South Korea may be renowned for its K-pop and technology prowess, but it has recently been making waves as a thriving global business hub.
The East Asian nation has, over the last few decades, transformed from being one of the world’s poorest countries into an economic powerhouse, with a GDP per capita that ranks among the highest globally. This success is partly due to its vibrant entrepreneurial ecosystem, advanced infrastructure, skilled workforce and government support for innovation.
However, South Korea has found it necessary to open its doors to international businesses in recent times to continue promoting entrepreneurship and innovation within its borders. That is why initiatives such as the K-Startup Grand Challenge (KSGC) have assumed a pivotal role in attracting new talent from across the globe. The aim is simple: establish South Korea as a business hub that provides a gateway to the broader region.
Global start-ups meet the K-wave
An annual accelerator programme organised by South Korea’s Ministry of SMEs and Startups, the KSGC is designed to attract bright, fresh talent from around the world to establish their roots in South Korea, with the promise of helping them launch their businesses in the Korean market.
The programme has attracted increasingly diverse start-ups from various industries and backgrounds. The inaugural edition in 2016 received more than 1,500 applications globally. These numbers have steadily grown, with 2,653 applications from 122 countries in last year’s edition.
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“Although 60 were selected from the auditions [in 2022], eventually 51 of them flew to Korea to participate in the all-expenses-paid acceleration programme,” says Amanda Lim, marketing manager of the Korea IT Cooperation Centre in Singapore.
The KSGC is open to businesses in IT and software, e-commerce, healthcare, cloud computing, green energy and sustainability, and fintech. Candidates selected to participate in this three-month accelerator programme are flown to South Korea, where they will receive extensive support through funding, mentorship and networking opportunities to help them gain a footing in the country’s favourable but competitive start-up environment.
“Four Korean accelerators manage the selected start-ups,” says Lim, adding that each is assigned to help 15 start-ups develop their business model to fit the Korean market better.
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Signing up for the challenge is a rather straightforward process. The KSGC seeks to identify and support innovative start-ups and pre-start-ups with exceptional technologies and ideas up to seven years old. Specifically, the programme targets start-ups represented by individuals of foreign nationalities who have a clear growth objective to expand into Asia by using the Korean market as a stepping stone.
More importantly, the programme imposes additional limitations such as investment requirements or revenue status. Also, Lim says an impartial selection process and the participation of competent and passionate organisations ensure a diverse cohort of participants every year. “Start-ups will be evaluated and selected based on their business plan, technologies, level of creativity in ideas and fit in the Asian market. We will also be looking at their strategy and execution plan, all through their overall presentation,” she adds.
Asian start-ups swarm to KSGC
Singaporean and Malaysian start-ups have been flocking to the KSGC, drawn in by the promises of expert mentoring, funding opportunities and access to South Korea’s booming tech ecosystem. So far, KSGC has seen 458 applications from Malaysian start-ups in six years, with 12 surviving to the final rounds.
One such start-up in KSGC’s 2019 edition is Anzene, which offers a safe, hot-swappable universal energy block and station that stores renewable energy from solar and wind in a portable, modular form factor. This product can then be used in homes, offices, and micro-mobility applications, allowing everyone to participate in climate change solutions. The idea of potentially making renewable energy accessible to the general public was one of the reasons Anzene joined the KSGC.
“South Korea has a lot of established battery companies like LG Chemical and Samsung SDI that we would like to partner with for our production and pilots,” says Anzene’s co-founder Joshua Lin. Anzene made the cut and joined the final 20 candidates in its batch, furthering its business ambitions in South Korea with another three months of government support.
KSGC makes it easier for foreign start-ups to bridge the cultural gap. “When expanding into a new country, localisation is very important, and the KSGC helps bridge the gap through this programme by encouraging the hiring of locals to ensure we have the strong local presence needed to grow in South Korea. We hired local staff, set up a website in Korean and got down quickly to building customer testimonials from Koreans about our product. They want to know that companies are there for them in the long run and everything is done legally,” adds Lin.
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The programme provides opportunities to partner with Korean conglomerates and small and medium enterprises (SMEs) to create business results. “Participants will receive coaching on Korean business culture and attend seminars on topics such as patents, tax laws and commercialisation,” Lim says.
Although the KSGC offered Anzene new-found opportunities, Lin’s team faced many challenges and learnt valuable business lessons. “The three months were a dive into the deep end of the Korean market pool. It was up to each participant to continue to build on the foundation and to explore and grow in the Korean market further,” says Lin. Anzene continues to build links with the Korea Battery Association, secure pilot projects with key customers, and grow product sales in the market.
For many start-ups, office space can be expensive in the earlier stages. That is why participating start-ups get free office space in Pangyo, South Korea’s “Silicon Valley” and the beating heart of the country’s start-up ecosystem.
Lim says: “Korea’s start-up ecosystem is active, well-designed and provides advanced infrastructure and an ideal environment for start-ups to attract the attention of investors, accelerators and incubators worldwide. SMEs and start-ups can mutually exchange information with high-tech research institutes and large firms across different industrial sectors to foster the growth of start-ups.”
Start-up superpower status
Besides free office space, KSGC’s start-ups receive one-on-one expert mentoring, matching and meetings with other Korean conglomerates, and administrative support on issues such as visa applications and opening bank accounts.
They are provided with an intern fluent in English and Korean to help overcome the language barrier. Participants can attend networking events with industry leaders in South Korea, facilitating further professional development and growth.
At the end of the 15-week acceleration programme, a Demo Day is held to select the top 20 start-ups, which will receive additional financial rewards and support from the South Korean government should they choose to establish their business in the country.
Lim says the KSGC programme has earned rave reviews from other start-ups that have found a sturdy footing for their game-changing innovations. Anzene’s Lin agrees: “This programme attracts numerous start-ups from all over the world, and in it lies a huge resource and more talented people whom we can learn from, bounce ideas off and collaborate with.”
Appetite for innovation
Beyond the many opportunities and robust support system, South Korea’s rich cultural influence, unparalleled tech expertise and, more importantly, the local consumer’s unyielding appetite for innovation have driven the country’s role from innovation follower to leader.
Not only is the country one of the world’s most connected, due to the 100% high-speed mobile internet coverage, says Lim, but its citizens are known to be early adopters of new technology. “Start-ups can look to test their products with a consumer base that’s ready to adopt new technologies. It is a perfect gateway to launch the business into Asia, thanks to its location and strong cultural and economic ties with China and Japan.”
The benefits do not stop there: South Korea boosts the start-up scene’s success by endorsing tax breaks, providing incentives for angel investors and venture capitalists, offering tax benefits for mergers and acquisitions in the technology and R&D sectors, and improving visa regulations for start-ups and entrepreneurs from abroad.
“The government plans to operate collaborative programmes among Korean corporations and start-ups and organise systematic cooperation between Korean and global venture companies. It supports sustainable R&D investment to develop an innovative ecosystem and plans to invest in start-ups and ventures over the next three years as part of its plan for future innovation and economic growth,” adds Lim.
This article first appeared in The Edge Malaysia and has been edited for length
