"Kakao Controversy Known... Hope Startup M&A Does Not Shrink (Comprehensive)"

Minister Kwon Chil-seung of the Ministry of SMEs and Startups Holds Meeting with Young Entrepreneurs
Minister Kwon: "Many Support Measures for Early Startups... Aiming for Startup Patriotism"
Appeals for Support of Development and Middle-Aged Workforce... "Practical Education Needed"
Record High Applications for Startup Competition 'Challenge! K-Startup'

[Asia Economy Reporter Kim Bo-kyung] "Apple has acquired more companies than Kakao but is not criticized. While monopolizing local markets should be restrained, please play a role in ensuring that the root of M&A itself is not cut off." (Yeon Chang-hak, CEO of Block Odyssey)

"Although they are young startups, middle-aged and older personnel are also needed. Support for hiring middle-aged and older workers with diverse experience and know-how is urgently needed." (Ahn Eun-hee, CEO of WhiteScan)

On the 15th, at the Global Startup Academy located in G Tower, Guro-gu, Seoul, Minister Kwon Chil-seung of the Ministry of SMEs and Startups met with young entrepreneurs ahead of Youth Day (September 18) and had an open and candid discussion. Young entrepreneurs in their 20s and 30s proposed government policies necessary for startups and conveyed difficulties faced on the ground.

The recent issue of Kakao's infringement on local markets was also discussed. Yeon Chang-hak, CEO of Block Odyssey, said, "Kakao is being attacked for acquiring 93 startups, but in fact, the employees of those 93 startups succeeded in exit (investment recovery) thanks to Kakao, which can be seen as nourishment for the startup ecosystem." He added, "There was a trend of increasing acquisitions by giant IT companies as existing large corporations did not acquire startups," and requested, "Appropriate regulation is necessary, but please ensure that the Ministry of SMEs and Startups plays a role so that the root itself is not cut off."

In response, Minister Kwon agreed with Yeon’s view, saying, "M&A is a legitimate transaction agreed upon by both parties. A healthy M&A culture is necessary." However, he noted, "Platform companies are expanding their business areas beyond what was initially thought," and said, "Once they grow to a certain scale, social responsibility and corresponding regulations become inevitable." He added, "It is essential to have an attitude of coexistence with platform users."

CEO Lee Yoo of GDP Studio said, "I often get asked, 'What if a large corporation enters this business?'" and added, "There is a widespread perception that large corporations will do it as long as it is profitable." He emphasized, "For young entrepreneurs who execute ideas alone, large corporations can be both a barrier to entry and a risk," and stressed, "Discussion on this aspect is also necessary."

Ahn Eun-hee, CEO of WhiteScan, which specializes in AI-based cybersecurity services, said government support policies for hiring middle-aged and older workers are needed, gaining sympathy from attendees. Park Hyun-sol, CEO of Disquiet, expressed the developer manpower shortage, saying, "There is a need for systems that quickly develop the technical skills required in the market and connect with startups."

Minister Kwon said, "Compared to other countries, Korea has many programs supporting early-stage youth startups," and expressed confidence, "We adopt what works well abroad tailored to our circumstances. Institutionally, we are one of the leading countries." He added, "We aim to create an environment where young people can challenge new ideas and pursue 'Startup Patriotism' to upgrade society through entrepreneurship."

In response, CEO Park said, "Some people think, 'If you write a good business plan, you can start a business,'" and warned, "Because some start businesses just to easily receive government support funds, those who sincerely start businesses may suffer."

CEO Yeon also said, "Historically, Korea has become the best environment for startups," but added, "Many jump in without sufficient consideration, thinking anyone can easily make money through startups, leading to failure." He insisted, "Education that addresses responses to startup failure and realistic issues like startup employee layoffs is also necessary."

Minister Kwon said, "We are well aware that young people have become more difficult due to the prolonged COVID-19 pandemic," and added, "However, the role of youth is becoming even more important to prepare for the post-COVID era."

He said, "In the first half of this year, startups founded by youth under 39 increased by more than 7.3% compared to the first half of last year, confirming that the enthusiasm of the second venture boom has spread to youth startups," and added, "The Ministry of SMEs and Startups will continue to help youth start and grow businesses in innovative fields."

Meanwhile, the young entrepreneurs attending the meeting had passed the preliminary round of the 'Challenge! K-Startup' Youth League. Challenge! K-Startup, Korea’s representative startup competition, is operated by the Ministry of SMEs and Startups and related ministries, running specialized preliminary leagues by ministry and field. Teams passing the preliminary leagues compete in the main, final, and championship rounds to determine the final winners.

Since the collaboration of four ministries?the Ministry of SMEs and Startups, Ministry of Education, Ministry of Science and ICT, and Ministry of National Defense?in 2016, this year a total of 10 ministries are running 9 field leagues. Notably, this year saw a record high of 7,352 teams applying, with 537 teams participating in the newly established Youth League.