Seoul Ripe for Early Stage Startups

South Korea is the world’s 12th largest economy and the fourth biggest exporting nation. In addition, exports comprised 44 percent of the Korean economy in 2019 according to Globaledge. Major corporations have benefited from this substantial increase in exports over the last decade. As a result of this the large predominantly family-run business conglomerates, also known as “chaebol,” have risen to dominate the economy. In addition, these conglomerates have a great influence on the political scene. To name a few, Samsung, Hyundai, and LG all have grown into behemoths and are international household names. With larger corporations dominating the Korean economic landscape, Korean startups tend to be an afterthought. However, with COVID-19, it is clear that new startups will be key to Korea’s recovery as they aim to be one of the world’s leading startup hubs by 2022

The Korean government stated they will be investing up to five trillion won into startups in Korea by 2022. The aim is to transform Seoul into one of the world’s leading startup hubs. One investment is its innovation academy, which is a series of programs to help develop thousands of IT professionals. Furthermore, funds will also be allocated to supporting and fast-tracking startups through financial assistance. They will allocate office space and the necessary infrastructure at a reduced cost to new businesses. Therefore, this would help address Korea’s high youth unemployment rate and break the cycle of larger venture capital firms focusing solely on ROI (return on investment).

The Korean Government’s Role in Supporting Startups

Traditionally, the funding style in Korea has had a focus on fueling local services rather than more complex technologies (core tech) as the former tends to hit profit targets faster. To allow suitable opportunities for Korean startups to grow, the Korean government will need to support burgeoning startups in their infancy when they are most financially vulnerable. The chaebols reported an average 50% decline in annual profits this year. Therefore the economic landscape of Korea presents fertile ground for South Korean startups to flourish. In addition to this, Seoul’s recent push to become a “smarter” city will certainly make room for new innovative ideas.

Startup Hubs in Asia – South Korea

The Jeju forum took place earlier this year. Furthermore, one of the key points of discussion was the relationship between smart cities and startups. Ms. Waltraut Ritter, the Founder of the Knowledge Dialogues in Hong Kong, noted that traditionally top-down government perspectives are often used in discussions relating to developing smart cities. She described startups as “Citypreneurs”. These Citypreneurs play a fundamental role in smart city development. In addition, today’s citizens have a wealth of new technology at their disposal which in conjunction with government cooperation can foster promising results.

Korea’s first smart city

A city gets the classification of “smart” when people try to mitigate the inevitable difficulties that come with living in a city. Data is used as a solution for traffic flows and pollution volumes. With Korea’s rising city populations, it’s no wonder they have had a push recently towards developing “smarter” cities and the attractive benefits it presents. Gyeonggi-do has even implemented a UBI in Korea called the Youth Basic Income Program. South Korea is not alone in this development.

The UN stated that nearly 70 percent of the world’s population will be migrating to cities for economic opportunity by 2050. With this influx of people comes concerns about efficiency and liveability with increasing population densities. In response to this, the Korean government recently brought to life their “city in a box”, formally known as Songdo. Songdo neighbors Seoul and is considered one of the world’s first truly “smart” cities.

songdo - startup hubs

Smart City: Songdo

Songdo is built on approx.1,500 acres of land near Seoul. It has all the “bells and whistles” that one would expect with a smart city. Apartments use digital technology to make communication easier for residents. In addition, computers are built into the streets to help control traffic. They even allow for neighbors in apartments and condos to do video chats with each other. Therefore, attending college can even be done at home. The State University of New York offers online classes for its students. They also created “America Town” to bring in more foreigners to Korea.

Some key features include

  • a central processing center
  • sensors that monitor the temperature
  • traffic flow sensors
  • bus arrival alert
  • charging stations for electric vehicles

Environmental and sustainability features include

  • Korean standards and LEED certification for all major buildings
  • A waste system that sucks garbage from home kitchens
  • LED Lights for buildings
  • Low U Value windows for buildings
  • A water-cooled air conditioning system
  • A central park that uses indigenous plants

To foreign eyes, Songdo may seem like it was pulled out of a sci-fi novel. Therefore, the Korean government’s goal to become one of the leading startup hubs in the world will likely lead them to tap into the ingenuity of their best and brightest startups.