Toward a ‘technopia’
We must create a corporate habitat and a culture of innovation where start-up enterprises can experiment, innovate and flourish without the fear of risk and failure in order to advance and strengthen our economy. This is the only way we can keep ahead of the Chinese and compete on equal footing with Japan on the industrial front. This is also the only way to keep decent jobs flowing for young people fresh out of school. The manufacturing sector makes money without generating new jobs. Venture start-ups that bring forth new ideas and turn them into commodities hold the key to durable growth in the new creative economy. To transform the start-up sector into a part of mainstream economy, the financial role will be essential. We need angel or venture capital investors who are willing to place bets on bright talent and minds, and share their risks and failures through stake investments.
In 1999, I visited Stanford University and Silicon Valley as a part of a government-sponsored road show to assure foreign investors that South Korea complies fully with its commitments to the international bailout and draws new investment. At the time, the financial sector had been the key driver behind growth and an industry pipeline for new intelligence for productivity. I accompanied a team of angel investors in their search for bright young minds in Silicon Valley.
A professor who had been teaching electronic engineering at Stanford for 30 years found a rewarding new path in his life through helping to commercialize innovative ideas. The chief executive of a midsize enterprise and an accountant joined him on his dream project to help young people start venture enterprises. They visited the technology hotbed in the San Francisco Bay area in search of new ideas and parking places for stake investment as well as to consult. The odds of success were less than 5 percent, but they could hit a jackpot if any one of their stake-invested companies went public or were merged with or acquired by larger companies.
The Silicon Valley fad caught up with Korea in the late 1990s. Many who were left out of work amid massive layoffs and corporate restructuring in the wake of the financial crisis were encouraged to start new businesses. Various government-sponsored venture funds and private capital companies joined the bandwagon. But most were ill-designed or had dubious motivations. Financial losses were heavy.
Start-up and venture companies can get financing from private venture capital companies or banks upon winning technology certification from the state-funded Korea Technology Finance Corporation. Recently, large companies joined in to offer funding to promising venture enterprises. The Korean Commission for Corporate Partnership has been arranging projects where large companies provide funding and technology to smaller enterprises for parts and material development to share the results. It is desirable that venture-capital investment be generated more from the private and corporate sector, with less dependence on government sponsorship. What is ideal is self-sufficient venture capital. Recently, an 11-member angel investor body won a business license from the Small and Medium Business Administration. The companies in which it invests can earn certification as venture enterprises and become eligible for government funding. The key to the success of the experiment is its ability to identify promising and feasible technology. Innovation and technology must be scrutinized for its applications and global competitiveness. These venture incubators must be able to grow in order to power the venture industry.
There are many qualified angel investor candidates in our country who are retired from their fields with good judgment and the resources to evaluate and guide innovation. If they contribute their capabilities to the angel capital industry or get jobs in banks as technology specialists, they could make a big difference in technology-based lending.
A human resource pool also is also essential to the sustainable growth in the venture industry. Universities must be able to produce young minds who have mastered both engineering and science, and economics and business management. Korean society must focus on new technology, biotech and renewable energy. This “technopia,” or technical utopia, should not be led by the government but the private sector. Angel investors in Silicon Valley prize devotion, passion and honesty as much as technical acumen in start-up founders and entrepreneurs. We hope venture start-up and technology capital companies will be able to lead the way to a technopia.
Translation by the Korea JoongAng Daily staff JoongAng Ilbo, Oct. 17, Page 35
*The author is the chairman of the National Commission for Corporate Partnership.
by Ahn Choong-yong
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