[Startup Struggles ⑤-2] Half of Korea's 'Unicorns' Are in the Red... A 'Quantum Jump' Beyond Borders Is Needed

Gojek and Grab Grow Decacorn Crossing Borders
Vertical Growth Possible with Government's New Southern Policy + Southeast Asia's Open Stance

Exterior view of JustCo, Southeast Asia's largest co-working space, Marina Square branch in Singapore

[Singapore=Asia Economy Reporter Minwoo Lee] It has been argued that in order for unicorns (unlisted startups valued at over $1 billion) like mobility services Grab and Gojek, which exert influence across borders, to emerge, it is necessary to focus on the Southeast Asian region. It is analyzed that this can create a synergy effect in conjunction with the government's New Southern Policy and the open stance of local countries.

According to the industry on the 16th, as of 2018, half of the 10 domestic unicorns were operating at a loss. E-commerce company Coupang recorded the largest operating loss of 1.097 trillion won. Following were Viva Republica, operator of the simple remittance application 'Toss' (44.4 billion won), e-commerce company WEMAKEPRICE (39 billion won), venture alliance Yellow Mobile (31.8 billion won), and accommodation and leisure reservation company Yanolja (16.7 billion won) in order of operating loss size.

Even unicorns that recorded profits have hit a wall in growth momentum. L&P Cosmetic and GP Club, which mainly generated sales in China centered on cosmetics such as mask packs, are showing a downward trend as the K-beauty fever in China cools down. This means that 70% of unicorns are struggling.

Therefore, concerns have arisen in the industry that even those who have become unicorns need to find new growth engines and markets. In particular, since most of the unicorns operating at a loss are active only in the domestic stage, it is pointed out that a 'quantum jump' is possible only by crossing borders. In fact, mobility companies Gojek and Grab, which grew from unicorns to decacorns (startups valued at over $10 billion), expanded beyond Indonesia and Malaysia to the entire Southeast Asia, causing their corporate values to soar vertically.

It is also a positive factor that Singapore, considered the gateway to the Southeast Asian region, is actively promoting the attraction of foreign companies. Minhogeon, Innovation Manager at the Energy Research Institute (ERI@N) of Nanyang Technological University, which is a startup support and nurturing institution of the Singapore government, said, "The government is actively promoting the attraction of foreign companies at the government level, and Korean companies are also showing active interest." In fact, ERI@N has already joined hands with KILSA, a specialized organization supporting entry into the Southeast Asian region, and is preparing to aggressively attract companies starting this year. Philip Park, co-CEO of KILSA, said, "If you enter Singapore, it will be easier to support other countries such as Indonesia and Thailand," and added, "At the KILSA level, we will actively collaborate not just as an intermediary but at the level of overseas branches and strive for settlement."

Professor Kyunghwan Kim, head professor at the Graduate School of Global Entrepreneurship at Sungkyunkwan University, said, "It is true that there are limits to the domestic market for domestic unicorns to grow in the long term," and added, "Since the government's New Southern Policy stance continues, not only unicorns but also innovative startups with technology need to actively target the Southeast Asian market."