Tariff Chaos Fails To Deter Tech Companies From Targeting US, Says Mercia

It says the current uncertainty has failed to deter businesses from targeting what is likely to be their biggest potential market, although it may slow their rate of progress.

Will Clark, Managing Director of Mercia Ventures, says: “The US has long been the ‘holy grail’ for high-growth UK tech companies and we offer a service to support those entering the market. While there has been a lot of talk abouttariffs within boardrooms, most companies targeting the US have decided to continue on the path and as yet, the outcomes we most feared have not unfolded.

“Many tech companies will escape tariffs - software is exempt, as are some medical devices. Others are looking to adapt in some way, such as unbundling hardware from software, or changing their manufacturing process or supply chain. One company had a device that was assembled in China but has now succeeded in having it classed as a UK product. If all else fails, companies may choose to raise prices.

“Apart from the sheer size of the market, some businesses may have other strategic reasons to target the US – often founders or investors aim to find a US buyer as part of their exit plan but they may need to build a presence therefirst.”

However Mercia warns that US expansion can be challenging. Its Growth Partners service offers in-country experts to advise portfolio companies and make introductions.

“The culture is very different in the US and the costs are much higher,” adds Will Clark. “Often companies go in too early and don’t have the resources to make it work. Our Growth Partners in the US help them avoid such mistakes and are currently playing a valuable role in helping them navigate the tariff chaos.”

Mercia-backed companies that have achieved US success include Manchester-based product information platform Pimberley, Inovus Medical of St Helens which provides simulators to train surgeons, Birmingham’s Voxpopme, a customer feedback platform, Alesi Surgical of Cardiff and Yorkshire medtech Eventum Orthopaedics.

Julian Castelli, a Mercia Growth Partner who is based in Utah, added: “Uncertainty is the biggest challenge for companies entering the US right now. When uncertainty prevails, deals are more difficult to close which translates into longer buying cycles and market penetration timelines.

“Some companies have been forced to slow or limit their expansion. However I haven't seen any change their overall perspective on entering the US market, as the calculus behind it is driven by the size of the opportunity. The US is a vast market and is likely to remain the key target for many UK companies.”