Korea slowly accepts more foreign start-ups but leaves plenty of room for improvement

K-campus

Published: 15 Feb. 2023, 15:41 Updated: 03 Mar. 2023, 18:25

Korea slowly accepts more foreign start-ups but leaves plenty of room for improvement

Participants of the ″D.Day X D.Camp All Star″ demo day cheer as winners of the event are announced on Nov. 24, at the Front1 building in central Seoul. [D.CAMP]

Jason Lee was 29 years old when he left his job at Google Korea and tried to establish his own start-up. However, because he couldn’t get a work visa without a company to sponsor him, he had to leave the country every few months to renew his tourist status.

“I was about to head back to the United States for good because renewing my visa every few months was such a hassle,” he said. “One time, I flew to Fukuoka and just returned an hour later so that I could just renew my tourist visa. But then I found out about the start-up visa and applied straight away.”

Lee, a Korean-American born in the United States in 1984, was the first person to be granted Korea’s first-ever start-up visa that allowed foreigners to establish and operate their own companies in the country, in 2014. With the visa, Lee successfully founded his wedding information company JJ Lee Company and went on to sell it in 2018.

As the rapid growth of the Korean start-up market opens new opportunities for ambitious minds, the government and private accelerators alike have been gearing up to attract foreign talent.

From new visas aimed at foreign businesspeople to networking programs organized by start-up accelerators, Korea is coming up with more ways to ensure a market robust with entrepreneurs of all nationalities.

Jason Lee, the first person to acquire the D-8-4 start-up visa in Korea [JASON LEE]

Knowing the right people

For a foreign CEO, the most important yet most difficult task is mingling with the right people to raise investment, find like-minded individuals to work with and promote their product in the market.

“The most difficult part for me was hiring the right people,” said Pankaj Agarwal, founder of education tech service provider TagHive.

Agarwal was 20 years old when he was chosen as the recipient of a graduate school scholarship program in 2004. He earned his master's at the Electrical and Computer Engineering department of Seoul National University.

He joined Samsung Electronics’ consumer electronics unit in 2006 and was chosen to participate in Samsung’s internal start-up support program for his idea to help teachers and students in underdeveloped countries access better education through technology. His start-up TagHive currently has nine employees in Korea and 26 in India.

“The thing with being a start-up is that you can’t pay people much but everyone has to be really capable because the company depends on a small number of people,” Agarwal said.

“At the same time, you’ve only just started so people don’t know about the company — and all that was added with me not being Korean. Thankfully, I had connections in Korea because of my days at the school and company and I was also able to use the benefits of knowing people in India.”

However, things don’t always go as smoothly as they did for Agarwal.

Marta Allina, founder of Seoul Startups, one of the biggest international startup communities in Korea with more than 3,000 members. [SEOUL STARTUPS]

Investors and governments prefer Korean companies to those that have been founded by foreign CEOs, and sometimes even exclude foreign companies from receiving the benefits of certain programs, according to Marta Allina, founder of Seoul Startups, one of the biggest international startup communities in Korea with more than 3,000 members.

“It’s often the case for foreign CEOs in Korea that they get looked over by investors or avoided by fellow start-up CEOs just because we’re not Korean,” she said. “The language barrier is high. You can get a lawyer or pay for someone to act as your language and culture guide, but it costs way more time and effort to get around without knowing the Korean language and culture.”

As a social entrepreneur from Poland who struggled to settle down in the local market, Allina has gathered people in similar situations to share their knowledge through Seoul Startups.

The English-based alliance holds regular meetings, networking events and mentorship programs for those entering the domestic scene for the first time and also runs a YouTube channel to share details on entrepreneurial life in Korea.

“Seoul is such a great place to live and do business,” she said. “We just hope that people who aren’t Korean also get to experience the same benefits and be given the same opportunities.”

The Banks Foundation for Young Entrepreneurs, also known as D.Camp, has been focusing on expanding its investment program to include foreigners starting their own businesses in Korea.

The non-profit start-up accelerator, funded by 19 banks, said it plans to inject as much as 300 million won ($237,000) in start-ups operated by foreigners in the form of equity investment and provide additional perks like free workspaces in Seoul for at least six months and professional mentoring.

A global meet-up day titled “D.Camp Global: Meet Korea @Seoul” will be held on Feb. 23 with 100 Korean start-up CEOs who are either seeking to go global and foreign CEOs aiming to establish themselves in Korea.

The ″D.Day X D.Camp All Star″ demo day held by D.Camp start-up accelerator last November [D.CAMP]

Participants of the ″D.Day X D.Camp All Star″ demo day pose for photos after the biggest get-together event organized by the accelerator last November. [D.CAMP]

Locking the talent in

The government has been aiming to make it easier for CEO-hopefuls to stay in the country long enough to bring their ideas to life. The D-8-4, the start-up visa that allows non-Koreans to stay in the country for a year and run their business, is one example.

The D-8-4 visa allows the recipient a year of stay in Korea, banking and internet services along with employment insurance for the staffers of the start-up. A D-8-2 ‘venture’ visa also existed before the start-up visa, but required a foreigner to have their company scale up to a certain size and be recognized as a venture by the government, which could take up to five years.

D-8-1 and D-8-3 visas also allow foreigners to run a business in Korea, but they must either invest more than 100 million won of their own money into the company or co-establish it with a Korean citizen.

Ever since the Korean government established the D-8-4 visa in 2013, an increasing number of foreign entrepreneurs have been getting the permit to earn a living in the Korean market.

What began with just nine people being granted the visa in 2015 doubled to 19 in 2016, growing steadily to 111 people staying on the D-8-4 visa as of November 2022, according to the Ministry of Justice.

A foreigner seeking to apply for a D-8-4 visa must have a master’s degree and achieve over 80 points from the government’s Overall Assistance for Start-up Immigration System, or Oasis, out of the total 448.

International CEO-hopefuls taking part in the government's Overall Assistance for Start-up Immigration System, or Oasis, program [OASIS]

Oasis is an education and training program run by the Ministry of Justice that provides both the help foreigners need in establishing their own company in Korea and the points they need in order to qualify for the D-8-4 visa. Points can be earned for taking classes, completing consultation sessions, receiving investments or getting a patent.

Two-hundred-and-twenty-four people took the Oasis course in 2015. That number jumped almost fivefold to 1,001 in 2022.

Growth has been slow in recent years due to the coronavirus pandemic, but the Ministry of SMEs and Startups is working with the justice ministry to expand the stay the visa permits from a year to two years, and lower the academic requirements if an applicant has received recommendations from the government.

“Oasis is both the prerequisite for foreign entrepreneurs and also the education they need for the Korean market,” said a consultant at the Global Start-up Immigration Center. “Not all people come to Korea with full knowledge of the market, which is where Oasis comes in.”

The K-Startup Grand Challenge organized by the Ministry of SMEs and Startups is another project that helps non-Korean CEOs penetrate the Korean market. The government-run accelerator program gives start-ups less than seven years old and founded by a foreign CEO the chance to apply for the program, which provides 12 million won of living expenses, 12 million won of funding, a working space in the Pangyo Techno Valley neighborhood in Gyeonggi and a Korean intern.

Start-ups will be evaluated following the acceleration program and demo day, after which the top 10 start-ups will be awarded with prize money of up to 132 million won. Applications for this year will begin April and the program will begin November.

Cho Ju-hyeon, Vice Minister of SMEs and Startups, gives a congratulating remark at the ″2022 K-Startup Grand Challenge″ demo day held on Nov. 11 in central Seoul. [NEWS1]

Lowering barriers and opening up

Barriers must be lowered and Koreans and non-Koreans should be given the same opportunities when it comes to support programs, foreign entrepreneurs say.

Aside from projects that are particularly focused on non-Korean businesspeople, information about general support given out to start-ups is not well laid-out in English and sometimes not applicable for people without Korean nationality.

“Getting access to funding is especially hard,” said Johnson Penn, founder of EcoLinks, a company focused on establishing solar panels in Africa.

“There are so many opportunities written out in Korean, but there are many where foreigners couldn’t even apply. And the Seoul Global Startup Center in Yongsan [central Seoul] shut down last year, when it was the only place that was dedicated to providing regular networking and mentoring programs for foreigners like me.”

A get-together organized by Seoul Startups, one of the biggest international startup communities in Korea with more than 3,000 members. [SEOUL STARTUPS]

Johnson Penn, founder of founder of EcoLinks, a company focused on establishing solar panels in Africa [JOHNSON PENN]

The simplest tasks that could easily be done online or over the phone for a Korean can be an administrative nightmare for someone who doesn't speak the language.

A bank account, for instance, can be opened up on a smartphone app for Koreans but foreigners must visit the bank in person and prove their identity. Writing a contract for an office or signing up for papers to establish a company at the community office is a whole other level of difficulty.

But the biggest ordeals are faced when encountering psychological barriers from fellow start-up CEOs or potential investors, according to Ben Asaf, founder of artificial intelligence (AI) developer Clika.

“Especially because I’m an Israeli who doesn’t speak English well, it was so difficult getting people to understand what we do,” he said. “I can see people distancing themselves from me just because I’m not Korean, which really didn’t matter once I got to talk to them but it’s hard getting over the mental barrier at first.”

Allina, founder of Seoul Startups, urged the government to open up more opportunities for foreign entrepreneurs, especially through education programs.

“There are a lot of people who want to settle down in Korea, but they just don’t know how,” she said. “Foreigners don’t know how to use the Job Korea site or who to talk to. If more education programs are offered that will let foreigners get the actual tips they need on how to get through the early stages, then it will be much helpful to changing the community.”

BY YOON SO-YEON [yoon.soyeon@joongang.co.kr]