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Despite its physical size, Canada is a very small market. However, this can be a strategic advantage. Speaking with INNOVATEwest ahead of the inaugural summit, VoPay CEO and Founder Hamed Arbabi explained his three-phase approach to turning Canada’s smaller market into a global launchpad.
Canada has a fairly wealthy population, strong diplomatic connections with world powers, and our English and French speaking society can easily connect into the biggest markets in the world.
There’s just one problem: we’re tiny.
Despite being the second largest country in the world by land mass, Canada’s population of 40 million pales in comparison to our peers like Germany (83 million), the UK (67 million), France (64 million), and the United States (340 million)
Canada’s smaller market has been a frequently-cited reason why it’s more difficult to scale a startup here. But being smaller has some strategic advantages as well—just ask Hamed Arbabi, Founder and CEO of Vancouver-based embedded payments platform VoPay.
Speaking with INNOVATEwest ahead of the summit, Hamed shared more about VoPay’s growth strategy and how it turned Canada’s smaller market into a strategic advantage and launchpad for global growth.
Hamed doesn’t disagree with the fact that Canada is small. However, he looked for opportunities within that more compact ecosystem first rather than running for the southern border.
“We had to be very strategic on how we enter the markets, where we focus and how we can slowly grab market share,” said Hamed.
The first phase of this is helping others navigate the complexity of doing business in Canada. It’s not that it’s incredibly hard, but the market may not be large enough for global players to justify doing all the work themselves. This became VoPay’s opportunity; if they could make it easier for global players to operate in Canada, they could get a foothold and grow from there.
“For many industries eyeing the Canadian market, especially those in the financial sector, there’s a significant barrier to entry,” said Hamed.
VoPay’s solution was to build an embedded back office function for many non-Canadian companies that want to operate in Canada’s financial ecosystem in some way.
For example, a global accounting software platform expands into Canada. One of its core services is helping small business owners track accounts payable; leveraging VoPay as a partner, that platform can now offer accounts payable financing options without needing to go through the hurdles of getting a Canadian financial services registration and building a solution from scratch.
To Hamed, VoPay plays the role of “enabler” in this transaction; they help companies deepen their own customer relationships and, in many cases, help them access customers in a way they couldn’t have done (or wouldn’t have wanted to do) themselves.
Phase two is the same process in reverse—instead of VoPay simply being a Canadian partner for global players, they use a Canadian experience to build credibility and then expand to wherever their partners currently operate.
This piggyback approach means they can leverage another organization’s boots on the ground to help land in a new market while bringing their own strength of embedded services and researching the nuances of regulations in a given region. But at the same time, VoPay already has a relationship and work history with that partner, making international expansion much more smooth for both organizations.
“Rather than ‘we think we need to go to Europe or Latin America’, we have existing partners already operating businesses there at scale,” said Hamed. “We offer that helping hand to all of these organizations that are coming to Canada and, as a result of that, we establish credibility .”
The third phase is both vertical and horizontal product expansion, said Hamed. Vertical expansion looks like more features on existing offerings that VoPay’s users can offer to their own customers. Horizontal expansion involves adding more services—for instance, starting with accepting payments but expanding to lending as a service or compliance as a service. This not only helps VoPay earn more revenue per customer but it also makes them attractive to larger enterprise partners that need a comprehensive solution.
“It’s another growth approach for large enterprises; by adding a component to their existing solution offering that can open new opportunities for them,” said Hamed.
From day one, Hamed has joked that his title of CEO actually stands for Chief “Everything” Officer. But as the company continues to scale, he’s less involved in daily operations and more focused on the road ahead.
To keep things going—and to keep building a global company from Vancouver—Hamed said his leadership style focuses on gaining momentum rather than building specific to-do lists. For instance, he has regularly scheduled meetings with executives on certain days, group leadership meetings weekly, and a team all-hands monthly; these flagpole events offer a rhythm and cadence that keeps the whole team moving towards global growth.
“The key responsibility of the CEO when the company is at scale should be building strategic relationships, networking, understanding the future of your industry, and determining how to continue growing the company at a healthy pace,” said Hamed.
This article was originally published on April 2nd, 2024, on Innovate West, located here.
