[Venture Abroad]Secret to success for start-ups is going globalStart-up is an almost tired buzzword on the Korean tech scene. Venerable tech giant Samsung Electronics has vowed to emulate the so-called start-up ethos as it desperately seeks to cultivate creativity and innovation.
But on the global list of over 170 “unicorns” - or start-ups valued at $1 billion or more - there are only three Korea-born companies: Coupang at 5 trillion won ($4.3 billion), Yello Mobile at 4 trillion won, and CJ Games at 1.8 trillion won.
It’s far-from-impressive when considering the sheer number of start-ups in Korea, encouraged by the Park Geun-hye administration’s “creative economy” initiative, which surpassed 30,000 last year. That is 15 times more than in 1998, when the government first compiled related data, and just before Korea’s tech community was traumatized by the bursting of dotcom bubble in the early 2000s.
Experts say the history of Korea’s fledging enterprises venturing abroad is just three years old. And a large portion of those companies have just realized the key to success is taking a step onto the global stage, not sticking with the domestic market.
“We may never have seen a Facebook born if Cyworld [the moribund social networking service that was launched in 2000 and became immensely popular among Koreans] was started with international users in mind,” said Yigal Erlich, chairman of Yozma Group, an Israeli venture capital firm, who advises Korean start-ups to go global.
“Three years is a short period of time for start-ups to produce a highly noticeable outcome,” said Lim Jung-wook, managing director of Startup Alliance, a non-profit organization that helps start-ups go global connecting them with people in the global start-up ecosystem. “That three Korean start-ups - Memebox, Sendbird and Seerslab - were inducted into Y Combinator and several companies have received positive reception in China and Taiwan is an upbeat signal.”
Y Combinator is the world’s most powerful seed start-up incubator, dubbed “a spawning ground for emerging tech giants.” Start-ups accepted into its biannual programs pitch to an audience of venture capitalists, angel investors and decision makers at large tech companies from around the world.
MemeBox, which sells curated beauty products over the Web and a mobile app, was the first Korean start-up to be accepted into its biannual program and has arguably become one of the most internationally successful Korean start-ups in the past few years.
After graduating from the Mountain View, California-based accelerator’s 2014 winter batch, a three-month program, the company has raised over $33 million at home and abroad and its value is estimated at around $100 million by investors.
SendBird, a solution for chat and messaging, was among the 15 fastest-growing Y Combinator’s winter 2016 start-ups that wrapped up in March, and Seerslab, developer of a mobile video editing app called lollicam, is currently participating in the summer batch.
“Korean start-ups are increasingly appreciated overseas in terms of their technologies and their founders’ confidence and language proficiency,” said Hanjoo John Lee, co-founder and general partner of SparkLabs, a Silicon Valley-style accelerator for early-stage start-ups. He added that Korean start-ups have evolved over the past years to focus on software, services and technologies rather than hardware, products and retail, their previous concentration.
Kim Jong-kap, chief executive director of the state-run K-ICT Born2Global Centre, says the “status of Korean start-ups overseas is getting better and better.”
“Korea’s start-up ecosystem is getting recognized in Europe and the center is getting a series of requests for partnership with Korean start-ups from European cities such as London, Paris and Stockholm,” he said.
Kim Kwang-hyon, executive director at D.CAMP, an early-stage incubator that supports start-ups, forecasts “global players” among Korean start-ups will bear “visible fruit” sometime next year and he believes their success will become a breakthrough for Korea’s generally stagnant business scene.
Start-up experts say that entrepreneurs aspiring to grow into the likes of Uber, Airbnb and Xiaomi - the most well-recognized unicorns - should realize that “understanding the market they are trying to enter” should be their foremost priority.
“Your potential will only open up with this mindset that allows you to appoint locally recruited elites as co-founders. This is taken for granted [on the global start-up scene] but is not true with many Korean companies,” said Lim of Startup Alliance.
“You should get away from the ‘copycat’ strategy and accurately assess the needs of the target market and be more strategic, practical and detailed,” advised Kim of K-ICT Born2Global Centre.
Today, the Korea JoongAng Daily launches a 10-part series profiling CEOs of Korean start-ups that are aiming at markets outside Korea. Their fields range from artificial intelligence to healthcare, education, virtual reality, photography, the Internet of Things, fashion and virtual reality.
All of them have already raised at least billions of won in funding. Some are already turning profits, whereas others are about to launch sales of their goods or services.
BY SPECIAL REPORTING TEAM [email@example.com]
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