[Manbo Jeongdam] The Challenge of 'Globalizing Venture Companies'... You Have to Work Hard to Remove Regulations

Interview with Seong Sang-yeop, Chairman of the Korea Venture Business Association
Emphasizing the 'Globalization' of Venture Companies
Regulations Must Be Lifted for Venture and Startup Growth

"Even when I go on overseas business trips, I walk whenever I can. First, as soon as I get off the plane, I try to exercise. If I rest, the jet lag gets worse, so after checking into the hotel, I head to the fitness center." For Sung Sang-yeop, Chairman of the Korea Venture Business Association, exercise is an extension of his management activities. He travels abroad for business nearly four months out of the year. Managing his physical condition is essential to handle this schedule. During periods with fairs or exhibitions, he sweats it out on the treadmill at the hotel fitness center and naturally interacts with CEOs from other countries.

Recently, the number of his overseas business trips has increased as he has taken on additional duties at the Korea Venture Business Association alongside his role as CEO of Intellian Technologies, a company specializing in satellite communication antennas and solutions. Since his inauguration as chairman, the association has been pushing ‘globalization’ of domestic venture companies as a core project. However, just because the association supports them does not automatically mean our venture companies can thrive in the global market. It is necessary to collaborate with the government to provide information on overseas local certifications and regulations that individual ventures find difficult to handle. Also, it must investigate the difficulties in regions with high demand for market entry and use local business networks to offer practical assistance to companies.

Chairman Sung, who actively pursues this mission, consistently builds up his stamina even when in Korea. He visits the fitness center more than twice a week to walk and swim. In the pool, he swims 20 to 30 laps of 25 meters each. He also takes walks around his surroundings during work hours. On the 3rd, we walked together near Seonjeongneung, close to the venture business verification agency in Gangnam-gu, Seoul, where he had returned from the U.S. a week earlier, discussing ways to globalize our venture companies.

Manbo Jeongdam - Seong Sang-yeop, President of the Korea Venture Business Association. Photo by Jo Yong-jun jun21@

- Since your inauguration as chairman of the Korea Venture Business Association, you have emphasized the global expansion of our venture companies. What preparations do you think are necessary for this?

▲ The essence lies in the entrepreneurial spirit of our companies to conduct global business. Before support, venture companies must have the will to go global and take on challenges. The positive aspect is that many companies recently are seeking opportunities in Japan and other countries through Software as a Service (SaaS). The foundation for entering the global market is improving. Now, companies need to develop products or services targeting the global market with greater competitiveness. Ventures and startups find it difficult to establish overseas organizations. In this regard, the recent collaboration between the Ministry of SMEs and Startups and the Ministry of Foreign Affairs to support companies at diplomatic missions worldwide is an important and significant change.

- With overseas diplomatic missions expanding support for companies, what role can the Korea Venture Business Association play going forward?

▲ It is not easy for individual companies to conduct business overseas. Tax systems, labor laws, and financial regulations differ. Receiving help from diplomatic missions is practical support. Especially for technology-intensive ventures with limited capital, there is a strong need for technological cooperation and business partnerships with local companies rather than simple exports. Accordingly, the Korea Venture Business Association has requested the Ministry of Foreign Affairs to identify and recommend global anchor companies, global investors, and overseas Korean entrepreneurs. When overseas diplomatic missions recommend key local companies and projects that have collaboration needs with domestic ventures through their local networks, the association will match these with excellent domestic ventures capable of collaboration, promote global cooperation, and jointly discover successful cases.

- You have also spoken about a ‘think tank’ to support domestic ventures and startups competing with global companies.

▲ Globally, the new paradigm is to enhance corporate and national competitiveness through technological innovation and new ideas. Countries like the U.S., Germany, India, and China are implementing comprehensive government-level startup support policies. For domestic ventures and startups to compete with global companies and grow as economic leaders of Korea, it is necessary to firmly establish the domestic innovative venture ecosystem that forms the foundation. To systematically design this basic blueprint, we plan to launch a dedicated venture think tank within the association’s policy research team, cooperating with private experts.

- Many agree that our venture companies must go beyond the narrow domestic market and enter the global market. However, there are still many practical barriers. What hinders the growth of ventures entering the global market?

▲ Recently, ventures trying to enter new industrial fields face many difficulties due to unnecessary entry regulations. Regulations, originally intended to protect general consumers and citizens, sometimes act as tools to protect specific interest groups. These regulations not only hinder venture innovation but also directly affect the survival of companies.

For example, in recent laws, taxation, and the medical industry, traditional vested interests have mounted comprehensive resistance, making it difficult for ventures attempting new service models. There is a need to ease entry regulations and conflicts between old and new industries. This will activate startups and contribute to economic growth and job creation through active entry into new industries.

Manbo Jeongdam - Seong Sang-yeop, President of the Korea Venture Business Association. Photo by Jo Yong-jun jun21@

- Regarding regulations, you must have expectations for the newly formed National Assembly as well.

▲ It is difficult for individual companies to overcome regulations. Representative examples include companies like LawTalk, DoctorNow, and SamzzumSam. A few companies are holding on. If new industries are blocked, the harm goes to the public. Another example is Uber, which operates worldwide. Foreigners feel inconvenienced when they come to Korea because Uber is not available. If Uber were allowed, tourism would improve. Looking at how Uber grew, there were similar regulations worldwide. It did not mean no regulations from the start but grew while resolving them. However, Korea is completely blocking it. If these regulations are not proactively changed, I wonder if new industries can be created, unicorns can emerge, and companies can succeed globally. When ventures and startups present new business models or technologies, we need to see how they can grow the industry. There are many stakeholders regarding regulations: companies, government, and professional groups. The National Assembly needs to play a role in harmoniously and proactively addressing this.

- The venture investment market has recently contracted significantly. This is an issue the association must consider. The Ministry of SMEs and Startups says the investment market will improve this year, but the field does not seem to feel it yet.

▲ The situation is similar worldwide. The U.S. investment market has shrunk by more than 40%. Investors now lower valuations compared to the past and want profitable companies. It is becoming harder to receive investment, and investments concentrate only on successful companies. Ultimately, increasing funding is the only option. The Korea Fund of Funds’ venture investment is a very successful system. More budget should be secured to increase it next year. Also, private fund of funds should be further activated, which requires tax benefits. Even a slight tax reduction effect can significantly grow funds. It would be good to supplement these systems to increase investment supply.

- Domestic venture companies unanimously say securing related personnel is the first step for global expansion. Many companies actually struggle with recruitment. Are there any association-level measures to nurture talent?

▲ According to a survey of 267 venture companies last year, 36.0% of respondents cited ‘inflow of specialized personnel such as R&D’ as a management difficulty. The core of ventures is technology, so securing talent is important, but small and venture companies lack policies to prevent existing specialized personnel from leaving and to attract new talent compared to large companies. There is a common recognition that various institutional supports are needed to attract excellent domestic and foreign talent.

First, support measures to attract global technical specialists must be strengthened. Visa quotas should be expanded to attract software specialists from India, Vietnam, etc., and KOTRA’s visa recommendation authority should be expanded to the Korea Venture Business Association and others. Also, to train ICT and software experts and improve industrial technological competitiveness, it is necessary to ease university enrollment regulations mainly in the metropolitan area. For advanced fields like software at metropolitan universities, total enrollment regulations should be exempted, allowing universities to autonomously set enrollment per department. Furthermore, to maintain employee retention, institutional improvements are needed to actively utilize stock compensation systems such as performance-based stock options for unlisted venture companies. For this, tax exemptions on exercise gains, deferred payment of exercise gains, and special taxation on exercise gains should also be introduced.

- It has been one year since you took office as chairman of the Korea Venture Business Association in February. What event or policy from the past year stands out the most?

▲ The most memorable policy achievement is the ‘permanent enactment of the Venture Business Act.’ The Venture Business Act was created as a special law in 1997 and maintained as a ‘10-year temporary law.’ Since it includes essential systems for corporate activities such as tax benefits, stock options, and mergers and acquisitions, there was confusion in the venture and market fields due to uncertainty about law extensions whenever the sunset approached. With the permanent enactment of this law, the National Assembly and government can establish long-term venture promotion policies considering the unique nature of the venture ecosystem, enabling ventures to use various support systems stably.

The passage of multiple voting rights is also memorable. Many lawmakers opposed it, so I practically lived in the National Assembly to persuade them. The law is not perfect and still has some restrictions, but I believe these can be supplemented later. During the remaining term, I will faithfully fulfill my role as chairman to help create an innovative venture ecosystem and support the growth of venture companies.

Manbo Jeongdam - Seong Sang-yeop, President of the Korea Venture Business Association. Photo by Jo Yong-jun jun21@

* Chairman Sung Sang-yeop of the Korea Venture Business Association...

Born in 1972 / Graduated from Daegu Dalseong High School and Yonsei University, Department of Electronic Engineering / Accenture Consultant / CEO of Intellian Technologies / CEO of Intellian Systems / Chairman of Cheongwon Academy Foundation / Senior Vice Chairman of the Korea Venture Business Association / Chairman of the Korea Venture Business Association