Twenty years ago, South Korea pulled out of the Asian Financial Crisis in only three years—and its economy has been thriving ever since.
With that same drive, South Korea has begun to position itself as the Asian startup hub, with the express intention of not only boosting the economy, but of sparking the interest of global venture capitalists.
And to back up their claim and prove their chops, they’ve made a massive investment in a project its Ministry of Science, ICT and Future Planning hopes will create a “South Korean Silicon Valley.”
High global growth potential
As part of the drive to create the Korean Silicon Valley, the Korean Ministry of Science, ICT and Future Planning established the Born2Global center to nurture early-stage startups with exceptional ideas or products and connect them to venture capital companies.
“We strive to introduce startups with low recognition but high global growth potential to the world,” said Chief Executive Director Jong Kap Kim.
To that end, Born2Global provides support in a variety of ways, including law and patent counseling, accounting, mentoring, marketing support, and global expansion, as well as conventional R&D support, plus below-market rent and opportunities to interface with other startups to foster a community of innovation—what President Park Geun-hye calls the “creative economy.”
Born2Global has been particularly focused on attracting global VCs by nurturing best-in-show companies with support from Korean VCs, angel investors, and accelerators.
Programs like the overseas Demo Days leverage the extensive network of Born2Global, and let startups lay the foundation for global growth by actively building strategic world-wide alliances in the cities they visit.
And, Jong Kap Kim notes, “If global investors settle at the Pangyo Global Startup Campus in Korea, they have a pass to the government-guaranteed startups all in one place.”
Small startups supported by the creative economy are already showing big results.
ASD Korea, which enables enterprises and service providers to extend their own ecosystem with their “Cloud for Business” service, was established in 2013. After obtaining an original investment of 1.1 billion (KRW), ASD Korea posted $1.6 billion (KRW) in sales in 2014.
Born2Global provided law, accounting, and marketing services, as well as secured the company a spot in the B2G Global Connect Overseas Demo Day in Silicon Valley and New York, helping to draw the funding the company needed to show profits within a year.
SmartStudy, another startup, has attracted a total of $10.8 million US dollars in global venture capital investment from NXC, IBK Capital, and KDB Capital.
With law, accounting, and marketing support, SmartStudy launched a series of 170 apps that have accumulated over 85 million global downloads and 8.8 million monthly active users. Their flagship app, PINKFONG Best Kids Songs and Stories, has been the top-grossing education app in 98 countries, and their YouTube channel brings in about 1.5 million daily views.
Local support, global reach
Born2Global reports that Korea’s top 60 startups are located in the Pangyo Startup Campus. Spaces are open to any individual or company wanting to start a business.
“It’s a win-win situation for all involved, including the large companies operating in the centers,” says Jong Kap Kim. Big firms working at the centers link startups to their large, pre-established networks. In return, the large companies benefit by collaborating with startups and enhancing their supply chain by outsourcing some of their business to smaller firms.
Of particular interest to global venture capitalists is the ease with which the rapidly-growing number of startups can expand overseas through networks set up with foreign accelerators and Korea Innovation Centers branches abroad.
In the end, that’s the most profound promise of the Korean Silicon Valley to the world: offering global venture capitalists the opportunity to sit down to a banquet of investment opportunities.