South Korea's President Park Geun-Hye recently championed her strategy for a "creative economy" in a keynote address at the World Economic Forum in Davos.
At the heart of her initiative is a focus on innovation and entrepreneurship. She believes the country's current economic model has reached its limits. To boost growth and employment, South Korea needs to foster an ecosystem to support startups.
I recently caught up with three venture capitalists making investments in Korean startups to get their insights on what policymakers and entrepreneurs can learn from Silicon Valley. They include the CEO and president of SoftBank Ventures Korea Greg Moon, the managing director of Maverick Capital’s venture capital investments Eric Kim and Altos Ventures' investment director Han Kim.
Mee-Hyoe Koo: What key trends in Korea are you targeting, and how does Asia, broadly, play into those trends?
Greg Moon: I personally don’t believe that creative economy has favoritism to a specific sector or industry. The concept of creative economy will be beneficial across all industries, as it will encourage all industries to think out of the box. But true innovation occurs when a particular sector takes the lead, and in this regard, I believe that information, communication and technology is the sector that will be take the lead on the back of the efforts to make creative economy in Korea.
Koo: What has enabled South Korea to be the birthplace of so many global tech leaders?
Eric Kim: It really comes down to people. One of South Korea’s greatest assets is its incredibly talented population. Heavy investment into infrastructure has also contributed to more innovation. South Korea’s high-speed internet subscription rate has actually exceeded 100%, smart-phone penetration is above 70%, 4G is ubiquitous with 5G LTE around the corner, and the population density (50 million people in an area slightly larger than the state of Indiana) are all factors that promote the testing and full-scale execution of some very creative ideas.
Koo: How does Seoul compare to Silicon Valley?
Han Kim: Seoul is in the early days of technology entrepreneurship and venture capital. Seoul, however, is learning and catching up quickly to Silicon Valley. I doubt that it will ever catch up or become larger than Silicon Valley. But there is no doubt that Seoul will become big and influential in the global technology economy.
E. Kim: The world is shrinking. Whether you are in Silicon Valley or Seoul or Shanghai, you need to be able to adapt to the local culture while bringing the lessons from the global market. Some of the first social networks were actually developed in Asia, and the testing of mobile monetization has been led by a number of Asian companies. Bringing those lessons back to Silicon Valley, I think, is incredibly valuable. At the same time, best practices from Silicon Valley can be applicable to other parts of the world. We all can learn from the diversity of experiences that technology companies are undergoing.
Koo: As a foreign investor in Asia, what are you looking for in startups? Does it differ at all from Silicon Valley?
E. Kim: Just as it’s true for what we are looking for in Silicon Valley, we are seeking people who have the potential to be great entrepreneurs. Our job is simple: to help startups achieve their full potential. Great business plans, strategy, and product design – those are all just table stakes. No matter where you are in the world, it really comes down to identifying a CEO and team that can achieve the impossible. Why I’m so excited about Asia is that we’re not only seeing much of the world’s technology growth being led by Asian countries (APAC mobile subscriptions alone are expected to reach 4.7 billion in 2019 according to the most recent Ericsson Mobility Report), but also seeing extremely talented founders in the region here to take advantage of the opportunity.
H. Kim: We are looking for great people who are demonstrating that they could build a great business. We typically look for companies that are scaling very quickly, and could take advantage of our capital and advice.
Koo: How important is entrepreneurship to President Park’s vision of a creative economy? What do you think needs to be done for South Korea to achieve her vision?
Moon: Entrepreneurship is the prerequisite that can nurture a creative economy. During the last two decades, particularly since the Asian financial crisis, the spirit of entrepreneurship has enabled the Korean society to overcome the economic recession by pioneering innovative industries.
Despite the entrepreneurs’ relentless efforts, of course, not all entrepreneurs were able to survive the current of economic turbulence. But their successes and failures both illuminated the importance of entrepreneurship in our Korean society, even more so as we strive to rebound from the current economic downturn.
E. Kim: Entrepreneurship is core to a creative economy and certainly essential to the continued success of any player in the global economy, especially South Korea. In South Korea specifically, the government is actively investing resources to promote entrepreneurship, including direct investment into startups. Concurrently, I think there needs to be a concerted effort to change the common perception that startups are not “prestigious enough” for young people to pursue, while emphasizing the reality that entrepreneurship is truly the lifeblood of South Korea’s future economy.
H. Kim: I believe that entrepreneurship is what has built Korea. The rules and regulations that promote the status quo are the very incumbents that should go away. The concentration of power (businesses) should be disrupted more often by the market forces.
Koo: How do you want to contribute to President Park’s vision of a creative economy as a venture capitalist?
Moon: Creative economy will provide a great opportunity to all venture capitalists. Vice versa, wise investment in start-ups is more than necessary to get into creative economy. In this sense, venture capitalists, who have expertise in financing and evaluating start-ups, can be effective facilitators in the creative economy.
E. Kim: Our goals as an investor are aligned with those of a creative economy. Through investment and hands-on company building, we hope to fuel the visions of entrepreneurs to create the next generation of leading technology companies. This is hard work. Many startups have and will fail, with the 10 year survival rates consistently being only -35%, according to the U.S. Bureau of Labor Statistics. However, we readily dedicate our capital, research, networks, and expertise to partner with entrepreneurs that will have real positive impact. New job creation and our future economies, both in Silicon Valley and Asia, are at stake. We are all in this together.
Koo: What do you hope to see more from Korean startups? Where do you think we are at the moment? What do you think will be crucial to transform Seoul to become the next Asian Silicon Valley?
Moon: I would advise the startups to avoid mistakes from myopia and start preparing for the future with a broader scope in their ideas and long term view. It is not very likely to change the world with a single idea. But start-ups can make impact. I don’t think we should even have the identical twin model of Silicon Valley here in Korea. Korea and the United States are different in many levels, ranging from the resource endowment to anticipated obstacles ahead. I think we should build our own indigenous "Seoul Valley" here. As Rome was not built in a day, and as the Silicon Valley is proud of its relative long history, Korea ought to have more patience in the journey of building our own.
E. Kim: I am hoping to see continued bold risk taking from Korean start-ups. I’m starting to see an incredible depth of vision matched by a resilient tenacity coming from Korean start-ups, similar to what we see here in Silicon Valley. Most entrepreneurs are generally smart and have great ideas – that’s not even the starting point though. The mental -- and frankly, physical -- toughness it takes to go from nothing to something is going to be crucial. That toughness is what enables bold risk taking. And risk taking, when calculated and carefully thought out, is the only way to reap true rewards.
