Artificial intelligence won’t just change the way large corporates do business. It could also help Europe’s small and medium sized services businesses expand internationally.
Globality, a Silicon Valley start-up, combines artificial intelligence and expert curation to help large corporates connect with qualified service SMES globally. The impact could be particularly strong in Europe, where 99.8% of companies are small and do limited business outside their home markets.
Today over 95% of services exports globally are handled by less than 1% of companies, namely large international companies who do a premium business in professional services.
Globality is aiming to change that. Its AI-powered marketplace replaces the request for proposal (RFP), a type of tender in which a company announces that funding is available for a particular project and invites bidders. “Not only is this an outdated analog process in a digital world it excludes SMES because smaller companies don’t have the capacity to play this game,” says Globality CEO and co-founder Joel Hyatt, a serial entrepreneur and trained lawyer who previously served on the faculty of Stanford University’s Graduate School of Business.
Artificial intelligence makes the procurement process far more efficient. It learns as it goes, acquiring deep understanding of what multinational customers needs are as well as the skill sets of local SMEs on the network, turning the AI into a skilled matchmaker, Hyatt says.
Globality, which launched in January, has opened an office in London has had a strong focus on Europe from the start. It has raised $27.5 million from backers that include former U.S. Vice-President Al Gore and Yahoo Financial Chief Ken Goldman.
Globality currently represents more than 375 consulting services SMES in 55 countries. Its network started by catering to service SMEs specialized in marketing, energy strategy, compliance, environmental issues and domestic legal issues. The company plans to add SMES in the management consulting, human resource services and accounting fields by year’s end. Globality matches these prequalified service SMES with multinationals in countries where they have a limited on-staff presence. For example, it helped a large Swedish manufacturer connect with a small public relations firm in S. Korea to help with a trade industry event.
SMES must be invited to join and can’t buy their way onto the marketplace. Industry veterans vet them in order to guarantee the quality of services offered to multinationals clients. The minimum contract size is $100,000. Multinational customers pay nothing to use the platform. With the exception of legal service firms, which fall under a different scheme, the SMEs pay a flat 15% commission fee on the value of contracts they obtain through Globality.
“We are doing this because we want to allow outstanding smaller companies to compete and become players in the global economy,” says Hyatt. The Small Business Act, a U.S. law that has been on the books since 1953, requires the U.S. government to help SMEs by buying their products and help them sell internationally. The law has aided American companies, which already benefit from a larger, more uniform market, to scale more quickly, giving them the ability to outgun their European rivals.
Europe did not pass its Small Business Act until 2008. It is not a law but rather a European Commission initiative, endorsed by the Council of the European Union, that provides 10 “guiding principles” to promote the growth of small- and medium-sized enterprises. Helping SMES expand internationally is one of its goals.
“We believe Globality can boost efforts to make globalization work for SMEs in Europe by helping turn them into “micronationals”, SMEs who do a significant amount of cross-border business,” says Hyatt.“The focus of public policy is on big business – I get it – but we should be focused on how we can help small businesses to seize the opportunities of the global economy. Ninety percent of the addressable market is somewhere else. We want to help SMEs get access to the larger global market.”