Why Invest in Korean startups?

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South Korean startup ecosystem is emerging as one of the strongest in the Asian subcontinent. With support from the government, top accelerators and known venture capitalists, Korean startups are growing significantly. 

In 2020, Korean startup ecosystem saw growth and resilience despite the economic impact of COVID-19. The startups developed creative technological innovations that helped in running an ‘untact’ world more efficiently. Events like COMEUP 2020, NextRise, were held virtually and got positive attention from global investors.

According to the Ministry of SMEs and Startups in South Korea report from January 24th, 2019, the new Venture investment for startups was $ 3 billion in 2018, showing that the investments had increased significantly by 43.9% compared to its highest record of $ 2.8 billion in 2017. New Investments, which are directly related to the sectors of the 4th Industrial Revolution, skyrocketed by 71.7% recording $ 1.1 billion in 2018. The largest funds of $ 800 million in 2019 were contributed to form a $ 2 billion fund for new ventures.

12 Korean startups have achieved the unicorn status with a valuation of $ 1 billion as of 2020. Coupang, Woowa Brothers, Viva Republica, Bluehole, and L&P Cosmetics have a combined value of $23.58 billion. Korea hopes to achieve 20 unicorn startups by 2022 and with startups doing well, this goal is achievable. 

Korea’s thriving startup ecosystem has attracted many large and diverse investors including Silicon Valley ventures and domestic corporate funders like Samsung, Altos Ventures, SoftBank Ventures Korea, 500 Startups and Anchor Equity Partners. As per a data by Crunchbase over 150 angel, seed, incubator and VC and corporate venture investors have participated in funding rounds for Korea-based companies over the past five years.

According to a report in crunchbase news, US startups and investors are looking towards founding companies in South Korea. The K-Startup Grand Challenge, country’s accelerator program for global startups, saw 33% rise in applications in 2020.

So what makes South Korea an attractive destination for investing in startups? Koreatechdesk.com has listed some reasons for investing in Korean startups.

1) Solid Information & Communication Technology Infrastructure

South Korea is a well-connected country with 95% of the LTE coverage. The country has the fastest average internet connection and the greatest number of broadband services per capita in the world.

2) Quick Adaptation to New Technologies

Koreans are known for their adaption for new technologies. South Korea is not only ahead in developing innovative technology but also in obtaining newly released technology.

3) Gateway to Asia

South Korea’s strategic geographical location with strong ties with other Asian countries like China, Japan, Hong Kong, etc. makes it a favorable destination for business expansion in Asia.

4) Sustainable startup ecosystem

The Korean startup ecosystem is active and well managed attracting investments from domestic and international investors. Major global companies like Google and Facebook are supporting the startups in S. Korea through opening their innovation labs and campuses in the country.  With government support, startups get collaborations and accelerator programs with major domestic companies like Samsung, Hanwha, SK Telecom, etc.

5) Support from South Korean government

South Korea government has been developing many programs to support startup growth in the country for a decade.  The government has budgeted $ 1.03 billion in data related industry for 2019. Korean President Moon Jae In has asserted to actively assist startups to grow into ‘Scale-up’ stage. By making colossal exclusive funds, the government has plans to invest $ 12 billion for the next 4 years. Also, the government has set an objective of increasing the number of unicorn startups by 20 until 2020.

6) Korean Culture influence globally

The K-Pop influence across the globe has significantly attracted business growth. The symbolic K-Pop boy group, BTS has ranked first in Billboard 200. In April 2019, BTS’s new Album ‘Map of the soul: Persona’ was ranked first for three times in the iTunes top album chart of 86 countries. The ‘Korean Wave’ contents business has gained $ 2.43 billion abroad in 2018, recording the highest surplus and a 73% increase from the previous year.

7) Korean Market Potential

The domestic market size of S. Korea is about $ 736.21 billion. Korea has the 15th biggest internal market in the world. Despite the tiny population and the small domestic demand market size, the Korean domestic market has great purchasing power, acknowledged by many global firms for a long time. Besides, the Korean value of to ‘work hard, play hard’ means there is a thriving market for restaurants, bars, events, etc. The ever-growing economy can provide a strong base for a global startup.

8)  Topmost Safety & Security

South Korea is one of the safest counties in the world with a very low crime rate. The country has established a strong patent law system where startup ideas are protected by government programs.

Also Read, 

How Korean startup ecosystem succeed with virtual events amidst the COVID-19 crisis in 2020?

Top 5 K-Content Korean startups looking to hit the ‘unicorn’ status

Foreign startups that are getting success in South Korea

Woowa Brothers: The Korean food-delivery app business’ journey from being a unicorn to a dynamic global acquisition deal

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