Start-ups need to grow and move onInertia is not just applied when it comes to movement. The government budget also has inertia. Once funds are allocated, they are hard to cut, especially when there is reasonable cause.
But next year’s budget plan includes an item for “0 won,” and a complete reduction has been made on the seed money that goes toward other funds with additional private money. This money is put toward promising start-ups to make a profit. There is no real reason to cut down on the allocation for this “fund of funds,” and the move has been criticized as discouraging a venture boom.
However, I applaud the decision. Let’s look at the situation clearly. While the entire budget has been cut down, that doesn’t mean the fund has run out of money. The fund has been accumulating for the last 10 years and continues to grow: 300 billion won ($254.9 million) is added every year sans new investment, so it’s not in immediate jeopardy. The start-ups should be different from existing businesses. They should deviate from the political defense mechanism of blaming the government for “neglecting the underprivileged.”
In fact, investing in start-ups was never the government’s job. The job of the government is to level the playing field. The private sector must perform here. Only then can the start-up ecosystem become solid. Rather than criticizing the issues, we need to solve them and ask what start-ups can do for themselves.
What determines investment activity is not the number of start-up companies. The Chinese start-up industry is considered to be three to five years ahead of Korea, and they are funded by Silicon Valley. American money goes to China because there are so many companies worth investing in. The standard is whether they are promising in the global market. When few start-ups meet this standard, it is useless to have a big “fund of funds.”
The culture has changed. Now, start-ups need to build up their caliber. Investors who participated in the Startup Sustainability discussion at Google Korea in September discussed whether Korean start-ups were attractive enough to obtain foreign investment and whether they had core technology other than ideas. The investors thought that the depth and length of thinking was too shallow or short, and that companies with limited futures remained in business for too long.
The economy is in a slump. But if I were to make a bet, I go all-in on start-ups. I hope start-ups won’t ultimately be indebted to the government for growth, like conglomerates, or beg for the government’s help like small and midsize businesses. Start-ups should stand on their own and move on.
*The author is the deputy editor of the JoongAng Ilbo.
JoongAng Ilbo, Oct. 1, Page 30
by KIM YOUNG-HOON