Supported by President Park’s effort to foster a Korean creative economy, a deluge of cash flooded into the Korean startup ecosystem in 2013. Including many conferences hosted by the government-affiliated organizations, countless programs to assist startups were organized both domestically and abroad. Of the many themes these programs publicized repeatedly, one keyword that stood out was “Going Global”. The concept of “global” is trendy and attractive yet so vague and such a cliché. Well over 100 startups travelled abroad from Korea to pitch in front of investors and to showcase their products/services in Singapore, Israel, New York, London, Berlin, Boston and Silicon Valley. The global tech press remained relatively quiet through the flurry of Korean startup activity, until last week when Korbit, a new BitCoin Exchange based in Seoul, announced its closing of $400k in venture capital investment.
This marks a significant milestone for Korean startup community as it is the first case to secure early stage funding from such a high profile Silicon Valley investor line-up. Investors in Korbit include Tim Draper, AngelList co-founder Naval Ravikant, SV Angel’s David Lee and SecondMarket CEO Barry Silbert, who created a Bitcoin Opportunity Fund. Also participating were Pietro Dova of XG Ventures, Michael Yang, co-founder of mySimon, and Jay Eum, co-founder of Translink Capital. So what secret sauce does Korbit have that helped CEO Tony Lyu attract the high-profile investor line-up, that the dozens of other Korean teams don’t?
To answer this question I caught up with Tony a few days ago to get the inside scoop and hopefully enlighten the rest of the Korean startup ecosystem, with the aim of achieving many more success stories in 2014.Many worked hard behind-the-scene of beGLOBAL, where Korbit first met Draper
Korbit was first introduce to Tim Draper at a Korean startup conference in Silicon Valley beGLOBAL last September, where Draper served as a judge. This conference differentiates itself from other events last year for one reason: it was organized by beSUCCESS, a startup solely dedicated to connecting Asian startups with Silicon Valley. The entire team, including supporters from the States, dedicated their time and resources to convene the top-notch investors in Silicon Valley, including three generations of the legendary Draper family (Bill, Tim, Adam), Jay Eum (Translink Capital), Jeff Clavier (SoftTech VC), Eric Kim (Maverick Capital), Aydin Senkut (Felicis VC), David Lee (SV Angel), and more. Convening this line-up of Silicon Valley VC celebrities as a startup doesn’t happen overnight; it requires time, money, and above all dedication. Yes, partial funding for the event, the first in Silicon Valley organized by an independent Korean organization, came from ‘Ministry of Science ICT & Future Planning’ but that’s not what made beGLOBAL a successful showcase with very clear, tangible outcomes.
The organizers, beSUCCESS favored “quality over quantity” in their selection of teams that were to showcase at beGLOBAL. You’d only want to show the best-of-the-best to these top-tier investors, and beSUCCESS was right; they only brought 10 Korean startup to Silicon Valley—not 50. Teams went through a rigorous selection process that is also used for their Seoul showcase, beLAUNCH, and additionally spent several weeks preparing the selected teams for their showcase, prior to the event.
Reference is important in doing any kind of business, and the startup world isn’t any different. Just to correct the misleading piece of information in TechCrunch’s recent article, such reference was built up by many dreamers dedicated to making a better startup ecosystem in Korea and not by the government.
Startups are pioneers in the market, and Korbit is an Evangelist of Bitcoin in Korea
The general public isn’t always comfortable with cutting-edge technology, and Bitcoin isn’t an exception. In Korea 99% haven’t even heard of Bitcoin, and even the 1% of early-adopters aren’t completely sold on the idea. Then what made Draper and others commit their cash to Korbit instead of a different startup, in another more certain market? Korbit’s Co-founder and CEO, Tony Lyu, said the investors were convinced that Korean market will adapt to this new technology faster than other markets since digital payments on online games and social network have been extensively used historically.
However, I would almost argue that the investors have seen the co-founders’ conviction in Bitcoin as a significant technological innovation and their missionary investment in Korean community to educate the public to its benefits. Louis Kim, Co-founder and Director of Korbit, published Next Money Bitcoin last October, the first book to be written about Bitcoin in Korea; with less than 3 books having been published before Louis’s book on Amazon. Tony also said that he gives lectures on Bitcoin 3 times a week on average; only nowadays people are coming to him asking for lectures whereas he used to seek opportunities to talk about Bitcoin before. I’ve personally asked Tony to share his insights for a group of friends, and he gladly took his time to do so. What particularly surprised me was that Tony’s attitude toward Bitcoin is utterly unfaltering, in a new and uncertain market. This is demonstrated in his calm confidence on the day of the lecture, when the Korean government announced it ‘doesn’t recognize Bitcoin as a currency’, and equally on the day of my interview with him, the day after a breakthrough fundraising round from Silicon Valley.
To conclude, Korbit had two things that others didn’t: the right platform to pitch its product to the right investors and the co-founders’ almost missionary investment of time and energy in spreading knowledge and understanding of the industry that they are pioneering in Korea. At a time when VC money is abundant, incubators are popping up everywhere, and miscellaneous programs to support “startups going global” abound with often obscure objectives and suspect organization, 2014 will be a year either to pursue more and greater tangible outcomes through careful planning and support for true winners—or to seriously re-examine the abundant use of tax money for a wide and deep pool of startup mediocrity.
Written by Heeseung Lee (2014)