K-Content News
[ANALYSIS] Korea witnessing 2nd startup boom
- August 27, 2021
[ANALYSIS] Korea witnessing 2nd startup boom
Updated : 2021-08-01 17:32
Companies build more wealth, advance to wider range of industries than those in 2000s By Yi Whan-woo Korea is going through its second startup boom, with more companies in a wider range of industries than the previous ones in the early 2000s. Some companies, such as Kakao, Celltrion and Naver, are characterized by building up their wealth in a short period of time to join the list of chaebol, or family-owned conglomerates that have dominated Korea's industry for decades with government support.
Kakao stands at 18th place, Celltrion 24th and Naver 25th on a ranking list of business group released by the Fair Trade Commission this spring.
Other startups are noted for pioneering new markets and growing the overall pie, as seen by Woowa Brothers with its app service Baedal Minjok accounting for the largest share of the food delivery market, scaled at more than 20 trillion won ($17.38 billion).
Another group of firms stand out for attracting massive investments, with e-commerce giant Coupang being an example. Dubbed as the Amazon of Korea, the company raised a cumulative 9.39 trillion won in investments since it was founded in 2010, including 5 trillion won through its listing on the New York Stock Exchange.
"The number of newly established corporations has increased and social interest in startups has grown, such that a second venture boom doubled the previous record of Korea's first venture boom in the early 2000s," the Ministry of SMEs and Startups assessed in a report released this month on the changing startup ecosystem.
It noted that the number of startups increased steadily to total 123,305 in 2020, up from 96,155 in 2016, 50,855 in 2008 and 61,456 in 2000.
In particular, 44 percent of the 123,305 companies were founded between 2016 and 2020. This suggests that startup businesses are expanding faster.
The second startup boom is different from the first one, when firms received massive funding, but eventually crashed with the dot-com bubble, ushering in a dark age for startups.
In terms of industries, the companies in the first startup boom were mainly related to manufacturing, according to the ministry, whereas those in the present era have advanced to a wider range of areas. They especially are concentrated in mobile communication, ecommerce, the Internet of Things, artificial intelligence, big data, augmented reality and virtual reality ― all related to the Fourth Industrial Revolution.
The startups are noteworthy for their assets and valuations, too.
The number of unlisted unicorn companies worth more than $1 billion stood at 13 in 2020, up from just 2 in 2016.
Three startups are on the top 10 list of the country's main KOSPI ― Naver at third with 74.2 trillion won, Kakao at fourth with 65.7 trillion won and Celltrion at 10th with 36.3 trillion won.
According to the Korea Venture Capital Association, the number of domestic venture capital funds exceeded the 1,000 mark for the first time and reached 1,076 in 2020.
The success of startups can also be seen from 15 Korean startup CEOs being named on Forbes magazine's list of promising Asian entrepreneurs younger than 30 years old, titled "Forbes 30 Under 30 Asia 2021."
At this year's CES electronics expo, 22 Korean startups received the Innovation Award, a surprise considering there were only five recipients in 2019.
Some industry sources say the second startup boom can be attributed to an innovative business mindset, fast decision-making processes and horizontal corporate culture that makes it easier for subordinate workers to talk to their superiors at startups.
"These are very critical values to communicate openly and make a correct judgment in the era of the Fourth Industrial Revolution, where things move too fast and recovering from a fatal mistake will be tough," a source said.
Another source said "a more spirited and innovative entrepreneurship" characterized startup CEOs in the 2020s from those in the 2000s.
"The startups CEOs are aware of rapidly changing business trends and that one mistake can lead to irreversible outcomes," the source said. "Even so, they are not afraid of taking risks and they push ahead with whatever they think is right."
The source argued their mindset possibly helped them raise a large sum of money.
"The Korean startup ecosystem is not only growing quantitatively but also qualitatively," a government official noted
The government accordingly has increased spending from 376.6 billion won in 2016 to 849.2 billion won in 2020 to bolster the startup ecosystem.
SMEs and Startups Minister Kwon Chil-seung said, "As a person responsible for startup and venture business policies, I feel proud and grateful that the Korean startup ecosystem has developed this much."
Kakao stands at 18th place, Celltrion 24th and Naver 25th on a ranking list of business group released by the Fair Trade Commission this spring.
Other startups are noted for pioneering new markets and growing the overall pie, as seen by Woowa Brothers with its app service Baedal Minjok accounting for the largest share of the food delivery market, scaled at more than 20 trillion won ($17.38 billion).
Another group of firms stand out for attracting massive investments, with e-commerce giant Coupang being an example. Dubbed as the Amazon of Korea, the company raised a cumulative 9.39 trillion won in investments since it was founded in 2010, including 5 trillion won through its listing on the New York Stock Exchange.
"The number of newly established corporations has increased and social interest in startups has grown, such that a second venture boom doubled the previous record of Korea's first venture boom in the early 2000s," the Ministry of SMEs and Startups assessed in a report released this month on the changing startup ecosystem.
It noted that the number of startups increased steadily to total 123,305 in 2020, up from 96,155 in 2016, 50,855 in 2008 and 61,456 in 2000.
In particular, 44 percent of the 123,305 companies were founded between 2016 and 2020. This suggests that startup businesses are expanding faster.
The second startup boom is different from the first one, when firms received massive funding, but eventually crashed with the dot-com bubble, ushering in a dark age for startups.
In terms of industries, the companies in the first startup boom were mainly related to manufacturing, according to the ministry, whereas those in the present era have advanced to a wider range of areas. They especially are concentrated in mobile communication, ecommerce, the Internet of Things, artificial intelligence, big data, augmented reality and virtual reality ― all related to the Fourth Industrial Revolution.
The startups are noteworthy for their assets and valuations, too.
The number of unlisted unicorn companies worth more than $1 billion stood at 13 in 2020, up from just 2 in 2016.
Three startups are on the top 10 list of the country's main KOSPI ― Naver at third with 74.2 trillion won, Kakao at fourth with 65.7 trillion won and Celltrion at 10th with 36.3 trillion won.
According to the Korea Venture Capital Association, the number of domestic venture capital funds exceeded the 1,000 mark for the first time and reached 1,076 in 2020.
The success of startups can also be seen from 15 Korean startup CEOs being named on Forbes magazine's list of promising Asian entrepreneurs younger than 30 years old, titled "Forbes 30 Under 30 Asia 2021."
At this year's CES electronics expo, 22 Korean startups received the Innovation Award, a surprise considering there were only five recipients in 2019.
Some industry sources say the second startup boom can be attributed to an innovative business mindset, fast decision-making processes and horizontal corporate culture that makes it easier for subordinate workers to talk to their superiors at startups.
"These are very critical values to communicate openly and make a correct judgment in the era of the Fourth Industrial Revolution, where things move too fast and recovering from a fatal mistake will be tough," a source said.
Another source said "a more spirited and innovative entrepreneurship" characterized startup CEOs in the 2020s from those in the 2000s.
"The startups CEOs are aware of rapidly changing business trends and that one mistake can lead to irreversible outcomes," the source said. "Even so, they are not afraid of taking risks and they push ahead with whatever they think is right."
The source argued their mindset possibly helped them raise a large sum of money.
"The Korean startup ecosystem is not only growing quantitatively but also qualitatively," a government official noted
The government accordingly has increased spending from 376.6 billion won in 2016 to 849.2 billion won in 2020 to bolster the startup ecosystem.
SMEs and Startups Minister Kwon Chil-seung said, "As a person responsible for startup and venture business policies, I feel proud and grateful that the Korean startup ecosystem has developed this much."
Reporter : yistory@koreatimes.co.kr
