Korea, once referred to as the ‘Land of the Morning Calm,’ has emerged as one of the key startup hubs in Asia.
Having witnessed firsthand the changes in this once conservative and shy nation, I am amazed at the pace of change and the hunger with which local founders are embracing the challenge and opportunity presented by entrepreneurship.
Predictable and arduous corporate careers have begun to lose their appeal in a country still dominated by big names, such as Samsung, Hyundai, and LG. Now, however, there are strong signals that innovation will begin to shape the economic landscape in the near future.
A faltering initial foray into entrepreneurship around ten years ago, supported by the Korean government, spawned five successful companies: NHN, NC Soft, Ahn Labs, Daum, and Nexon.
But there has been renewed interest in entrepreneurship over the last three years, and this time there are signs Korea is ready. Korea boasts highly skilled developers and engineers, a large pool of business graduates with entrepreneurial flare, a powerful work ethic, and an increased appetite for the unknown. The stratospheric rewards generated by the likes of Twitter, WhatsApp, and Oculus U.S. have whetted many people’s appetites. Now Koreans want a piece of the action.
Along with the growing enthusiasm, there has also been a huge injection of finance from the Korean government, which has put great effort into legitimizing entrepreneurship as a national aim.
For these reasons the Korean startup ecosystem has been picking up speed over the last 12 months, and the seeds of change are now sprouting. Korean startups are now getting global recognition in the press, from international investors and by an increasingly global user-base, spurred on by a flurry of activity from both domestic and overseas organizations.
In a new trend that looks likely to accelerate, overseas VCs — from Japan, China, and the U.S. — are setting up shop in Korea. Burgeoning tech companies are also looking to get in on the action, supporting growth and capitalizing on a highly engaged domestic market.
And just in the last few weeks, two brand new startup accelerators have been founded in Seoul by Korean entrepreneurs who, following successful exits from their first ventures, are in a financial and experiential position to give back to the ecosystem. This is exciting, not just because it shows that the ecosystem is maturing and beginning to support itself, but because it demonstrates that Koreans can build companies that produce high valuations, successful exits.
We are on the verge of seeing the emergence of a virtuous circle of entrepreneurship in Korea, after a decade-long struggle.
The role of the government
The Korean government has recently pledged $3.2 billion in investment in startups and the ‘Creative Economy’ over the next three years.
This funding is being disbursed as direct grants/investments, the creation of innovation centers connected with national universities, and also through agreements with many of the leading venture capitalists and accelerators in Korea. Currently ten private organizations have an agreement for 1:5 matching funding from the government, meaning that by the end of this year 50 Korean startups will have received $600k in funding under the program.
While outsiders often comment that the government should stay out of entrepreneurship, something I also fervently believed, one has to understand more of the context of their involvement. In Korea there has been a long and successful relationship between industry and government. Its fruits can be seen in the success of some of Korea’s biggest corporations and the enormous success that is the Korean economy in the last four decades.
With a national shift from industry to innovation, results are already visible. Public opinion has shifted in towards supporting entrepreneurship. Korea is effectively branding itself as a country that fosters innovation.
In a promising trend that demonstrates validation of the strengthening status of Korean startups, foreign interest in Korean startups is also growing, with an influx of overseas investors setting up shop in Seoul.
Additionally, with Korea’s standing as one of the most technologically advanced nations (boasting the world’s fastest mobile internet among other accolades) a number of regional Asia offices have been established in Seoul by small, medium and large global technology companies, including Facebook, Google, SuperCell, Uber, HasOffers, AirBnB, and AppLift, among many others.
While we are still in the early stages of ecosystem building, there are determined signs that the miracle on the Han River, resulting in Korea’s economic boom over the last four decades, will translate to a similar startup revolution in Korea.
beLAUNCH, an annual startup event in Korea which I help organize, is now in its third year and has been tracking this growth in Korean entrepreneurship. The event will happen this year in Seoul, May 14-15. The event will bring together some of the world’s top entrepreneurs and investors and provide an open forum for discussion on a range of current technology trends. Early bird tickets for beLAUNCH are now on sale through the event website.
CoinPlug is a Korean Bitcoin startup that is seeing rapid growth. The company has raised its second round of funding from Silicon Valley venture capitalists in less than six months. The company operates a bitcoin exchange, but have also now released their first bitcoin ATM in Korea’s biggest shopping mall, COEX, and plan to expand into additional payment areas in the coming months. Another Korean Bitcoin exchange, Korbit [http://betech.asia/2014/01/27/korean-startup-korbits-secret-sauce-in-raising-400k-from-silicon-valley-dream-team-of-investors/], also recently raised funds from Silicon Valley to strengthen their platform.
Coupang was founded in 2011 by Bom Kim, a Harvard MBA dropout. While the company initially focused on daily deals, they now have a burgeoning e-commerce platform and are seen as one of the stars of the Korean startup ecosystem. It is expected that the company will seek to IPO in the coming year. A worrying fact for Korean investors is that they missed out on this opportunity on their doorstep, with all of Coupang’s venture financing coming from the US.
Kakao Talk: Founded in 2011, Kakao Talk is now one of Asia’s most prominent ‘social platforms’. The company enjoys 95% penetration on Korean smartphones and has over 130M global users. The messaging platform was monetized to great effect with the release of its gaming platform in July 2012 and now boasts a range of social features including ‘Kakao Story’ a popular social feature similar to Facebook.
Memebox and Flitto graduated from Y Combinator and Techstars (respectively) in the last 12 months and have raised capital from overseas investors. Memebox is a beauty curation service, similar to BirchBox; Flitto is a translation platform that has been getting a great deal of attention from overseas press and investors and now translates 90 percent of all tweets that are translated.
Devsisters is a leading Korean game developer. While its first game was released ten years ago the company struggled to find success, until a year ago when its second title Cookie Run was released on the Kakao Games platform. Since release the game has been downloaded in Korea 20 million times and achieved four straight quarters of $20 million revenue. The game was released globally on LINE Games two months ago and has already been downloaded 20 million times.
Nathan Millard is global director of Korea-based startup blog beSuccess. He is based in Seoul and dedicates his time to helping Korean startups connect with overseas resources (VCs & Angel Investors, Accelerators, Media & PR Resources, Potential Partners). When he’s not blogging or tweeting about startups, you can find him coaching them on marketing and product issues or organizing events around the themes of tech, startups, and ‘Going Global’.
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