FDI deals work just like funnels (funnily enough). Out of a huge numbers of opportunities, a select few emerge, before finally (not funnelly), you get the right deal.
So far, so simple, right? Wrong. Because in foreign investment, there are two funnels.
Investment agencies have one. When hunting for new opportunities, agencies start with a huge list of potential companies. And from this, only a handful of leads will emerge. And a few of these turn into investment projects.
Meanwhile, prospective investors have their funnel. From a longlist of potential locations (typically, between 7 to 20), a shortlist of 3 to 5 emerges. (Note that these are locations, not countries; a list might contain 2 or 3 locations from the same country.) A clear winner is announced only after each location has been visited and each option closely analysed.
It’s worth bearing in mind that most invest promotion agencies create less than 30% of their deals by reaching out directly to companies. The other 70% comes from marketing, referrals, and other sources.
From an agency point of view, what does this mean? You can focus on companies you think are potential investors without any success. Then, out of the blue, find yourself on the longlist of a company you weren’t even aware of. In the end, with so many potential opportunities, this process is never an exact science.
But making sure you understand what’s most likely to get you onto an investor’s longlist is a good place to start.
Getting on the longlist
You might think that getting on the longlist is all about macroeconomic fundamentals. That’s not entirely true. Lithuania has moved from being an unknown entity to a high profile investment location without its macroeconomic conditions changing dramatically.
Here are some factors that have definitely helped to get us noticed:
- Specific clusters that are internationally recognised
- A strong track record for hosting major international businesses
- Site selection consultants who understand local dynamics and trust the service quality your agency provides
No shortcuts allowed here. We have worked proactively to build relationships across Europe and the US. This process can be complex, as site selection is not a clearly defined service, but there is large community that is consistently involved in this process throughout the year.
- International rankings / data
Don’t underestimate the rankings. Their simplicity is helpful for the business community (what could be simpler than this graph we recently received from a potential client)
Get these areas right, and soon enough you’ll find yourself regularly cropping up on company longlists.
But don’t forget, the longlist is just the first step, and sealing an FDI deal is marathon, not a sprint.
Next time we’ll be analysing how to get yourself from the longlist onto the shortlist.