How will South Korea recover post-COVID-19? The answer is simple, through entrepreneurship and startups. Some might remember the film, Forrest Gump. After a massive hurricane, the whole shrimping industry was crushed, however, one small fishing boat survived and ended up dominating the market. The same is happening now. Businesses in Korea are having to shut down, especially those that have not been able to transition into the digital space. Every month hundreds of businesses in South Korea are shutting down for good. Those that work for Korean companies are not safe either. Some Koreans have had their hours cut or even worse lost their jobs. As major companies in Korea are in a wait and see mode, this is a great opportunity for startups in Korea to flourish. There are many examples of super-successful businesses that were started during a downturn. Entrepreneurship is about innovation and COVID-19 has shown the need for innovation in all industries. This is why it is the perfect time to start a startup in Korea as soon as possible.

First, before we even talk about why it is the perfect time to start a startup in Korea. We first need to answer the question of why start a startup in the first place. Startups are unique in that when you start you are on an equal playing field with other new businesses. You don’t have to be young and straight out of grad school, basically, anyone can start a startup. All you need is an idea and a drive to make your dreams a reality. In certain cases being unknown and lacking in funds is seen by investors as a good thing…let me explain.

What are Korean Investors looking for?

An investor in Korea wants to find that diamond in the rough. A startup that no one knows about but them. Most might not think it but Koreans, in general, like to gamble. There is a reason why the Korean government has outlawed gambling in Casinos for its citizens. Korea’s desire to gamble is also what drove the Korean cryptocurrency craze back in 2017. Their passion for gambling can be found in investing as well. Their goal is to invest in 10 unknowns in hopes one becomes big. As long as those unknowns are cheap it is worth the risk. Instead of investing 500 million won into one company, most Korean investors would rather invest in 10 companies for 50 million won each. This is why early-stage (seed funding) is easy compared to the later stages in Korea. How do you find these angel investors in Korea? it is all about networking and knowing the right people.

There is a lot of material online, especially during COVID, to teach you how to bootstrap your startup. However, not a lot of information can be found on how to do it in South Korea. However, the process is the same except most angel investors are not fluent in Korean. Therefore it is crucial to have a Korean partner when looking to raise funds from angel investors in Korea. So the question becomes, what kind of startup would get Korean angel investors interested. South Korea will need new and innovative ideas as consumers and businesses adapt to this new environment caused by COVID-19. Across all industries, changes need to be made from remote working to finding new business models. Angel investors in Korea will be very active to search for these early-stage startups that have the potential to take off post-COVID. The potential is the key. If they feel the startup can gain some traction with other investors who are looking for businesses that can take off post-COVID…it really doesn’t matter if the startup is generating money…as long as they can gain traction among investors, initial seed funding will be easy.

When Should You Start a Startup in Korea?

Don’t start a startup unless you first have an idea or solution to an existing problem. Granted, ideas can change and the execution of the idea is way more important than the idea itself but you need an idea to first start the startup. In Korea, the timing is right because of the increase in the desire of investors to jump back into the startup market. Remember their interest levels when it came to Blockchain and cryptocurrency. Investors in Korea are always looking for the next big tech trend. The trend now is businesses that can survive post-COVID. Delivery services, biotech companies, and digital content are the next hot trends at the moment. So focus on these sectors first.

The Korean government has funds that support startups and are continuing their efforts to support new and innovative tech startup companies in Korea. South Korean President Moon has promised to cut through red tape and provide financial incentives for young entrepreneurs, promising to support small and mid-sized businesses, which also encompasses startups. This will be taken into overdrive as Korea slowly looks to recover from COVID. They are actively pushing government contracts that aim to put money back into small businesses in Korea. To help Korea’s post-COVID economy, the Korean government will roll out the “Korean New Deal”. The Korean New Deal will inject a massive amount of money (Over $150 billion by 2025) to create 890,000 new jobs by 2022 and 1.9 million new jobs by 2025. The Korean New Deal will focus mainly on digitalization and eco-friendly solutions.

Korean President Moon

How do you know if your idea is any good?

Simple. Does the idea solve a problem? If so will it solve it for the next 10 plus years? Keeping in mind that automation is on the rise. Video chatting, gig work, and medical innovation are issues brought up by COVID. Long-term thinking in startups is very underrated but crucial because you are trying to build a lasting company. Remember it takes many many years to build a great startup. Don’t expect big results in the first few years. This is a grind and payoffs might not happen until the next decade.

Also make sure that the idea is something you really care about, love, and most importantly something YOU can use. That is the perfect way of understanding your customers because you yourself ARE the customer. It would be a waste and defeats the purpose of starting a startup that you are not passionate about or don’t need.  The best ideas are usually the ones that sound crazy. This means that no one is probably working on your idea and probably no one will think twice about stealing it. An app that makes regular drivers into taxi drivers?? Sounds crazy right? Renting out your room to strangers?? Get out of here…

Why Start a Startup in Korea?

Korean Night Life

So why South Korea? Target a small market and expand from there. There is no reason to think big right from the start. The startup will be more successful if you focus on the small picture before you tackle the big picture. That is why many startups first test their product or service in Korea before expanding out into the global markets such as Southeast Asia and beyond. The market evolves over time, what the market looks like now will be completely different in 10 years. So there is a huge risk going global right from the start. Start small and expand from there. Korea might be considered a small market compared to the US or China but it is a fast and expanding market and that is what you should be looking for.

Is Getting Funding in Korea easy?

Again it depends on your project. Korean investors love the new hot craze. 2018-2019 was all about blockchain and cryptocurrency. 2021 and beyond will be businesses that can survive further COVID-like outbreaks. Korean Investors are craving for the next big South Korean Unicorn. They are even willing to invest in imperfect startups just for the chance to hit it big.  Korea is becoming more globalized than ever. Young entrepreneurs are learning English and getting experience abroad and Korean investors are taking notice. The growth does not seem like it will stop anytime soon. That is why in 10 years the possibilities in Korea are endless.

Seoul is now the prime location to start a startup in Korea

The late Seoul Mayor Park Won-soon once said during his opening speech at NextRise 2019, that the Seoul city government would nurture 10,000 workers to prepare for the 4th Industrial Revolution. His aim was to combat the unemployment crisis in Seoul through startups. He was a major figure that pushed for innovation in Korea. He called for support centers like, Seoul Startup Support Center that helps the unemployment issue in Korea. Seoul plans to double the number of spaces for tech startups by 2022. Currently, there are 1,000 of these spaces. An extra 1,000 will be available to foreign businesses. This means that any entrepreneur whether you are foreign or Korean can join the Seoul Startup Membership where they will be able to receive customized support from specialized organizations.

Seoul has also cooperated with the justice ministry to introduce a startup visa fast track program for young foreign entrepreneurs looking to start a startup in Seoul. They will also work with these young entrepreneurs to find affordable housing in Seoul which can be expensive.

With all this support, Seoul is the perfect city to start a startup. Startups have the ability to constantly change depending on consumer needs. Larger more established companies in Korea can’t do this. Startups will be crucial in filling the gaps where bigger companies can’t post COVID. Consumers in Seoul are ore open to new ideas and technology. Buying online is no longer a novelty. Sure consumers in Korea will have less money to spend at the moment, they will be smarter consumers looking for new businesses that offer better/faster service. As more and more businesses in Seoul are playing it safe, the right startup can become a new fresh voice in this vacuum created by COVID.