Insider’s Guide to Korea’s Tech & Startup Ecosystem

2017

Author: Nathan MillardFounder & CEO, G3 Partners> From UK (Scotland - London)> 8 years as comms pro in Asia (Korea & China)> Worked with startups in Asia since 2012> 2.5 yrs as tech journalist, covering Korea’s startups> Helped 100s of startups in Asia with cross-border growth> Executed many cross-border startup programs (USA & Asia)> Speaker at entrepreneurship conferences in USA, Russia, China, Korea, Singapore, India> Mentor @ Google Campus, DEV Korea, Orange FAB> Founded G3 Partners in Jan 2015> BA / MSc, University of London

Find me on:● LinkedIn● Twitter● Facebook

Contact me on:● nathan@g3partners.asia● +82 (0)10 8723 7702● www.G3Partners.asia www.g3partners.asia

The BackdropThe following slide captures some of the common images people associate with modern Korea...

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But,

It wasn’t always like this…

Gangnam in the 1950s Gangnam in 2016

Rapid & continuous change is the Korean norm

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KoreaQuick Facts

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1. 53 million people (26 million in greater Seoul)2. Top 15 global economy (GDP over US$1 trillion)3. Highly developed tech infrastructure & mobile broadband4. Sophisticated, fickle & demanding tech consumers5. 65% college graduates, many with international education6. Good test market for Asia7. Reasonable levels of English, especially among startups8. Home of global brands (Samsung, Hyundai, LG, Posco)9. FTAs with 52 countries (includes 74% of global GDP)

10. Foreigner-friendly government and population

Korea - 10 Quick Facts

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KoreaTech backdrop

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Samsung & LG: 80% m/s

Apple: 12% m/s Kakaotalk: 42M MAU

Facebook: 14.5M MAU

>

Local Brands Rule Korean Tech

Naver: 50% m/s

Google: 37% m/s

>

>

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Source: Kakao

Author’s note

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Are you surprised that Facebook is not Korea’s dominant social media platform, that Google doesn’t dominate search and that Apple commands just 12% of Korea’s smartphone market?

Korean consumers are perhaps the most mature technology consumers in the world. Local brands are so dominant because they are experts at catering specifically to Korean tastes in a way that the most successful global tech global brands have so far failed to do.

Korea presents a great opportunity for global tech firms, but localisation is absolutely critical. Your marketing strategy will NOT copy/paste in Korea and translation is NOT equivalent to localisation. Nimble startups could stand a better chance than lumbering giants.

Coming up - a few examples of foreign tech firms that are making an impact in Korea.

Foreign Invasion?

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Foreign tech companies are setting up shop in Korea• Netflix• Tesla• Amazon

• Uber• Air BnB• Evernote

• Supercell• Fiksu• AppLyft

• Facebook• Twitter• Instagram

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Luxury Brands are also doing well

• Automotive • Beauty • Apparel • Technology

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Author’s note

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When I arrived in Korea for the first time in 2004, foreign brands were rare. As FTAs have opened up trade with Korea and as Koreans garner more disposable income their thirst for luxury has increased dramatically.

Along with this a number of new industries have emerged quickly and present opportunities for foreign firms. These include Pop music, TV dramas, cosmetics and cosmetic surgery, PC & mobile gaming.

G3 Partners are ‘Asia’s Startup Marketing Experts’

We’re a fast-growing team of marketers, PR pros and communication experts. We help startups expand beyond their home markets through practical support.

We’re based in Asia, but have roots in the West. We’re super-connected to the Asian and Silicon Valley startup ecosystems.

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Marketing, PR & Cross-border Growth for Startups

- Website design, development, content creation and re-writes

- Social media strategy, management & ads

- Multimedia content creation and ads

- Marketing brochures, banners and flyers

- Public Relations, media outreach, press releases

- Crowdfunding campaigns, including strategy, campaign page development, pre-marketing and full campaign execution

- Pitch coaching and investment support

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How we help corporations connect to innovation

Access to innovation is essential for large corporations. We understand the startup ecosystem in Asia and we’re perfectly positioned to help organizations gain access. We're always happy to provide information and introductions to our extensive startup networks.

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Korea’s Startup Ecosystem

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Author’s note

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I started working with startups in Korea back in 2012, just as the current ‘startup boom’ was kicking off. Back then there was precious little infrastructure to support startups, there was just one accelerator, around ten VCs, a small discreet Angel investment community and practically no government support.

In the last five years the scene has changed beyond belief. There’s now 20+ accelerators, tons of coworking spaces and startup events, a vibrant Angel and early stage investment scene and over that period literally billions of dollars in investment by big name global investors like Black Rock, Sequoia, Softbank, Tencent and others. The government has also jumped headlong into a wide range of fiscal and logistical support.

What’s more, there’s clear signs of success, in the form of a more active M&A and tech IPO environment. That’s also fostering a more high-skilled mentor pool. There’s still plenty of work to do, but the signs are that tech entrepreneurship in Korea is becoming a big deal and Seoul’s claim to being one of Asia’s premiere startup hubs is gaining legitimacy fast!

Seed Series A Later StageK Cube Ventures DSC Investment LB Investment

Bon Angels Stonebridge Capital Partners Investment

TIPS DS Asset Mgmt. Atinum Investment

Fast Track Asia Smilegate Investment Company K Partners

Yello Financial Group Capstone Partners SL Investment

The Ventures Value Invest Korea Neoplux

IDG Capital STIC Investment

KTB

Korean Investors

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Seed Series A Later Stage500 Startups Formation Group Softbank VenturesStrong Ventures Bain Capital Goldman SachsY Combinator Qualcomm Altos VenturesHarbor Pacific Cap. Big Basin Capital Hillhouse CapitalKOISRA Partners DT Capital Partners Tapjoy Korea

Bluerun Ventures Goodwater CapitalStorm Ventures Draper AthenaD3 Jubilee Cyber Agent Ventures

Global VCs With Korean Portfolio

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● Data does not include outliers (see next slide)

Early Stage Investment Trends

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Source: Platum

Author’s note

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You’re probably wondering why investment amount dropped from 2015 to 2016.

One answer is that the figure only counts investments up to November. More importantly there were two major outliers that each raised USD $1 billion in 2014 and 2015 respectively. There were no USD billion investments in 2016.

See next slide for details of those monster investments.

Forward Ventures (Coupang)• USD $1Bn in 2015• Softbank Ventures

4:33 Creative Lab• USD $1Bn in 2014• Line, Tencent

Outliers in 2014 & 2015

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Source: Platum

Woowa BrosFOOD DELIVERY

• USD $50M • Hillhouse Capital

consortium

Lezhin EntertainmentONLINE PUBLISHING

• USD $43M• IMM Private Equity

MemeboxCOSMETICS, HEALTH & BEAUTY

• USD $66M • Formation Group,

Goodwater Capital

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The Biggest Winners in 2016

Source: Platum

SocarCAR SHARING & RENTAL

• USD $55M • SK, Bain Capital

ZigbangREAL ESTATE

• USD $50M • Stonebridge Capital,

Capstone Partners, Goldman Sachs Consortium

Yello MobileMOBILE SERVICES

• USD $48M• Formation 8

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The Biggest Winners in 2015

Source: Platum, Startup Investment Report

Korea’s Top Accelerators

> Sparklabs

> KStartup

> Lotte Accelerator

> Samsung C-Lab

> DEV Korea

> SK Planet

> Shift.

> Orange FAB

> Future Play

> The Ventures

> Primer

> Fast Track Asia

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> Google Campus

> Maru180

> D Camp

> WeWork

> MyWorkSpace

> The Bitcoin Centre

> Seoul GSC

> Hive Arena

> Fast Five

> 10K

> Seoul Global Centre

> CoWnDoG

Seoul’s Best Co-working Spaces

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> Startup Grind

> Drink Entrepreneurs

> Wine On Wednesday

> First Thursdays

> Koreans in Mobile (KIM)

> Seoul Tech Society

> Entrepreneurs in Seoul

Check these for up-to-date info:

>> Google Campus, Maru180, D Camp, Startup Alliance & Hive Arena websites>> OnOffMix and Eventbrite>> Startup Digest newsletter for Seoul>> Facebook groups: > Marketing in Korea > Entrepreneurs in Seoul > Seoul Startups #1 > Seoul Startups #2 > South Korea Startup Club

Monthly Meetups for Startup People

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Large Scale Startup Events

Rank 2014 2015 2016

1st USA S.E.Asia China

2nd China USA S.E.Asia

3rd S.E.Asia China USA

Desired Overseas Market

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Source: Startup Alliance, 2016 Startup Trend Report

Author’s note

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The last slide indicates that Korean founders’ most desired market for expansion is China. But I’m not aware of any Korean startups that are successful in China. Literally, not one and I’ve been working in the scene for over five years.

Three years ago it was the USA. Similar story - I’m aware of a couple of Korean startups that are doing well - that means big revenues and decent profit margins.

Of Korea’s recent stand out successes (Kakao, Coupang, Baedal Minjeok, etc) - none have found success beyond Korea.

All this to say that while there’s some very positive signs of success, Korea still needs some big overseas success cases to prove that she’s ready to take on the big boys overseas and begin attracting the top global talent that can further speed up her claim to being one of Asia’s top startup hubs.

• $12B USD pledged for building “creative

economy” (over 5 years)

• $2B+ pledged for 2017, just for startups

• Helped to legitimize entrepreneurship

• TIPS program (1:5 & 1:7 matching)

• Beginning to support foreign-owned startups

>> Doing too much?

Government Support: Overview

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Govt. Agencies Supporting Startups

New Entrepreneur/ Early Stage Support• 12 programs• Funding from $17K to $85K• Ex) TIPS: Angel investment

of $35M in select startups

Global Expansion Support• 3 programs• Funding, local incubation and

acceleration, global marketing expense paid

• Ex) K-Global Smart Mobile

Tech Startup Support• 9 programs• Funding, development

support, international patent expense paid

• Ex) K-Global Startup

Female Entrepreneur Support• 2 programs• Small funding, startup camp• Ex) Women Venture Care Program

Re-Startup Support• 3 programs• Funding from $25K to $250K• Ex) K-Global Re-Startup

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Government Support in 2016

Source: Brunch.co.kr

Ministry of Science, ICT and Future Planning• USD $127M• Science/Tech focused• Focused on establishing infrastructure for

basic science and new growth sectors

Ministry of Culture, Sports and Tourism• USD $100M from 2015 to 2019• Tourism focused • USD $17M to be invested in 2017• Early stage• Operated by AJ Capital

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New Government Funds for 2017

Source: Platum

>> USD $43M >> Media/content focused >> Early stage with proprietary tech for media>> Seeks to stimulate an ecosystem for individuals to create and share contents

New Corporate Funds for 2017

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>> Pledged $420M investment in startups over the next 5 years>> Including $84M fund with Mirae Asset to invest in AI, IoT, VR, and autonomous driving

>> Providing IR services for 300 startups >> Partnership with accelerators and VCs to match them with startups

Author’s note

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The last few slides demonstrate an amazing level of government and private support, but it’s gone too far. I believe the government in particular MUST back off a bit and let the ecosystem begin managing and funding itself. There’s so many programs that many fail because there simply aren’t enough relevant startups.

It’s also so easy to startup right now meaning that the talent pool is spread so thinly that VCs are really struggling to find good deals.

There will be a correction and it’s likely to begin in January 2018.

> K-Startup Grand Challenge

Launched in 2016 K-Startup Grand Challenge invites foreign-founded startups for three months all expenses paid acceleration in Seoul. in 2016 40 startups participated and 20 startups were awarded follow-on funding of up to USD $130K. Of the many government funded programs I’ve been involved with over the years I can honestly say that this is one of the best. It will return in 2017.

> Seoul Global Startup Center

Seoul GSC is a brand new facility in the heart of Seoul, specifically set up for foreign startups. It offers free coworking and office space, networking events, courses and seminars and of course free coffee, pizza and the occasional beer. If you’re keen on exploring Seoul as a base in Asia, this is a good place to check out.

> Seoul Global Centre

With several facilities around Seoul, this organisation provides legal,financial and other useful advice for foreign business people in Seoul, as well as office space. Worth checking out.

FINALLY... Support For Foreigners

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Author’s note

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Support for foreigners and foreign entrepreneurs in Korea is an extremely good sign. The Korean startup ecosystem has been too homogeneous until now (just 17% of founders are non-Korean, compared to 53% in London). I’ve advocated for a long time that every Korean startup that is serious about going global needs to hire a foreigner. It’s also important for the ecosystem as a whole to have more foreign-founded companies as they bring knowledge of other markets and a more cosmopolitan view of the world.

Thanks to a huge increase in the number of foreign students in Seoul there’s also a growing talent pool of foreigners that local startups can hire from.

Author’s note

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You’re probably thinking, “I’m a foreign entrepreneur, how easy is it to set up shop in Korea?”

Quick answer: Not very, and you’ll need to be committed. That means registering a patent locally, attending a 3-week government course (the OASIS program), committing USD $100K to the cause… or marrying a local.

It’s great to see programs opening up for overseas startups and they may also be your best bet to test the market with minimal outlay and risk.

Contact me for more on this if you’re interested (nathan@g3partners.asia)

>> The Good:

“The public’s perception of startups is improving, and there are ever more support for startups.”

“Startups simply offer better products with great ideas, leading to more customers.”

“The quality of startup workforce is improving.”

>> The Bad:

“There are just too many startups; investors are reeling back, and some are even starting startups to put them on their resumes.”

“Stagnant economy and lackluster policy performance.”

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Korean Founder SentimentWill Next Year Be Better for Startups?

Source: Startup Alliance, 2016 Startup Trend Report

Signs of Success

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Primary Source: John Nahm, Strong Ventures (2014)

The Korean Unicorn Club

“13 companies belong to what we call the “Korean Unicorn Club” (Korean software companies valued over $1 Billion by public or private market investors)”

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“Get a nice job at Samsung, son”

- Ajummas

Until recently it was socially frowned upon to join a startup or be an entrepreneur, especially for the well educated. Thanks in part to recent successes demonstrating the viability of tech entrepreneurship as a career this stigma is changing fast.

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The “Ajumma Factor”

> Nathan Millard, CEO @ G3 Partners

> Michael Hong, CEO @ RedHering

> James Jung, CEO @ beSUCCESS

> Jungwook Lim, CEO @ Startup Alliance

> Jeffrey Lim, GM @ Google Campus

> Hee-eun Park, @ Altos Ventures

> Ejang Yang, Manager @ D Camp

> Mike Kim, Manager @ Google Korea

> YJ Min, CEO @ Kono Labs

> Tim Chae, Partner @ 500 Startups Korea

> Minhee Cho, CEO @ RocketPunch

> Louis Ryu, CEO @ Shift.

> Hyekyung Hwang, CEO @ Hive Arena

> Kihong Bae, Partner @ Strong Ventures

> Richard Min, CEO @ Seoul Space

> Yer-Hyun Baek, CEO @ Korea Investment Partners

> Douglas Guen, CEO @ Primer

> Junghee Ryu, CEO @ FuturePlay

> Elaine Ramirez, Freelance tech writer

> Phil Yoon, CEO @ Big Basin Capital

> Eugene Kim, CEO @ Sparklabs

> Hyemin Lee, CEO @ Finda

> Olivier Mouroux, CEO @ Asiance

> Joon Oh, CEO @ MangoPlate

People to Look Out for / Connect with in Seoul Startup Ecosystem

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Am I missing someone? Email me (nathan@g3partners.asia)

a

Author’s note

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The wonderful people on the previous slide have been selected as ‘go to people’ in the ecosystem because they’ve been in it for years, speak English, work at companies I’d classify as ‘ecosystem builders’. They are people whom I know as knowledgeable and whom I’ve found to be open and willing to give advice and connections.

Many don’t know they’re on the list, but if you mention that you saw their name in this presentation it should help break the ice.

Hot Trends that Foreign Brands / startups can Leverage

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>> Strong gaming heritage in Korea

>> Foreign games doing well

>> Opportunities for foreign games and related services (e.g. Ads & Analytics)

Gaming

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>> Korea is trend leader in Asia

>> High fashion market is growing

>> Opportunities for tech partnerships, e-commerce, exports

Fashion, Fashion Tech & Cosmetics

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>> Hyundai pursuing autonomous vehicle innovation

>> Government support

>> Opportunities in automotive tech partnerships

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Automotive Tech

>> Korea is one of Asia’s largest E-commerce markets

>> Coupang recently raised $1Bn

>> Regulations easing

>> Opportunities for import, export, e-commerce platforms and support services (payments, analytics, Ads, etc)

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Cross-border Commerce & E-commerce

>> Trendsetter in Asia (music, film, TV)

>> K-Pop mania in Asia (and west?)

>> Foreign content platforms entering market

Pop Content & Visual Media

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>> Songdo ‘completed’ in 2015

>> Samsung & LG pursuing smart home opportunities (and investing globally)

>> Government support

>> Koreans love tech

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IoE, Smart Home, Smart City

>> Koreans are very tech savvy

>> Koreans work hard, so helping them save time is an opportunity

>> Overseas business services doing well

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Biz-tech Services & Platforms

Nope - don’t bother.

Despite local fintech events and tons of chatter, there really isn’t opportunity for foreign startups in Korean fintech. In fact, the government is increasing regulation.

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Fintech

>> Of course barriers to entry exist

>> Government desire doesn’t always mean results

>> Samsung (and other conglomerates) are tough to get into and very conservative

Is There REALLY Opportunity

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>> Early movers have an advantage

>> Korea’s a small market, but Koreans are big spenders

>> It’s easier doing business in Korea than Japan or China

>> The Korean market is open for business

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BUT...

Got questions or suggestions?

nathan@g3partners.asia

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