In my last post, I explained the current state of Korea’s tech and startup ecosystem. This post takes a deeper dive into why Korea is such an ideal environment for startups to grow.
Wired and Ready to Go
Korea has rapidly advanced to become the world’s most connected country. It leads the world in three critical measures of connectivity: broadband, smartphone, and credit card market penetration. On average, Koreans hold five credit cards compared to just two for American adults.
Together, these factors have enabled Korea’s mobile commerce industry to expand rapidly. What’s that look like in practice? Mobile commerce in the U.S. makes up about 13% of total online sales, whereas in Korea it’s 28% and has grown at 156% year-on-year, since 2014. One can only expect the trend to continue, as the hunger for better services at an increasing rate provides the perfect market opportunity for startups.
One example of Korea’s e-commerce prowess is mobile food delivery platform Baedal Minjok. It delivers more meals per day (in total, not per capita) than any other food delivery app in the world.
One for All and All for One
Entrepreneurs tend to have a laissez faire attitude toward government, but in Korea, the government’s involvement is welcomed and recognized as highly effective at building the startup ecosystem.
In 2013, the Korean government announced its strategy to catapult Korea to the forefront of global economies. The growth model centers on innovation and entrepreneurship. Every year since, the government and private sector have contributed approximately USD $2 billion to startup diversity, expansion and success. No other country in the world has more government backing for startups per capita! In and around Seoul, there are more than 40 accelerators and creative spaces for startups, an abundance of venture capitalists, and established tech giants.
The New and Improved Unicorn Breeders
In Korea, a new billion-dollar unicorn appears at least once every year, disproving the idea that talent and success are extremely rare. Perhaps, the single largest contributor to the rise of Korea’s startup ecosystem is the ready supply of connected, bi-lingual and global-thinking engineers changing the cultural norm.
In 2009, Daniel Shin famously (in Korea, at least) quit his job near New York City, moved to Korea, and started a company called Ticket Monster. Now renamed TMON, that company’s billion-dollar success helped to inspire a generation of smart young Koreans and hyphenated Koreans to found or join startups, rather than going for the safe jobs at conglomerates that their parents’ generation preferred.
Ranked first globally in cognitive skills and educational attainment according to Pearson, Korean millennials are the most educated and globally minded generation to date. An astounding 69% of Koreans aged 25 to 34 years hold university degrees, the highest in the OECD and 27 points ahead of the average. Increased numbers of students studying abroad develops a global perspective that prepares them for global influence.
Location Location Location
While other countries continue to improve on infrastructure, government support and education, none can compare to Korea’s standards and be less than a two-hour flight from a billion people. Korea’s central, northeast Asia advantage makes it the perfect gateway to the rest of Asia, allowing swift access to markets such as China, Japan, Singapore and more.
For Korean startups, this means huge growth opportunities as global investors look to Asia for the next big thing. Y Combinator, for example, has now taken three Korean startups into its batches. The most recent, O2O house cleaning service Miso, used the opportunity to significantly expand its network and knowledge with foreign investors.
Support from organizations, like Born2Global, have helped nearly 2000 startups in their bids to go abroad.
Korea’s advantages in technology infrastructure, government support, education and location have turned it into a burgeoning startup hub in Northeast Asia. As it continues to develop, look for more success stories, more unicorns, and more interest from foreign startups and investors, looking to leverage the benefits Korea offers.