Six Common Traps Foreign Founders Repeatedly Fall for in the US Market

By Shuly Galili, Partner, UpWest Labs

It’s indisputable that foreign-born entrepreneurs have made huge contributions to the US economy, building great companies that have enriched billions of lives. A recent study in the Wall Street Journal found that more than half of the highest valued startups in the US — 44 total valued at more than $1B — were created by immigrants. Acknowledging these contributions, the National Venture Capital Association is actively pushing for the smooth passage of the International Entrepreneur Rule — slated to go into effect July 17 — despite the Trump administration’s intention to scrap it.

Given the uncertain climate, the stakes are high for foreign entrepreneurs, who risk everything to bring their businesses to the innovation capital of the world. They understand that to succeed in the US represents the opportunity to make a bigger impact, and the impressive stats like the study above prove it.

Inherent in that opportunity are not only thousands of mission-critical decisions and responsibilities each day, but risks both big and small should the entrepreneur make the smallest misstep. Foreign-born entrepreneurs need to be prepared to seize the opportunity, and avoid the pitfalls that have ensnared those preceding them.

Throughout my years of work while heading the California Israel Chamber of Commerce and now as an early-stage investor at a Silicon Valley cross-border fund, I have worked closely with more than 300 international startups. Watching them navigate the complex and literally foreign territory has provided me a bird’s-eye view of how founders manage the transition. It’s always a tricky process, with lots of variables, and some underlying truths for what and what not to do.

Here are the six known traps any entrepreneur should consider.

  1. Aiming Too Low and Not Building a Long-Term Vision

If you are aiming for US market, you need to step up to meet the competition. The sheer number of unicorns (98 companies valued at $372B combined according to CB Insights), the immense size of US funds, and the staggering sum of investments made ($58.5B in US venture capital funding in 2016) creates a perfect storm for international entrepreneurs who often come from smaller, local ecosystems.

One of the biggest traps I’ve seen foreign founders fall for is aiming too low and not aspiring to achieve more than what they first envisioned in their native country. An entrepreneur’s definition of success should be shaped by the environment in which he or she plays in — and in places like Silicon Valley, that environment is always fast-moving, disruptive, and high stakes. When foreign founders arrive to the US, they need to be ready to step up their game and face the competition for the long haul. My partner at UpWest Labs, Gil Ben-Artzy, likes to call this the “Michael Jordan Effect,” where players around the world grew up wanting to “be like Mike,” resulting in hundreds of international players coming to the NBA. If the US is where the Michael Jordan of startups play, you best be ready to face them.

2. Hiring a “Ghost CEO” to Act on Your Behalf in the US

Throughout my career, I can’t count the number of times I’ve witnessed founders who understand the need to expand to the US market, but don’t fully believe they need to be here physically. So they create a work-around system by hiring what I call the “Ghost CEO.” This person is hired to act on behalf of the CEO on the ground, and usually bears the title Business Development, VP Partnerships, VP of Customer Success, or other vague combination.

It sounds straightforward enough, but I’ve seen this set-up repeatedly (and disastrously) fail. Why? The “Ghost CEO” is completely isolated from everyone else in the business, is given directions remotely, and often has no insight into how or why decisions are made before meeting with customers, partners, or investors. When meeting with customers or potential partners, it quickly becomes apparent they have no actual authority to make decisions or close deals, as their hands are effectively tied. Furthermore, the “Ghost CEO” often receives the most critical and honest feedback from working closely with US customers and partners, but when they route that feedback back to headquarters, they are often met with defensiveness and even suspicion that he or she doesn’t know what is best for the company. This breeds constant misunderstanding and confusion about the direction of the business and who has the authority to make necessary change.

That’s all to say that the founder needs to be physically present in the US — no ifs, ands, or buts. With the trust of the company behind them, the founder is the only person who should take meetings, do product demos, talk to investors, and ultimately make decisions on the ground.

3. Being Product-Centric as Opposed to Market-Centric

Foreign founders at early-stage companies are extremely product-oriented, often to a fault. As they often lack a person or team to be the interface with customers (and sometimes a language barrier is at play), these founders’ fallback is to work on the product to death. But success in the US is not driven by talking about the product in the abstract. One of the biggest challenges I’ve observed for foreign founders is getting them to articulate what problem he or she is solving and for whom? That transition — from thinking about the product to thinking about the customer is difficult to do, but crucial. To get from A to B requires a lot of customer feedback, learning the pain points first-hand, and constantly iterating on the design. Through this, the founder begins to learn the art of storytelling — not just what they built and what it does, but why they are doing it and how it is going to change people’s lives.

4. Mistaking Fake Validation as Real Feedback

This is one of the hardest traps to detect. When foreign founders come to the States, they immediately buy into the positive encouragement and validation they receive from the wrong people. Often this comes from players in ecosystem indirectly involved in their domain, whether other startups, industry associations, and even accelerators and innovation labs sponsored by big brand-name companies. While such encouragement can be a short-term confidence boost, founders need to remember that these well-intended individuals aren’t being directly impacted by the business, and ultimately they won’t write you a check. Cultivating relationships is important, but be wary of getting caught up in an industry echo chamber. The people who have the biggest pain are the ones you need to talk to most. At the earliest stages, the real feedback is from customers.

5. Believing Your Homegrown Street Cred Is Transferable to the US

It’s cringe-worthy to watch as a foreign-born entrepreneur walks into a meeting with either a potential investor or customer and boasts about the number of partnerships or customers they have back home. The bottom line is that few US investors or companies care at all about what you did before you arrived. Any street cred earned in other cities or countries doesn’t transfer to the United States — no matter how much capital you’ve raised elsewhere, how many customers you have, how many startups you’ve been a part of. Foreign founders must learn the art of immersion, absorbing the DNA and culture of the city that surrounds them, and connect with the people who make that market thrive. Immersion is also the fastest way to gain valuable customer insights, form partnerships, and build the momentum needed to grow your business quickly. Confidence, patience, and a certain degree of humility are key.

6. Waiting too Long to Understand the Regulatory Hurdles

The dream of building a product or service that has never existed before can quickly come crashing down when met with unforeseen US regulatory and compliance hurdles. It bears repeating that just because a product worked in your home country doesn’t mean it can be rinsed and repeated in the States. This is particularly true in highly regulated US industries, like banking and finance, healthcare, and insurance. Founders have to do their homework on the types of certifications and compliance protocols they must meet at the local, state, and national level. How quickly entrepreneurs can both understand and comply with regulations is actually a competitive advantage — as investors, customers, and other partners will value that you have thoroughly assessed risk and have a strong compliance plan in place.


Given the openness from the investment community and the broader tech ecosystem, there’s no better time than now for foreign founders looking to grow their business to come to the US, even given the current political climate. As Bobby Franklin, the president and Chief Executive of the NVCA pointedly describes: “Immigrant entrepreneurs have enhanced our economy and culture despite immigration law, rather than because of it.” The opportunities to build a unicorn company are clearly in the US. But those who choose that path must aim high and find the best opportunities to scale and grow their businesses, and importantly, avoid the traps that can send them packing for home.