Report tracks onset of a sea change for start-ups

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Report tracks onset of a sea change for start-ups

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The Park Geun-hye administration’s creative economy initiative has started to pay off, according to a government report Wednesday showing the growth of start-ups.

A report by the Ministry of Strategy and Finance said both the number of start-ups and the amount invested in those start-ups are on the rise, an indication that a favorable environment for innovative start-ups is taking shape.

As of Jan. 13, the total number of start-ups in Korea exceeded 30,000, a significant improvement from about 24,000 in 2010.

The number of clubs made by university students to share ideas and create start-ups also jumped by about 60 percent, showing that young people are taking the initiative to launch their own businesses rather than relying on examinations to enter large corporations or government agencies.

The aggregate investment in start-ups stood at 1.64 trillion won ($1.5 billion) in 2014, up nearly 20 percent from a year earlier, the report said.

Funds created for investment in those start-ups also ballooned to nearly 2.54 trillion won in the same year, a 62 percent increase from 2013.

Owing to the expansion of deductions for taxable income, the number of angel investors also is on the rise, according to the Small and Medium Business Administration (SMBA). The figure shot up from 4,870 in 2013 to 7,049 last year.

“The amount of investment is increasing and more investors are showing interest in investing in promising start-ups these days,” said an analyst at Dongbu Securities. “The atmosphere is clearly different now.”

Investment in the cultural content and biotechnology sectors showed relatively remarkable growth, it said.

The SMBA released a compilation of cases of successful start-ups that have grown globally and made aggressive investments.

One such case was the smartphone app developer KeuKey, which allows users to correct spelling errors without hitting the backspace key.

“When I use smartphones for business, I found there are too many typos,” said the owner of the company. “I was mulling solutions to minimize errors and reduce wasted time, and the idea just popped into my head.”

The app developer received seed money from an angel investor and established the company. It received $300,000 from Santec, a Japanese IT firm, in 2014.

In its annual plan for 2015, the Ministry of Science, ICT and Future Planning announced the government would establish a start-up friendly ecosystem.

So-called Creative Economy Innovation Centers will be set up in as many as 17 cities in the first half of the year, where aspiring entrepreneurs can network with peers and launch start-ups. The government and conglomerates in each region will help the start-ups to receive one-stop services in areas ranging from design and export.

In Yeoksam-dong, southern Seoul, the government will create a so-called High-tech Start-up Campus on 10,000 square meters (2.5 acres) of land in an area the government wants to develop as Seoul’s flagship Start-up Valley that would rival Silicon Valley. As many as 160 teams will be able to launch start-ups at the campus.

BY SONG SU-HYUN [ssh@joongang.co.kr]
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