[Inside Chodong] Startups Need Enhanced Global Openness

Kim Cheol-hyun, Deputy Director of the Bio Small and Medium Venture Department

"Startups are inherently 'Born to be Global'." This was stated by Kim Seong-hoon, lead attorney at Mission Law Firm, at a recent National Assembly discussion titled ‘Legislation and Policy Tasks to Expand the Global Openness of the Korean Startup Ecosystem.’ This remark encapsulates a common concern frequently discussed in the domestic startup industry lately. Startups with growth potential must overcome the limitations of the domestic market and target broader demand in the global market. There is no disagreement that a virtuous cycle can be established only when successful cases accumulate in the global market, continuously nurturing promising startups and entrepreneurs, and that successful overseas investments and exits must be repeated to enable expanded reinvestment in quality startups domestically.

Nevertheless, the concern begins with the fact that our startup ecosystem is still primarily activated around domestic participants. The background behind Lee Young, Minister of SMEs and Startups, frequently stating "Our country still lacks global unicorns" whenever given the opportunity is due to this characteristic of our startup ecosystem. According to CB Insights’ January report on the status of unicorns by country this year, Korea accounts for only 1.2%. The government says, "Startups lead the future of the national economy," but that future still seems distant.

Naturally, the question follows: what efforts are needed to expand the global openness of our startups? The case of Singapore, ranked first in global connectivity in this year’s evaluation report by the global startup data analytics firm ‘Startup Genome,’ is worth noting. Singapore’s use of English as an official language and its geographical location at the center of Southeast Asia make it advantageous as a strategic hub within Asia. Additionally, it has intrinsic competitiveness such as business-friendly tax systems and negative regulation. However, what deserves even more attention is the practical effort to strengthen global openness, sustained since 2014 through a cooperative system between the government and the private sector. For example, startups can issue foreign entrepreneur-specific visas when attracting investment from private investors. Employment visas can also be issued based on multi-faceted evaluations even without academic or career credentials, with overall requirements relaxed. Startup nurturing programs are operated without distinction between domestic and foreign participants through public-private cooperation. When private investors invest in early-stage tech companies, the government sometimes executes joint capital investments.

Startup founders met during reporting also request such tangible policies from the government. One startup CEO said, "Networks and capital are important for startups’ overseas expansion, so the government should implement policies that allow Korean venture capital firms to establish themselves abroad and secure capital and networks." If there is something the industry expects from the candidate for Minister of SMEs and Startups, who is a former career diplomat, it would be precisely this. There is hope that, based on expertise, the globalization of Korea’s startup ecosystem can be accelerated. After visiting the Korea Venture Business Association on the 12th, candidate Oh Young-joo told reporters, "Only about 19% of venture companies export overseas, but comprehensive overseas expansion is necessary for the competitiveness of our national economy over the next decade," adding, "For globalization, more investment from abroad into our companies is also needed."

Although startups are ‘Born to be Global,’ growth into global unicorns does not come easily. How many startups are truly global from birth? Without supportive policy environments, it is difficult to expect startups to thrive in the global market, especially amid a shrinking investment market. The Ministry of SMEs and Startups, which will welcome new leadership, has much work to do.