South Korea Ambitions to Become Regional Hub for Tech Startups, Started to Blossom
Feb 02, 2016 10:04 AM EST
Since her inauguration in 2013, South Korean president Park Geun-hye has launched several initiatives to boost startup companies with more than $3 billion investment. Now the nation has started to see the blooming of its effort. One last thing to change is the people's mindset who looked down on entrepreneurship.
In her inauguration speech on February 25, 2013 President Park announced her vision to create the "second miracle on the Han river" by focusing on development of creative economy. She decided to put creative economy as its core economic policy for targeting economic democratization and creating new employment opportunity.
Korea has the most advantage to become the hub of tech startup. It is because according to Bloomberg Global Innovation Index, Korea is topping of the list of the most innovative countries in the world. Korea also spend the most amount of money in reseach and development among other countries.
Nowadays, Korea has started to see the result of its initiatives. As many venture capitals and startup accelerators look to Korea to find innovation, also attracting business from Facebook and Google alike. Currently, there are around 40 startup accelerators in Korea to provide funding for entrepreneurs on various sectors.
However, president Park's initiative also faced fundamental cultural challenges to achieve full growth of Korean innovative capacities. One of which is the mindset of most Koreans as Steve Lee the co-founder of Korea Accelerate, startup accelerator told Forbes, "In Korea, being an entrepreneur is still looked down upon. You're supposed to study hard, graduate with honors and get a good job at Samsung. We're target conventional media, like the Korean Herald, because we want parents to read about this as an interesting and globally accepted career path with the potential for success, as an alternative to a corporate job."
Korea Accelerate is the first startup accelerator in Korea, and the first public-private partnership providing acceleration program for local startup. It partnered with Small and Medium Business Administration (SMBA), and Korea Institute of Startups and Entrepreneurship Development (KISED). Both of them are government institutions focused on developing startup companies in Korea.
One hurdle the joint-initiatives needs to encompass are the nature of Korean entrepreneurship. According to The Diplomat, South Korea's economy is heavily reliant on necessity-driven entrepreneurship rather than opportunity-driven entrepreneurship, or based on creativity. As a developed country, Korea is weak in the opportunity-driven entrepreneurship sector. Based on 2014 survey, 80% of the small medium enterprise in Korea said that they opened their businesses as a means to find work or to support themselves.
This necessity-driven economy have a very low lifetime expectancy and according to a researcher at Hyundai Research Institute Ho-jung Cho, "Necessity-driven enterprises have very low survival rates, which lead to the owners' increased economic hardships, limited contribution to employment and weak competitiveness of businesses."
Korea has established a good startup ecosystems with government initiatives supported by other stakeholders. In order to fulfill ambition of becoming regional tech startup, one challenge remained is to change the culture of Korean entrepreneurship.