Seoul Rises as a Global Startup City: Start-up Friendly Policies and Innovative Technology Drive Rapid Growth
Establishing a base for entrepreneurs from cafes, subways and campusesSupporting for scale-up in collaboration with large companies and open innovationExpanding its start-up territory by securing a base in Vietnam,"Try Everything” Global Startup ...
Establishing a base for entrepreneurs from cafes, subways and campuses
Supporting for scale-up in collaboration with large companies and open innovation
Expanding its start-up territory by securing a base in Vietnam,
“Try Everything” Global Startup Festival will be held September 15th
SEOUL, KOREA / ACCESSWIRE / September 3, 2021 / With its goal of becoming a global top 5 start-up city set in 2019, the Seoul Metropolitan Government(SMG) declared that it would fully support startups with innovative technologies. It has announced and promoted seven projects, including creating a technology startup infrastructure, nurturing talent in technologies, investing in each growth stage, and expanding globally.
Startup city Seoul is drawing attention in the global startup ecosystem. This is thanks to Seoul’s strong infrastructure and active startup support policies, which produced 7 of the 15 unicorns in Korea (privately held startup companies valued at more than US $1 billion). This has enabled Seoul’s startup ecosystem to grow strong quickly.
Starting with the establishment of the New Technology Startup Center in Deungchon-dong, Seoul in 1995, the Seoul Metropolitan Government also created the Seoul Bio Hub (Hongneung), the Seoul Startup Hub (Mapo), virtual reality (VR) and augmented reality (AR) centers (Sangam), an IT·BT·Green technology (GT) center, a nanotechnology (NT) center (Magok), a fintech hub (Yeouido), an IT convergence center (Guro, Gasan), and AI and big data hubs (Yangjae), with a startup asset in every corner of Seoul. In addition, investing in infrastructure gave birth to 13,414 companies in the city, from a total of 32 incubation facilities.
These companies have contributed to national economic development by generating nearly 5 trillion Korean Won (US $4.2 billion) in sales. Now, these startups have dreams of growing into unicorns by drawing a cumulative investment of KRW 853 billion ($725 million). While economic growth slows and the number of high-quality jobs decreases, startups are creating jobs and adding value, bringing dynamic change to a variety of industries.
In addition, an innovation growth fund created between 2018 and 2019 to revitalize investment in startups saw contributions of KRW 32 billion ($27 million) from the Seoul Metropolitan Government, close to KRW 280 billion ($240 million) from the Korean government fund, and KRW 497 billion ($423 million) from private venture capital funds. By 2022, the fund plans to create and invest KRW 350 billion ($298 million) in startup funds, KRW 315 billion ($268 million) in the 4th industrial revolution funds such as AI/NT, 300 billion won ($255 million) in bio-funds, and about KRW 1.4 trillion ($1.2 billion) in Internet of Things (IoT) and blockchain-related industries.
In particular, the Seoul Metropolitan Government is creating and expanding an investment-friendly environment to participate as LPs in currently operating the funds for global VCs who are interested in promising startups in Seoul, and to help them adapt to the unfamiliar Seoul investment ecosystem. To expand the startup network, the Seoul government is reviewing various support measures, such as preparing programs in connection with the Seoul Startup Hub.
Thanks to these efforts, Startup Genome, an institution that analyzes the global startup ecosystem, evaluated the value of the startup ecosystem in Seoul at KRW 47 trillion (US $40 billion), which would put Seoul in the top 20 startup ecosystem globally, in its the 2020 Global Startup Ecosystem Report (GSER).
In particular, the report highly evaluated Seoul’s strong R&D capabilities and large number of patent applications. These factors make the city an Asian technology innovation hub. Due to active investment of the Seoul government in AI, fintech, and life sciences, the ranking is expected to go up further this year
Hwang Bo-yeon, the deputy mayor for Economic Policy department, said, “We will make Seoul a startup city that can compete with global startup cities, and a city that supports steady growth beyond the startup phase and into the medium-sized company level. We will more than triple the number of unicorns in Seoul from seven at present via step-by-step, customized startup support policies.”
- By expanding startup contact points, now entrepreneurs in all demographics can think about starting a business
Startup Seoul is evolving from its role of providing business space and government funding to helping with due diligence service, technology commercialization, providing business connections with large corporations, and supporting overseas expansion. Seoul, the capital of Korea, has literally positioned itself as a large startup accelerator.
The biggest characteristic of startup acceleration delivered by the Seoul Metropolitan Government is that it has densely established startup bases throughout Seoul. There are a total of 49 establishments, including a startup incubator, a prototype factory, and an exchange space for startup information (the Seoul Startup Cafe). This number is greater than the number of any franchise companies. (The total number of Popeyes fried chicken outlets, a global franchise company, is now 39 in Korea.) The Seoul government not only provided space throughout the city, it specialized by taking advantage of the characteristics of each base. For example, the Seoul Fintech Lab is located in Yeouido, Korea’s Wall Street. Also, the Seoul Bio Hub in Hongneung, is near pharmaceutical and bio research complexes, while the Seoul Food Startup Center is located in Gil-dong, where food culture is developed. These centers provide benefits for startups by having offices there and running relevant startup programs.
Seoul Startup Cafes also operate in shared offices in 11 locations in Seoul so that the citizens can get involved in starting a business. From subway stations to underground sidewalks and buildings located near stations, advantageous spots are secured in terms of expanding the contact points of startups. In March, the SMG started an event called the Seoul Startup Cafe Challenge (linked to discovering ideas and accelerating follow-up) to spread the startup culture that had been shrinking due to COVID-19 and help increase the success rate of startups’ founding. Previously, the focus was on getting people interested in entrepreneurship, but now the emphasis has been to put that interest into practice.
Entrepreneurship is also being encouraged among university students. The SMG has designated 34 universities in Seoul (54 in Korea) as Campus Towns and providing comprehensive support for young entrepreneurs in a variety of forms from technical advice to legal/accounting, prototyping, online advertising, marketing, and web/app development consulting. Currently, 646 startup teams are active in Campus Towns alone, and 1,000 teams are expected to receive support by the end of the year. This means that anyone from members of general public who were not interested in starting a business, to college students with rich ideas but minimal capital can easily start a business in every corner of Seoul.
The Seoul Metropolitan Government is also transferring its capacity to incubate startups accumulated in Seoul to overseas markets. A good case in point is the establishment of a base in Vietnam, the Seoul Startup Hub Ho Chi Minh, and fueling the enthusiasm of Korean entrepreneurs who want to start a business in Vietnam. In May, the SMG established an office at the Vietnamese National Startup Support Center, a representative start-up support facility in Ho Chi Minh City. It is operating an accelerating program in cooperation with 25 organizations such as the Ministry of Science and Technology of the municipal government under the main provinces of Vietnam and university innovation centers. Expanding additional bases in other countries is now under consideration. This provides other opportunities for startups dreaming of entering the global market, even with the looming threat of COVID-19.
- To achieve scale-up via open innovation with large companies
In July 2017, CEO Han Yun-chang of Korean startup Cochlear.AI, who created a company only with audio artificial intelligence (AI) technology, could not imagine that a single piece of paper submitted to the Seoul Metropolitan Government would increase the company’s value as much as it has. The paper was an application for the Connected Car Startup Hackathon, which was organized by Mercedes-Benz Korea and the Seoul Business Agency (SBA), a startup support organization under the Seoul Metropolitan Government in December 2019. Until just before Han applied, he was skeptical of how much the government-hosted event would actually help his business.
CEO Han’s company placed second in the hackathon, giving him an unexpected opportunity to visit the headquarters of Daimler Germany AG, the parent company of Mercedes Benz Korea. In February of the following year, he went to Germany to introduce the company (IR) to Daimler executives and received a sheet of paper shortly thereafter. The paper was a proposal and contract for Mercedes Benz to apply Cochlear.AI’s audio AI technology. The technology development project with Daimler that started this way came to fruition in the first half of this year.
“It was all thanks to the Connected Car Startup Hackathon that a small Korean startup without any references was able to conduct business with a global company. From Daimler’s point of view, it must not have been easy to make a business proposal to a startup that with no reference in Korea, a distant land. In a way, I think the Seoul Metropolitan Government has become our guarantor and lifted all barriers to entry. After we made references with the SMG and Daimler, many companies have inquired about further inquired about cooperation, and investment companies made offers before we even reached out to them,” said Han.
Likewise, the SMG is also promoting a project to encourage scaling-up or overseas expansion in connection with large companies so that startups can go through early challenges and get on a growth trajectory. This project is referred to as an “open innovation” strategy to match technological alliances between startups with innovative technologies and large corporations that need to secure future opportunities or create new businesses. In addition to Mercedes-Benz, the SMG has signed a business agreement for joint discovery and development of startups in a broad framework with 20 large corporations, including Procter & Gamble, a Korean distribution giant, Binggrae, OB Beer, and a steel manufacturing company. This year, it plans to match more than 130 startups with large companies and ultimately support their global expansion.
- Turn crisis into opportunity with preemptive support during the pandemic
In the midst of the pandemic, Seoul’s preemptive start-up support policy stood out. Last August, when venture capital (VC) funds temporarily dried up, the Seoul Metropolitan Government prepared a policy to support 100 promising startups with a growth promotion comprehensive package worth 10 billion won (US $8.5 million). Individual companies that received support of up to KRW 100 million ($85,000) were able to invest in areas such as commercialization, R&D, employment, and market development without facing a liquidity crisis.
Apptest AI, a startup that provides AI-based app testing services, benefited from the growth promotion comprehensive package. By participating early on as a technology partner of Samsung Electronics and Hyundai Motors, it is now possible for Apptest to supply solutions to the world. Jaejoon Hwang, CEO of Apptest AI, said, “While thinking about how to expand the product line for large corporate clients, we received funds from the growth promotion comprehensive package and were able to develop new products on time,” he said.
- Secure contact points with global investors with Try Everything
Starting with Tech-Rise in 2019, SMG has held an annual event called Try Everything since 2020 to create an opportunity to introduce Startup City Seoul to the world. Try Everything is an event where promising startups, investors, and accelerators from around the world gather.
Last year, a total of 33,450 people (online) attended despite COVID-19, and Alphabet (Google’s parent company) Chairman John Hennessy, a global VC, Tim Draper, and Alibaba’s founder Ma Win appeared as speakers. In all, 237 global startup ecosystem experts from 10 countries, including the U.S., China, France and Canada, along with 45 investment companies, participated in the event under strict quarantine conditions.
Try Everything, which will be held at Shilla Hotel in Seoul this year, has expanded in scale this year, and more than 400 organizations, including global startup experts from more than 15 countries, global conglomerates, VC/Acc organizations, and startup-specialized institutions, will participate in the event. The event includes about 80 startup programs focused on global expansion, lasting from August 1st to September 30th, in all regions of Seoul. In particular, as it is a stage prepared for startups, an online meet-ups will take place so that investment discussions between startups and investors can take place on a regular basis. The main event will be held online and offline for three days from September 15th to 17th, and everyone can participate from both the official website and YouTube (Try Everything 2021).
Media Contact:
Company/Organization: TRY EVERYTHING OPERATIONS BRANCH
Contact: KIM TAE YOON
Telephone: +82-10-6859-9406 / +82-2-6929-0061
E-mail: [email protected] / [email protected]
Website: www.tryeverything.or.kr
Address: Seoul Venture hub, 21, Baekbeom-ro 31-gil, Mapo-gu,Seoul,Republic of Korea
SOURCE: Try Everything Operations Branch
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