Export market selection: how a Latvian SME picks its first country

“Which country should we start in?” — this is the second question Latvian SMEs ask us when discussing export start. The first is “how”, the third is “how much”. Market choice determines everything else: from contact database to language to price positioning.

A bad market choice doesn’t just lose a project — it imprints a false narrative on the company that “exports don’t work for our product”. The more correct view: this particular product may not fit this particular market in this particular moment. A different configuration (product, market, moment) often does work.

This article is the framework we use at the start of every Market Testing project when we help a Latvian SME choose its first (or next) export market.

Three-factor framework

First market choice usually balances three factors:

Proximity — geographic, cultural, linguistic, legal
Market size — total addressable market for your ICP
Competition and saturation — how many other services/products already compete for the same client

No single factor tells the whole story. A small but low-competition market with high proximity (Estonia, Lithuania) can be a better first step than a huge market with high competition (Germany) or a small one with low proximity (Switzerland).

But each of these three factors is decidable, and we’ll explain how next.

Proximity assessment

Proximity has four dimensions that all affect first-market execution ease:

Geographic proximity

Flight time from Riga, physical logistics cost, time zone difference. In serious B2B SaaS and services context — less critical, but often determines whether in-person meetings are feasible without major investment.

High proximity to Latvia: Estonia, Lithuania, Poland, Finland, Sweden, Germany, Belarus (not currently considerable due to political situation) Medium proximity: Norway, Denmark, Netherlands, Czech Republic, Austria, Slovakia Low proximity: UK, France, Italy, Spain, USA

Cultural proximity

How similar are business decision-making style, formality, relationship-building processes in business context.

High cultural proximity to Latvia: Estonia, Lithuania, Finland, Poland Medium: Germany, Netherlands, Czech Republic, Scandinavian countries Low: Italy, Spain, France (more relationship-focused culture), USA (different sales dynamics)

Practical example: German B2B SaaS decision-making typically takes 60-120 days with a formal evaluation process. Italian — often faster but more based on personal relationships. Latvian founders typically adapt to the German style more easily than the Italian.

Linguistic proximity

What language is needed for effective outreach?

Only English works: Scandinavian countries, Netherlands Native language mandatory: Germany, France, Spain, Italy, Poland (largely) Native language strongly improves results: Czech Republic, Slovakia, Hungary

Practical statistic: our experience shows native German increases reply rate 2-2.5x compared to English in Germany. In Scandinavia — almost no difference, many even prefer English.

Legal proximity

EU member states vs outside EU. EU member states simplify tax questions (reverse charge VAT), uniform GDPR regulation, contract enforcement in EU courts.

Inside EU: Easiest EEA (Norway, Switzerland, Liechtenstein): Moderately easy UK: After Brexit — more bureaucracy USA, UAE, Canada: Separate tax registrations, different data protection requirements

Market size assessment

Second factor — how big is your addressable market in the specific country. Latvian SMEs often approach this too broadly — “Germany has 84 million people” isn’t useful information. Useful information is:

How many ICP-matching companies exist in this country?
What’s the total annual spend of this ICP-segment on your product category?
What percentage of that is realistic to capture over the next 24 months?

Approximate counts for a SaaS lead-generation tool:

Germany: 30,000+ B2B SaaS and agency companies → maybe 2,000 match your ICP → potential addressable market €5-20M/year
Estonia: 500+ B2B SaaS companies → maybe 50-80 match your ICP → potential addressable market €0.5-1M/year
Sweden: 8,000+ B2B SaaS companies → maybe 500 match your ICP → potential addressable market €1.5-5M/year

Germany in this sense is incomparably large, but choosing based on this would be a mistake — the competition factor changes the landscape.

Competition assessment

Third factor — how many other providers already compete for the same client segment in this market.

High-competition markets:

UK, USA — alongside local services, here are 50+ top global agencies
Germany — DACH-specific services move here after success in USA
Netherlands — globally oriented, fully competitive

Medium-competition markets:

France, Italy, Spain — local services dominate, global ones cut a share
Scandinavian countries — some local players, some with global presence

Low-competition markets (but also smaller):

Czech Republic, Slovakia, Poland — some local services, none dominant
Baltics — minimal local, some from Scandinavia and Poland

Strategic principle: if you compete mainly on price positioning (Latvian SaaS often do), going to a high-competition market isn’t recommended. You’ll lose the price war with bigger competitors. Go to a medium- or low-competition market where price positioning is less sensitive.

If you compete on niche or product-specific differentiation, high-competition markets can work — there are bigger ICP-matching lists there.

Concrete market profiles for Latvian SMEs

Based on dozens of Sales Pilot projects, these are the typical first-market profiles for Latvian SMEs in B2B category:

Germany — “Big, complex, valuable”

Plus: Largest B2B SaaS and industry market in the EU. High willingness to pay for quality tools. Stable buying cycle.

Minus: Native German needed. Long buying cycle (60-120 days). High competition. Formal communication style that differs from Latvia.

Fit for: B2B SaaS with truly differentiated product, fintech, deep tech, manufacturing services

Scandinavia (Sweden, Finland, Denmark, Norway) — “Open, English-friendly”

Plus: English works in most B2B cases. Open to new products. High digitalization. Tech-friendly market.

Minus: Relatively smaller per-country market (comparable to Latvia, scaled up slightly). High competition in Stockholm and Helsinki tech hubs.

Fit for: B2B SaaS, AI tools, mobile and cloud platforms, climate tech

Netherlands — “Pragmatic, B2B-ready”

Plus: English works in almost all B2B. Pragmatic, fast decision-making. EU hub for logistics and financial services. High average SaaS purchase ticket.

Minus: High competition. Many global players already present.

Fit for: Logistics tech, B2B SaaS with international focus, e-commerce support tools

Poland — “Closest large market”

Plus: Largest Central European market, geographically close, partially similar business culture. Growing B2B SaaS sector.

Minus: Polish language needed in most cases. More price-sensitive than DACH.

Fit for: Local and regional B2B platforms, mid-market SaaS, manufacturing services

Estonia and Lithuania — “Starter trampolines”

Plus: Very low proximity threshold, partially similar markets to Latvia, English works well in tech sector. Low competition in some niches.

Minus: Small market. Estonia and Lithuania each have roughly 30-50 ICP-matching companies for a specific SaaS niche.

Fit for: First “export” step as a learning project. Validation before going to larger markets.

Practical decision matrix

Your first market choice is essentially determined by two questions:

1. Do you already have or can quickly acquire native-language capability in the export market?

Yes → DACH, France, Poland, Italy available
No → Scandinavia, Netherlands, Baltics, UK are best choices

2. Does your product’s value justify a high B2B price point (€10K+ ARR or more)?

Yes → Germany, Scandinavia, Netherlands, UK are top candidates
No → Poland, Baltics, CZ/SK are top candidates

Crossing both answers, you usually end up with 2-3 real candidates. Choice is then determined by:

Your team’s language capabilities
Your existing network — do you already have 1-2 contacts in this market
Your competitors’ coverage in this market

Why Latvian SMEs choose wrong

Three common mistakes:

1. Choose “biggest” by population. Germany isn’t just “biggest” — it’s harder. Competition, language barriers and buying cycles compensate the absolute size. Many Latvian SMEs would do better spending the first €15K in Estonia and Finland rather than directly in Germany.

2. Choose by founder’s personal connections. “I once worked at a Dutch company” — better start than nothing, but not a substantiated market choice argument. Validate this intuition with a concrete Market Testing.

3. Try to cover 3 markets in parallel. Leaves shortcomings everywhere. Focus on one in the first 6 months is better strategy than 30% of each of three.

Next step

If you already know which market you want to test, our Market Testing service is exactly for this — 22-day fixed-scope market test in one country with two ICP segments in parallel and a go/no-go report.

If you haven’t decided on a market yet and want consultation on where to start — contact us via /en/contact/ and we’ll work through this framework for your specific situation.

First market choice isn’t one-time — it’s iterative. Test one market, learn, choose the next based on lessons. That’s the real export-opening dynamic, not the romanticized version.