South Korean business is known globally for giant chaebol conglomerates like Samsung and Hyundai. But the country’s startup sector is increasingly emerging as a driver of innovation, with the hottest new arrivals attracting tens of millions of dollars in investment.
Korea Exposé spoke to Lim Jung-wook, managing director of Startup Alliance, an organization playing a key role in developing South Korea’s startup ecosystem by linking community members and investors.
Lim, a former CEO of Lycos Inc, has been cutting new paths for South Korean startups based on his experiences in South Korea, Silicon Valley, and Boston, before joining the alliance in 2013. Also well-known for his Twitter handle, @estima7, he is at the forefront of the startup community in South Korea both online and offline.
The following interview has been edited for length and clarity.
KÉ: How did you join Startup Alliance?
Lim Jung-wook: The alliance was started by Naver and the Ministry of Science, ICT, and Future Planning in July 2013. They felt the need to create an organization to help startups and create a positive startup ecosystem in South Korea. I was working in Silicon Valley when Naver reached out and asked me to become managing director. I came to South Korea in late 2013 and Startup Alliance was working fully by 2014.
What is Startup Alliance’s main objective?
We started out with a mission to invigorate the startup ecosystem in South Korea and help local startups expand overseas. Basically, we think the following things are needed for startups to succeed: improved public perception, more talent recruitment, better understanding on the part of government and media, a healthy and natural startup ecosystem, parallel growth of a venture capital investment ecosystem, and global awareness of the South Korean startup world.
To make these things happen, we talk about startups to the media and the government, and try to connect different members of the ecosystem by hosting conferences, weekly networking events, bootcamps and press days to help promotion.
In particular, we try to connect VCs with entrepreneurs and help startups expand abroad. And we constantly research the South Korean startup ecosystem and publish reports for our community to use. Naver provides all our operating expenses.
How has the South Korean startup ecosystem improved?
Mainly due to increased investment. Venture investment in startups has increased by 1 trillion won (about $937 million) since 2013, rising from 1.38 trillion to 2.38 trillion won ($1.3 to 2.2 billion) in just five years. The changes have been striking here in Teheran-ro, the street where Startup Alliance is located. Many startup hubs have appeared here, as well as in other areas around Seoul.
How are startups different from small and medium-sized enterprises?
I don’t think it’s necessary to define either term exactly. But startups are basically companies experiencing hyper-growth, especially in the IT and bio industries. Anyone who owns their own business is an entrepreneur, but what differentiates a startup is that it utilizes a unique technology or idea to achieve this level of growth. These companies naturally want to accelerate their growth through venture capital. They create many jobs and increase sales.
What role do startups play in the South Korean economy?
Startups can stimulate the economy and create jobs in ways that big businesses can’t. Big companies can’t expand their labor forces so much, because their focus is on growing their existing businesses instead of starting new ones. In order to do that, they have to cut their labor forces and rely increasingly on automation and artificial intelligence.
But at the same time there have to be new jobs that meet the world’s changing demands. A good example of this is the gaming industry here in South Korea. Back when there weren’t any gaming companies, positions like game designer, game storyteller, or game programmer didn’t exist. It was only as these companies began growing and competing against each other that thousands of people started doing these jobs.
Startups can help create occupational clusters and dynamic industries, because they’re responding to the changing demands of our economy. That’s why it’s important to have people challenging new things and creating new jobs as they build new companies. It challenges the companies and motivates them to do better.
A recent report published by Startup Alliance found that most South Koreans only seem to know about big names on the startup scene, such as Kakao and Baemin. Do you think that’s helpful, or shows a lack of attention to smaller startups?
I think it’s important that pioneering companies like these come to people’s minds when they think of startups. Having role models like these can help startups aspire to become like them. It can also encourage talented individuals to challenge themselves and consider joining a rapidly growing startup, instead of choosing to live a boring life at a big company. Compared to the United States or China, where they have role models like Mark Zuckerberg and Jack Ma, I think we lack the figures to drive this kind of inspiration.
What are some recent success stories? How do you define success for a startup?
The most obvious indicator of success for a startup would be its exit, whether it’s through an M&A or an IPO. I can’t think of a single one that started out and had an IPO over the four years that I’ve been at Startup Alliance: It’s rare to see a company grow that fast in South Korea, although it’s pretty common in other countries – such as Snapchat in the U.S. But [navigation app] Kimgisa was acquired by Kakao for 62.6 billion won (about $58.6 million). And more recently, Nexon purchased a 65% stake in Korbit for 91.3 billion won (about $85.5 million). Besides that, a few other businesses have been acquired for a couple billion won. The most famous examples would be SoCar, Zigbang, Baemin, Yogiyo, and Toss.
Which foreign markets are appealing for South Korean startups these days?
It’s become more difficult for startups to enter the Chinese market, especially since [the] THAAD [missile dispute]. Southeast Asia, on the other hand, has rapidly growing economies and a high population. Indonesia and Vietnam are particularly appealing for South Korean startups.
What are some startup trends that we can look forward to?
The current startup trend is definitely blockchain. There’s a lot of potential because many blockchain services can be incorporated into existing technologies such as artificial intelligence to create new business ideas.
Cover image: Lim Jung-wook. (Source: Courtesy of Startup Alliance)