About three years ago, the South Korean government has began to take a keen interest in expanding and supporting the startup ecosystem in the country. According to sources within the government, they have looked towards Israel as a tech model that they are trying to replicate, from government backed investments to support in building the startup ecosystem.
Here are some general things to know about the Korean startup ecosystem:
The Korean culture is very comfortable with new ideas and initiatives. The people are quick to try new things, though they can just as quickly drop it and move on to the next fad. This makes new service tools and gaming very popular in the country.
Most Koreans are ‘Korean’ centric, often feeling uncomfortable interacting with outsiders, unless they have been foreign educated. However, it’s interesting to note that many Koreans idolize the US, seeing America as an impressive achievement they hope to realize either by attending a US university or getting a job or funding in the US. When it comes to startups, success to a founder often means overseas expansion to the US (as opposed to expansion across Asia.) This can be seen in many aspects of the culture including ‘Silicon Valley’ themed startup parties, where, according to attendees, they eat pizza, drink coke, and stand around and mingle.
The government of S. Korea has implemented many strategies to help support the expansion of the startup tech ecosystem in the country.
One of the most active initiatives is Kotra, a government program that helps promote startups and collaborate with partners to help bring private investments into the company. Kotra also organizes showcases of Korean startups and attends conferences around the world. They currently operate in 86 countries, 126 branches worldwide.
The government also supports the growth of startup through funding. According to representatives of Kotra, many startups in Korea can expect some seed money from the government. In addition, the government matches investment funds- for every $1 a startup receives the government kicks in $9. Government representatives estimate that currently, Korean startups are funded about 50/50 private/government money.
There are many potential employees for startups in the country. While most founders are foreign educated, or have spent time working outside of Korea, talent can be found within the country in the necessary areas, both for technical skills and business.
While top Korean graduates used to look towards the large corporations for stable jobs (think, Samsung), startup culture is now popular and exciting enough that fresh graduates and top talent are choosing to join startup companies, or found their own. Since the government is supporting the growth of so many new startups, this ecosystem has opened many new jobs which leads to an increased level of cultural comfort in working with a startup company.
Korea believes it has the necessary education in business and entrepreneurship (in addition to technical skills) to continue to provide a well-educated workforce, allowing the startup ecosystem to continues to grow.
Business Trends to note:
Since it’s hard for Korea to compete with China on hardware, their focus mostly lies in software, with many developing companies related to the service industry (deliveries, car rides, e-commerce, etc.) and gaming.
Many early adopters are the young generation which, according to government sources, are being squeezed out of the middle class. This means that easy and affordable services are mandatory for companies looking to scale and gain strong market share. This fact is reflected in the biggest exit to date, Coupang, which is a deals site.
Since Koreans idolize the US, there is a huge interest and excitement about foreign investors. Venture groups like Sparklabs, 500 startups and Google campuses are quite popular in the country. Because of language and cultural nuances, there still requires local partners, but foreigners are welcomed by both the government and the startup community.