The Korean Startup Ecosystem
In this article, we introduce an overview of the Korean startup scene. Today’s ecosystem features stakeholders from a variety of sectors and industries. As the investments in tech entrepreneurship grow, both opportunities and challenges emerge.
Startup Ecosystem
The biological metaphor of an ecosystem has long been used to explain the assumption that market actors do not merely compete, but rather seek to gain benefits from sharing resources, networks and ideas. By bringing together companies, business incubators and industrial clusters aim to induce synergies that enhance innovation. Startup incubators take it a step further by accommodating the needs of tech entrepreneurs in particular. Some incubators operate as stand-alone ecosystems, but often times it takes a city, region or even a country to effectively build an innovative ecosystem.
Public-Private Sector Collaboration
South Korea ranks high in global comparisons of R&D investment, with a ratio to GDP of 4.55%. The public sector plays an active role in promoting startups, and operates a number of programs across central and local governments. In common for many of the public programs, is a close collaboration with the private sector. TIPS (Accelerator Investment-Driven Tech Incubator Program for Startup) is a long-running initiative that provides funding for startups to enter incubators and accelerators run by private investors, such as KB Investment and Hyundai Motor Group. Another major collaboration between business and the government is the Creative Economy and Innovation Centers (CCEI), launched under the former Park Geun-hye government. In total 19 centers are located across the country, each of which operates with the joint support of regional governments and one of the Korean conglomerates, including Samsung, LG and SK.
Regional Regulatory Sandboxes
While sectoral and industrial integration plays an important role in fostering startups, sustaining and scaling new ventures requires further measures. Within his first year in office, President Moon Jae-in launched a national strategy for the Fourth Industrial Revolution. A central feature of the policy plan is to promote startups. In particular, the government has been working towards the enactment of regulatory sandboxes. Thus far, seven different cities and regions have been designated as regulatory sandboxes in respective industries, ranging from healthcare to security. For example, the City of Busan is becoming a hub for experiments in blockchain regulation and smart city innovation.
Seoul and Pangyo
Despite efforts towards regional dispersion of innovation and entrepreneurship, a significant proportion of startup activities remain within Seoul, and the neighboring province Gyeonggi. Within the province, Pangyo Techno Valley is home to a growing cluster of new and established tech companies. According to Seoul Startup Hub, there were 154 accelerators in South Korea as of March 2019, among which one hundred were located in Pangyo and Seoul. Additionally, many of the highest ranking universities are located in the capital, making it a source of talent and a hotbed for research-innovation programs. Seoul Metropolitan Government provides future entrepreneurs with access to a large number of local support services, with 24 incubators, six maker spaces, and ten startup information centers.
How Does Korea Compare?
A good infrastructure builds the foundation of a vibrant ecosystem. Still, for an ecosystem to bring about synergies, there needs to be sufficient communication in between the actors and institutions involved. South Korea is emerging as a contender in the global competition for innovation, but has yet to fully realize the potential of local startups, as it ranks 24 out of 137 countries in the Global Entrepreneurship Index. To this end, grassroots efforts and community building can play an important role.
