Like Moliski, many online entrepreneurs are learning that the overseas climate can be harsh -- or at least one heck of a learning experience. It's not so much that money is a problem -- although funding is always a great challenge. A bigger problem is that other countries have much lower rates of Internet penetration than the United States (see "Level of Internet Penetration," right).
Half of the U.S. population is estimated to have Internet access, compared to only 12 percent in Japan, just over 30 percent in western Europe and not even 5 percent in Latin America. Infrastructure problems "" are largely to blame. Most foreign countries do not have high-speed Internet access and are plagued by antiquated phone lines. Even pricing systems can be a problem. In Japan, for example, telephone customers are charged for every call; there is no such thing aas free local calls, so people tend to curb their Internet usage.
Local traditions also get in the way. In some Latin American and Asian countries, for example, customs snafus make it all but impossible to get a package overnight. Delivery costs are much higher too. And those two-hour lunches, common in Europe and Latin America, can sure cramp a startup's speed to market.
As in the United States, it's getting tougher for Web startups to find funding, especially if they sell to consumers. But many countries now have newer, more tech-friendly stock markets, akin to the Nasdaq in the United States, that make going public a possibility. For instance, while Japanese startups have no hope of meeting the stringent requirements for going public on the traditional Tokyo Stock Exchange, they have a better chance of competing on Japan's two fairly new technology-heavy stock markets, Nasdaq Japan and Mothers Stock Market.
In Latin America, local funding is harder to come by, unless you have an "in" with regionally formed incubators or family-run companies that control much of the financial capital in those countries. There, who you know is more important than what you know. "Fresh ideas and a solid management team will find a venture capital audience with either crowd, but contacts are vital," says Grant Smith, a senior analyst with the Yankee Group in Boston.