Seoul, with its rapidly growing startup ecosystem, is gaining precedence as one of the most promising entrepreneurial hubs in the world. Home to two of the most influential global tech leaders, Samsung and LG, the perception of Seoul has traditionally been of a corporate hub. This is now rapidly changing, as a new breed of tech startups rise and as the big boys begin to plateau.
South Korea is now rapidly moving towards an economic paradigm that supports innovation, rather than relying on manufacture. Supporting this rise are an increasing number of Seoul-based accelerators, many of whom aim to connect Korean entrepreneurs with overseas markets, like the USA and China. Here we take a look at the top accelerators in Seoul.
“We think about ourselves more as a tutoring-based approach, a one-to-one approach.”
Mark Tetto, The Ventures
The Ventures was founded early in 2014 by Changseong Ho and Jiwon Moon, who formerly created viki, a community-driven distribution platform for TV contents. The company was acquired last year by Japanese Rakuten for $200 million.
The Ventures works very closely with startups for n un-specified period of time. Startups receive office space, mentoring and professional support until they are ready to enter the market.
“We are less industry-focused, as each of our 11 portfolio companies focuses on a different industry. More than anything we look for the right team and the global focus.”
The special thing The Ventures can bring to its’ startups is their broad Silicon Valley networks. Additionally, the team have gained experience scaling their own product globally, and startups in their accelerator benefit from this. Startups interested in joining The Ventures need to have global potential and there must be ways in which they can actually benefit from the experiences which The Ventures team possess.
“Without a doubt, the global startup hub is Silicon Valley. for Europe and the Middle East it is Isreal. I really feel that in Asia that hub will become Korea.”
Having asked about the startup ecosystem in Korea, Mark Tetto highlighted the strong potential of Korea in becoming a leading startup hub in Asia. This is mostly due to the fact that the Korean government is showing more support through funding, building co-working spaces and providing other resources. Further, Korean investors are willing to take higher levels of risk, that typically result in higher returns, if successful. In addition, private foundations have been showing interest in supporting the startup ecosystem financially. According to Mark Tetto, all of those resources together are creating a “wave of momentum” that is quickly accelerating the growth of a startup ecosystem in Seoul.
“We are trying to come up with a realistic solution to help startups to relocate overseas. We are going to completely reimagine what people have done so far. We are going to determine what startups truly need.”
Steven Baek, FuturePlay
Founded in early 2014, FuturePlay focuses on funding early-stage tech startups. The company believes that in order to understand the market properly and have a solid basis, a startup company needs more than an acceleration period of 3-months. By combining incubator, accelerator, and venture capital, FuturePlay offers a paid, 12-month intensive program for talented entrepreneurs.
“In Korean society it is not easy for people to take a risk of doing a startup. It is ok until you fail. If you fail that’s where the problem comes in. We want to reduce the chances of failure, and offer support when it happens.”
In Korean society failure and mistakes are not socially accepted. For those who are talented and are hired by big corporations, they are less likely to pursue their own company for fear of disappointing family and friends through failures and the lack of stability that entrepreneurs have to face. Hence, FuturePlay reduces these unknowns by offering a yearly salary to those who join the program. Incidentally, it’s a similar figure to the one they used to be paid at their previous positions.
“We don’t call ourselves an accelerator. We are “Company building Company. And if we had to fall into any of those categories, we would be probably closest to an incubator.”
Within the yearl-long program FuturePlay organizes 24 classes in 12 weeks. It teaches entrepreneurs how to set up a team, how to overcome legal implications and protect intellectual property. Additionally, FuturePlay hires one specialist per field that guides founders throughout their efforts. These fields, include Marketing and PR, Engineering, Design, Product Development, Prototyping. Equity that entrepreneurs receive varies between 5% and 10% just for joining the program. On top of that, depending on the seed investment (between $15K and $25K), FuturePlay asks for an additional 10-15%.
Another promising initiative is Digital Entertainment Ventures (DEV). Launched in New York in 2012, DEV focuses mainly on media, entertainment and platform businesses, and only recently expanded to Korea. According to Kaine Kim the Co-CEO of DEV Korea, Seoul seemed to be the most suitable place for setting up a new office within the Asian market. This is in part due to the growing support of the Korean government, and the President’s “Creative Economy” initiative. These external resources though, are only expediting the existing growth of entrepreneurship in Korea.
“We are focusing on all-stage startups, however because Korea has very strong I.C.T. industries, we are actually making investments in those areas. Our main focus is platform businesses.”
Kaine Kim, DEV Korea
As well as providing capital, DEV runs its own acceleration program in Seoul. The unique characteristic of the program is that companies are accelerated at the same time in New York and Seoul. The program lasts between 3 and 4 months and is held twice a year. Enterprises are required to spend at least 1 month in America. After each program, DEV saves another 2 months for the host program, which is mainly devoted to evaluations, interviews and follow-ups. Up until now, DEV has made 11 investments and 8 of those companies took part in the acceleration program.
“Our focus differs from other Korean accelerators. We are willing to take some risks, as we are willing to invest in companies with no product.”
Whilst selecting participants, DEV is looking for two main characteristics. Firstly, ounders have to be able to adapt to other cultures very quickly, and the company’s technology has to be easily adapted abroad. Secondly, the companies need to be focused on global expansion. One of the examples is Mushroom, a platform that enables users to sell and buy art pieces at affordable prices. Even though Korea is not ready for art trading yet, in the USA there are a lot of independent artists, so the product is actually more suited to an international audience.
“We believe that as long as we continue to pursue our dreams and hobbies the outcome will always be positive.”
While many Korean corporations and investors still shy away from risky investments, American-based hedge funds or individuals want to diversify their portfolios and accept the greater rewards offered by increased risk. Over the next 2.5 years DEV has an ambitious plan of investing in at least 40 Korean startups, helping to greatly diversify DEV’s investment portfolio and explore new opportunities.
“The upcoming two years will be a defining point for the Korean startup ecosystem”
KJ Byeon, KStartup
Started as a pilot program in 2012, Kstartup officially launched in January 2013 and is now regarded as the biggest acceleration / incubation program in Korea. Supported by both Korean and American corporations (including Google), it focuses on early stage startups that aim to build global companies. Founders are in the program for three months, during which time they are given support in developing their ideas and are mentored by Silicon Valley-based entrepreneurs, marketers, designers, and investors.
“Our uniqueness lies in bringing mentors from Silicon Valley. 90% of our mentors are from Silicon Valley, 5% from New York and maybe 2 to 5% from Beijing”
To date, Kstartup has funded 40 hardware and software startups from 4 batches over the past 2 years. As a non-profit accelerator, they incubate only early-stage startups, meaning teams without existing services. Of the first 30 startups to be accelerated, 21 had no product when they entered the program. Of the remainder, nine companies had a prototype and of those, seven had already raised funding. The program provides $40K investment to all teams.
“The best scenario for our companies would be to raise funding or get acquired by a Silicon Valley company”
As the program focuses on early-stage companies, it takes more time to develop and build relationships abroad. One of the main success stories is Korbit, a well-known Korean bitcoin company. They joined the program in the 2nd batch, as a two-person team. Korbit’s success is rooted in the fact that it attracted Silicon Valley big name investors and raised funds from, among others, Tim Draper, Angel List’s Naval Ravikant and SV Angel’s David Lee. They are now regarded as the most important company developing the Bitcoin industry in Korea.
“What separates us from other accelerators in Korea is the fact that we focus on global startups. You might say that everyone wants to go global, but startups in Korea are very focused locally.”
Eugene Kim, SparkLabs
Founded in December 2012, SparkLabs provides a small investment, mentoring and workspace in exchange for an equity stake in a company. The equity investment is equal to $25K and the equity stake does not exceed 6%. The program lasts for three months and runs twice a year. SparkLabs has currently operated 3 batches. Already, two companies have been acquired, around 30 companies have graduated and around $75 million has been raised in follow-on funding.
“We are all doing the same thing. We are all trying to help.”
The SparkLabs’ motto “entrepreneurs for entrepreneurs” depicts its uniqueness among Seoul-based accelerators, as the leading team consists only of experienced entrepreneurs. Startup founders are guided by business tycoons, such as Charles and Kai Huang, the founders of Guitar Hero or Sungmoon Cho Principal Product Manager at Oracle. Moreover, SparkLabs has a formidable roster of mentors overseas.
Memebox is probably Sparklabs’ most promising company to date. Memebox is a subscription beauty e-commerce service. With global headquarters now in San Francisco, Memebox enables its customers to use luxury Korean and global cosmetics at affordable prices. The company raised $1.3 million of funding in 2 rounds from 7 investors and is currently operating in Korea, the USA and China.
“We are going to continue as a general accelerator but we do feel that the next big thing, the next big era of the Internet is IoE- Internet of Everything.”
Only officially announced last week, SparkLabs will open their new, hardware-focused accelerator in Songdo, the “smart city”. As IoT-focus requires prototyping, manufacturing, and very specialized knowledge, the accelerator will have a different structure, personnel, and mentorship program. The opening is planned for early 2015.
“We live in Korea-the most wired country in the world. Cloud, infrastructure, manufacturing, and talent-everything is there. Now, we plan to put it all together.”
Even though the Korean community is perceived as risk-averse, many resources are now coming together to build a new economic paradigm in Korea, based on Entrepreneurship. A large number of seasoned entrepreneurs and IT professionals are now reinvesting their time and money into startups, and have built successful facilities to accelerate the new breed of Korean entrepreneur.
These resources, while differing in shape and scope, are all empowering others to take a risk and follow their dreams. With the rise of top Seoul-based accelerators, Korea can already be proud of some global success stories. As the most wired country in the world with a motivated and hardworking workforce, South Korea is attracting ever-more foreign investment.
With the current rapid pace of development in Korea’s technology and startup ecosystems, Seoul could become Asia’s leading startup hub sooner than we think.