The South Korean entrepreneurial arena has gained much traction over the last few years, catching up with its neighbours in terms of creating a hotbed for innovation and advancements owing to several reasons, including:
Favourable Infrastructure: Setting the Stage for Startups
Often an unsung hero in the entrepreneurial sphere, South Korea boasts superlative infrastructure – spearheaded by a forward-thinking government – that creates a fertile environment for businesses.
One of the major pillars of this infrastructure is the country’s Internet speeds, which rank top in the world as of the end of 2016, helping to propel the nation forward digitally. The government provides assistance to its citizens to connect to these high-speed Internet connections through subsidies for the low-income and traditionally unconnected population, and in turn, this growing proliferation of users creates a large addressable market for Internet-based technologies and businesses.
The country is also equipped with an efficient, highly competitive and successful education system. Its leading technology institutions provide an unrivalled pool of talent to the strengthening industry.
When one thinks of startup hubs in Asia, cities such as Singapore often come to mind, known for its inviting business environment. That said, the last five years have seen a rising prominence of the Korean startup landscape.
The country’s ascent as a thriving startup hub is largely due to increased governmental support. This was evident from the get-go for the new presidential elect Moon Jae-In in 2017, with an announcement for the setting aside of USD 2.2 billion to be channelled in support of small and medium-sized enterprises.
Alongside the unprecedented amount of funding being allotted to the startup industry, the government has also created tax exemptions for young entrepreneurs. The injection of funds into the venture capital industry has also seen 48 venture capital firms investing in startups helmed by young entrepreneurs, fourth industrial revolution-related enterprises as well as in entrepreneurs who are attempting to launch a second business after failing in a previous one.
A Stellar Track Record
Aside from all the governmental assistance at hand to bolster the industry, South Korea has an added advantage of being home to global giants of the likes of Samsung, LG and Hyundai – to name a few. What this translates to is an extremely supportive and fertile environment for entrepreneurs to both emulate as well as gain assistance from the abovementioned giants.
Samsung’s C-Lab (Creative Lab) programme, for example, provides startups with training and preparation on key aspects of running a business with the help of experts. The programme also engages these businesses in various talk sessions with former colleagues to add mentorship in their growth journey.
Hyundai is also getting in on the action, with their very own startup competition. The automobile giant assesses startups based on their value proposition, innovation, competitive advantage, market potential and business model, providing them with exposure though a chance to be televised if they reach the finals. The company has innovation centres of its own in Israel and in Silicon Valley in the United States, with plans already in place to set one up in Korea.
Focus on Southeast Asia to accelerate growth
President Moon has made clear the country’s focus on Southeast Asia with the introduction of their New Southern Policy, set up to to better connect South Korea through the bolstering of relationships across the ASEAN region. These plans were unveiled during his recent visit to Indonesia in early March.
The initiative, that will encourage reciprocal economic cooperation, will offer cross-border support for small and medium-sized companies, presumably allowing for acceleration for business and trade exchanges between South Korea and countries in this region.
The renewed push by the government for cross-border alliances will only further startup growth within the country, allowing for funding and assistance to come from regional players such as Singapore – that already have a thriving and an established entrepreneurial ecosystem in place.
South Korea has certainly begun to stamp its authority on the regional scene and has been constantly developing its startup and innovation ecosystem. While the country’s supportive education system and government policies will remain factors that support the startup ecosystem-building efforts of the country, how it connects its ecosystem regionally and globally while ensuring that its small and medium-sized businesses have legs outside of the country will determine the success of its ecosystem in the next decade. The government clearly realises the need for stronger collaboration, with its New Southern Policy just the start of many strategies to follow..