Why diverse markets are good for startups

Exposure to diverse markets helps startups thrive. There’s now a significant body of evidence proving that diverse startup teams are more likely to be successful in international markets – with diverse companies around 35% more profitable than non-diverse companies, and diverse teams 70% more likely to capture new markets.

But beyond a startup’s own team, diversity in the markets it engages with is also valuable. Why?

Diversity gives startups access to different perspectives and ideas

Creativity and innovation are essential for startups. And ultimately, more diverse markets give founders and startup teams access to broader perspectives – which drives out-of-the-box thinking and enables them to come up with fresh ideas.

When we interviewed Derek Chim (Head of Incubation and Acceleration Programmes, Hong Kong Science & Technology Parks Corporation on the LEAP:IN podcast, we asked him about the Elevator Pitch - one of the international initiatives of Hong Kong Science & Technology Parks Corporation (HKSTP).

It’s a unique, worldwide competition that enables global startups to leverage HKSTP’s networks and support systems, starting with a 60 second pitch.

“We want to tell the world that Hong Kong has a really ripe startup ecosystem here, we have the funding, we have the government support, and we have the resources,” Chim said. “It’s to help founders overseas to experience the startup culture of Hong Kong. To prove to them that they should consider Hong Kong for their startups.”

Within Hong Kong, this drives increased participation from international startups in the local ecosystem. And Chim sees this as a critical driver of that ecosystem’s value.

“It’s very important. If you’re doing one thing for one market, you’ll fail in the end.”

Diversity is a fundamental need for any startup, because it broadens the scope of thinking – enabling founders to consider how they can apply their technologies and products to different opportunities. And it creates an international network that gives local founders the chance to collaborate with different regions and people.

“This diversity enables them to scale faster, and to have a broader and deeper scope of innovation,” Chim added.

Diverse markets offer a wider talent pool and increased cultural competence

As well as driving more in-depth customer understanding, and the ability to adapt their products and tech to suit different needs, diverse markets offer startups access to a wider pool of talent.

The right people are essential when you’re growing a business – and when you can connect with talent from different professional and personal backgrounds, you’re more likely to find the skills and experience you need to drive success for your business. Diverse teams are more successful, with the capacity to identify and solve a broader range of technical and business challenges – and you can build that team far more easily when you operate within a diverse market.

Access to diverse talent also means your startup will benefit from greater cultural competence. This is incredibly important if you want to expand into international markets; because you need a team that can navigate different business environments and working practices, as well as understand regional regulatory frameworks. And cultural competence within your team allows you to scale out more confidently – by recognising the adaptations you need to make to your products or services in order to meet consumer demands in overseas markets.

To scale successfully, your startup has to be able to build productive, meaningful relationships with stakeholders in markets that are different from your home market. And if your home market is, in itself, diverse, then you’ll be better placed to build those relationships.

That’s why it’s important that regional markets work hard to welcome participation from international startups. It’s not just about driving revenue in the short-term – it’s about building an ecosystem that allows businesses to thrive.