KOTRA survey reveals that in 2022 over 50% of Korean startups launched business overseas before a domestic base

A survey by KOTRA (Korean Trade-Investment Promotion Agency) revealed that over half of the Korean startups had established bases overseas without a parent company in Korea. The ‘born global’ startups were established first in 29 countries in North America, Asia, and Europe.

KOTRA announced that this was the result of a survey on the current status of Korean startups in its jurisdiction targeting overseas KBCs worldwide in December 2022. The survey was conducted on 259 startups in 29 countries where KOTRA has overseas trade centers. According to the survey, 51.0% of startups that have entered overseas markets are ‘born global’ startups. The share of Born Global is increasing yearly from 37.0% in the 2020 survey, 46.0% in 2021, and 51.0% in this survey.

Of the 259 companies surveyed, 26 are startups established in 2022. Six companies were found to have successfully attracted foreign investment during the year. In addition, 26 out of 198 overseas startups counted in the same survey in 2021 were excluded from the tally because they either went out of business during the past year or succeeded in exiting (recalling), such as an initial public offering or merger and acquisition.

36.7% of the regions entered were North America. Nearly half of them, 48%, were in Silicon Valley. In addition, it was found that they have entered China (19.7%), Southeast Asia (15.4%), Europe (10.8%), and Japan (6.2%). As for overseas expansion, 48% cited ‘to target overseas markets with appropriate services.’ ‘Expansion of consumers and customer base’ was the next highest at 36%.

It was found that most of the startups going abroad are in their early stages. 71.4% were Series A or lower, and 35.5% of companies were in the double seed investment stage. 64% had at most ten employees. Annual sales of more than $1 million accounted for 25%, and sales of less than $10,000 accounted for 18%, showing a dumbbell-shaped distribution.

As for the entry method of overseas startups, single investment was the most common at 76.5%. Joint ventures with foreign companies accounted for 8.1%, followed by ‘flip,’ which converts overseas branches into headquarters, at 5.0%. Two-thirds of respondents said they needed to gain experience using government-supported projects. As for the time required to prepare for overseas expansion, 63.7% of companies answered that it was one to two years.

Jeon Chun-woo, head of KOTRA’s small and medium-sized business division, said, “Overseas expansion is no longer an option for startups to grow, but a necessity.”

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