European technology companies struggling to secure funding for innovation or expansion should exploit growth regions for new opportunities, according to one market observer.

“Growth regions hold the key to fast international development for Europe’s innovation companies. And those same growth regions often have a pressing need for the technological products that these companies provide. We just have to get the two parties together, it’s a win-win situation,” said Alexander Banz, partner at Niton Capital Partners, an independent investment and corporate finance company.

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Potential growth regions for tech companies include the Middle East, Russia, Kazakhstan, Brazil and Africa.

Mr Banz said the most successful way to expand into any growth region involves the combination of local investors and the innovation of the company in question. The local investor contributes capital, contacts, manpower and awareness of the overall conditions, while the company shares its marketing and technological know-how.

Other key factors for success include local demand for a product, as well as an early launch of a pilot with a customer. “It always works much better if there’s a pressing need for that product within the region,” said Mr Banz. “The greater the need, the quicker people will grab a viable solution.”

Air conditioning technology that uses less electricity, for example, would be suitable for the Saudi market. “Any potential Saudi Arabian investor can personally relate to the need, both for air conditioning itself and for a system that saves energy, because she or he feels the pain on both levels. It’s the same everywhere – people prefer to invest in things that have relevance to their own lives and that they can talk about to their friends. They want to see the prototype and experience its advantages for themselves,” said Mr Banz.

The human element is an essential factor when it comes to addressing possible challenges blocking expansion into growth regions, such as bureaucratic issues or inefficient infrastructure. Despite the fact that some growth economies have resources to facilitate their procedures and to ameliorate their infrastructure, a change of mindset is needed to do so, said Mr Banz.