We found the scale we needed for a joint venture with Olympus for a product aimed at global scale. We encouraged them to go out of their usual risk profile. We were very early stage,” he said.
“It’s not easy to do business in a country like India. To begin with, it’s a 20-hour flight,” Govindaluri pointed out. Therefore, he advised having a business plan for the next five to ten years, with a structure to raise funds in Asia, match the legal structure to the environment, have your attorney with you, and consider how the new shareholders (or board members) will interact with the current set. Also, have an exit strategy that considers the positions of both sets of constituents.