BV Bridgehead Ventures logoDeveloped using 30 years’ experience of supporting clients to expand in the Middle East - and following extensive consultation with energy-focused businesses seeking to establish a foothold in the region - Bridgehead Ventures offers a new approach to business internationalisation.

The Bridgehead Ventures model aims to meet the gap between the two main mechanisms of entry to overseas marketplaces - using export sales agents or setting up or acquiring an in-county business.

In recent years, we have become increasingly aware that a new perspective was needed to accelerate revenues and reduce the costs and risks associated with evolving to an in-country business establishment.

The traditional low-cost, low-risk business model of appointing local agents under a sales commission remuneration has become increasing obsolescent due to the high front-end workload and long-lead times to revenues. This leads to an absence of cashflow to fund the work efforts involved and a mismatch of expectation between the parties, sometimes leading to friction and contentious terminations.

This has been compounded in recent years by policy initiatives which are driving localisation and in-country value. Local presence is now an essential element of any successful venture in the region.

However, a business accepting that reality is then faced with the prospect of the costs and risks associated with putting a business venture on the ground. The key risks arise from the need to invest substantial time and money well ahead of the ability to prove and quantify revenue streams; the need to establish and maintain effective local partnership relationships; and the requirement to put an often untried management and business development presence on the ground.

This is compounded by the requirement to work through all the challenges of business registration and licensing, banking, vendor registrations and in-country value certifications. Many businesses simply fail to break through or find that it can take two or three years of negative cashflow to break into a meaningful revenues stream.   

The Bridgehead Ventures model seeks to address these challenges by offering up the following key components:

  • A BV Management Agreement with HFI Consulting International under which managing partner Hugh Fraser and his senior team will pull together and supervise each Bridgehead Venture towards clear first revenues objectives
  • A Joint Participation Venture with a trusted local partner. This is the legal mechanism to allow an international partner to “piggyback” on trade licences, vendor registrations and ICV scoring certificates along with its infrastructure and capabilities relating to customs codes, visas and office accommodation. All of this should defer the need to invest in the business’s own infrastructure until sufficient revenues are arriving
  • A Service Agreement allowing shared access to an “on the ground” industry specialist interim General Manager who will defer the need to put a new management team on the ground for 12 months. This provides a local presence to represent the business on the ground and to pull together the efforts of the local partner and business’s own team.

HFI has been working on these proposals since early 2018 and, after an extensive consultation with energy-focused businesses who have ambitions to set up in the Middle East, has made several revisions and improvements to the model.

We listened carefully to what the market was saying and the following key issues emerged:

  • Although the model envisages a specific BV team managing between five and 10 companies in parallel to achieve economies of scale, cross marketing benefits and lowest possible costs, it was felt the model had to be more flexible to allow a participating company to enter the BV at its own optimum timeline, to operate independently and to have flexibility of when and how it leaves the BV
  • The need to control monthly costs of the BV to a fixed budget in the region of US$5,000 per territory and to allow an orderly exit on no more than three months’ notice was another key element. On this basis, the monthly fee is the cost recovery mechanism and the profit element for the BV team will come from a 2% of the gross revenues attributable to the BV efforts
  • There needs to be a laser focus on achieving first revenues within the first 12 months through a combination of the BV local platform and the parallel support of the existing management, business development and technical team of the participating company
  • There must be an option to exit in an orderly manner on no more than three months’ notice or indeed to move on to a conventional business establishment structure when the time is right.

Based on the revisions to the concept, we now feel that we have created a best-in-class solution to the very real tests which companies face when trying to break into a new market in the Middle East. The initial focus will be on Saudi Arabia, the UAE, Qatar, Oman and Kuwait but the plan is to expand geographically in line with client demand.

The BV model brings an innovative solution to the table, and we believe it will open the door to many companies seeking to internationalise their business.

HFI Consulting International is an independent consulting and legal services firm which was established in 2003. Our key objective is to be a driving force for our clients’ international business expansion ventures, with a sharp focus on objectives and results.

We specialise at the intersection of three vectors:-

  • Business ventures in the wider Middle East region by
  • Businesses that deliver advanced technology and know-how solutions to
  • The energy, water and environmental protection sectors.

Our clients are principally businesses backed by private equity firms which are focussed on strong and sustainable growth in the region and we support new ventures and existing ventures which are being re-positioned.

HFI is led by Hugh Fraser, a Scottish lawyer and member of the GlobalScot network who has over 25 years’ experience of international business ventures in the Middle East. He is the former Group Head of Legal of John Wood Group PLC and Head of Middle East for Andrews Kurth Kenyon.

Our key drivers, differentiation and value proposition for clients comprises:

  • Specialisation in know-how and execution skills at the intersection of the three vectors: regional, technology and sectors;
  • Investment in long term relationships with our clients, personnel and network; and
  • Strict adherence to professionalism, creating and protecting value and business ethics.