[K Startup Great Transformation] 'Alphago Gohyang' UK, Creating Infinite Momentum by Nurturing Startups

Successful Cases in Overseas Venture Ecosystems
Half of EU Unicorn Companies in the UK... Ecosystem Value Reaches 653 Trillion Won
First Introduction of Financial Regulation Sandbox... Driving Rapid Growth in Fintech
Support in AI Sector Through Public-Private Agreement... Financial and Tax Benefits for Foreign Companies

Tech City, located in the northeast area of London, UK. It is a kind of 'venture-exclusive industrial complex' that has emerged as a startup hub under the active promotion policies of the UK government. In 2011, Google purchased a 7-story building here and established 'Campus London.'
[Photo by UK Department for International Trade]

[Asia Economy Reporter Lee Junhyung] Domestic certified security startup Senstone received a love call from the UK government in 2018. The offer was to support visa issuance and tax benefits to encourage business operations in the UK. After heading to London, the company went through the UK Department for International Trade (DIT)'s Global Entrepreneur Programme (GEP) and within two years was recognized with a corporate valuation of approximately 94 billion KRW. Yoo Changhoon, CEO of Senstone, stated, "We judged that there were more opportunities in the UK than in the US or Southeast Asia," adding, "In fact, through DIP, we were introduced to major banks like Natwest and the UK Financial Conduct Authority (FCA), which allowed us to explore various business opportunities."

The UK’s startup ecosystem is dominant in Europe, with half of all European unicorn companies (unlisted companies valued over 1 billion USD) located there. This is thanks to the government’s various efforts, including regulatory reforms, to establish itself as a leader in the Fourth Industrial Revolution. Notably, achievements in fintech and artificial intelligence (AI) stand out.

Startup Ecosystem Valued at 653 Trillion KRW... Fintech and AI Booming with Government Support

According to global data analysis firms such as Dealroom, the economic value of the UK startup ecosystem reached 653 trillion KRW last year, growing about fourfold compared to 165 trillion KRW in 2015. Arithmetically, this amounts to one-fifth of the UK’s Gross Domestic Product (GDP). It exceeds the combined value of Germany (326 trillion KRW) and France (165 trillion KRW) within Western Europe. According to the annual ‘Global Startup Ecosystem Ranking’ published by Startup Genome, London has maintained 3rd place for four consecutive years since 2017.

This is the result of national-level efforts. Since the 2010s, the UK has revised related systems to create a business-friendly ecosystem. A representative example is the financial regulatory sandbox. A regulatory sandbox is a system that exempts or defers existing regulations for a certain period when launching previously unavailable products or services. The UK was the first in the world to introduce a regulatory sandbox in the financial sector in 2015.

With policy support, the fintech industry has grown rapidly. According to the Korea Trade-Investment Promotion Agency (KOTRA), there are over 1,600 fintech companies in the UK, directly creating employment for about 80,000 people. The industry attracted investments worth 4.6 trillion KRW last year alone, and fintech maturity ranks third globally. The UK has also produced numerous unicorn companies. There are more than eight fintech unicorns in the UK, including Checkout, valued at approximately 16.8 trillion KRW.

One of these is Revolut, the UK’s version of Toss, which became a unicorn within three years of its founding. A solid support system underpinned Revolut’s rapid growth. In its early days, Revolut received assistance from the Scale-up program operated by the British Business Bank (BBB). In 2016, BBB partnered with private financial partners to provide initial funding for Revolut.

AI is another field where the UK is leading with startups at the core. The UK adopted AI as one of the government’s four major challenges in 2017 and concretized its promotion plan a year later through the ‘AI Sector Deal,’ a public-private agreement in the AI field. The results are encouraging. According to the International Development Research Centre (IDRC), the UK ranked 2nd out of 172 countries in AI readiness last year. London, where AlphaGo was born, is already called the ‘European AI Capital’ and is recognized as a hub.

The UK sends love calls to overseas startups deemed to have high growth potential through embassies in each country. Domestic startup Sensstone was invited to a luncheon event hosted by the British Embassy in Korea last year. From the left, Yoo Chang-hoon, CEO of Sensstone; Simon Smith, Ambassador of the British Embassy in Korea; Oh Soo-hyun, Vice President of Switch (Sensstone's UK branch).
[Photo by Sensstone]

Active Attraction of Overseas Startups... Innovative Entrepreneurs Head to the UK

The UK is also actively attracting overseas startups. It courts foreign startups deemed to have high growth potential through embassies in various countries. Benefits include loans for startup capital and partial corporate tax deductions on income earned through research and development (R&D) and patents.

As a result, many startups have chosen to go to the UK. According to the British Embassy in Korea, over 3,500 people have applied for the UK Tech Nation visa in the past seven years. The Tech Nation visa applies to entrepreneurs in advanced technology fields, indicating that many innovative entrepreneurs find the UK attractive. This visa grants a basic residency period of 5 years and 4 months, with the possibility of extension up to 5 years.

There are implications for the domestic ecosystem as well. Experts point out that systematic data construction and research must precede everything else. The Science and Technology Policy Institute (STEPI) stated in a recent report, "Since 2016, the UK’s Department for Business, Energy and Industrial Strategy (BEIS) has overseen scale-up support and continuously provides the basis for related policy promotion through the Scale-up Institute," adding, "Korea also needs an organization dedicated to surveys and research for diagnosing the scale-up status and ecosystem."