Seoul is hoping that massive injections of new funds will clear gloomy economic skies caused by Covid-19's rampage. Photo: Andrew Salmon/Asia Times

South Korea has long been one of the most top-heavy economies on earth.

At the summit, tower a privileged handful of massive, family-run conglomerates which vacuum up capital, lure elite human resources and bully suppliers. At the bottom, countless mom ‘n’ pop operations – franchises, restaurants, coffee shops, educational institutes, taxis – battle to survive.

And in the middle? Precious little – bar suppliers to the various conglomerates.

This, at least was the situation in the 1960s, when Korea started to industrialize, to the last few years. Now, evolution is becoming apparent.  “Significant social and cultural changes are taking place in Korea,” said Park Young-sun, Seoul’s minister for Startups and SMEs – a body created in 2017 – in a briefing to foreign reporters on Friday.

There are positive signals that Korean entrepreneurialism is being unleashed, that venture capital taps are gushing and that Korea’s middle business tier is being filled. According to global research platform CB Insights, South Korea has, as of 2019, bred eight unicorns, or privately held startups valued north of $1 billion.

Overall, this means that G11 South Korea (population: 51 million) falls behind only G2 economies the US and China, services giant the UK (with 17 unicorns) and demographic monster India (with 16).

According to CB Insights’ data, South Korea’s unicorn herd is the same size as Germany’s (eight); double the size of France’s, Israel’s and Indonesia’s (each with four) and is galloping ahead of national competitor Japan (which boasts just one).

Rise of the unicorns

Korea’s unicorns bestride a range of sectors. They are, according to CB Insights: E-commerce company Coupang (valued at $9 billion); Travel-tech provider Bluehole (worth $5 billion); Yello Mobile, a mobile software and services provider ($4 billion); Woowa Brothers, an on-demand player ($2.6 billion); L&P Cosmetic, a beauty-and-grooming firm ($1.78 billion); Wemakeprice, an e-commerce marketplace ($1.33 billion); Fintech provider Viva Republica. or Toss ($1.2 billion); and Yanolja, a travel-tech company ($1 billion)

Officials are upbeat. “We believe in the strong emergence of a second venture boom in Korea,” said Oh Kee-woong, the ministry’s director general for Venture Innovation Policy, who joined Park at the briefing.

Korea’s first venture boom – the Internet bubble of the 2000s –  would bust, but not before spawning a handful of firms to add to a national industrial portfolio that previously consisted of metal bashers like Samsung and Hyundai. Those companies include portal firms Naver and Daum and online gaming firms like Nexon and Neowiz.

A major barrier preventing Koreans from creating startups was a financial eco-system and social culture that has customarily punished failure. But now, “We have programs to support ‘second-chance’ startups,” said Park.

“As statistics from Silicon Valley show, before there is one success story, there are seven to eight failures,” said Oh. “We are recognizing the importance of failure before success, and we are working to improve institutions, culture and society.”

That is a tall order, demanding regulatory change and social engineering. But positive change appears to be underway.

Anti-entrepreneurial eco-system

Central to the problem was capital access. In the United States, such tech colossi as Bill Gates, Jeff Bezos and Steve Jobs enjoyed the security of a financial eco-system where entrepreneurs could bounce from failure to failure before hitting the big time on the strength of personal charisma and smart ideas. Conversely, Korea’s top-down financial system took a sternly conservative approach to risk management.

Banks customarily lent to giant businesses with plentiful collateral; entrepreneurs who lacked such major assets were forced to take on perilous liabilities, and early-generation Korean venture capital firms were not much better.

“In the past, a lot of VCs required the owner or founder to take personal liability or offer guarantees,” James Kim, an investor with Tiandi Partners, told Asia Times.

When a start-up went under, there were dire consequences for its founders.

“I believe that when it came to bankruptcy, there was no protection from liabilities – even tax liabilities,” said Eric Cornelius, managing director of Bright Shiny Robot, a Seoul-based start-up consultancy. Liquidity providers would seek to recoup their investments, “… even if it meant [the capital recipient] had to do slave labor for life,” Cornelius added.

Such practices are thankfully, fading – at least, in the VC space.

“These days it is not that big of an issue, as there as so many sources of funding without debt or personal liability,” said Kim. “VCs have got smarter, they don’t hold company founders personally liable the way it was a few years ago,” noted Cornelius.

Moreover, those who failed once would have their credit history forever besmirched across the national financial system. And in a nation with a powerfully neo-Confucian culture where the issue of “face” was paramount, shame was attached to bankruptcy.

“Now we see serial entrepreneurs who have risen from the ashes of companies that have crashed and burnt,” said Cornelius. “It does not seem as if there is so much judgment [of failure] on the social side; it seems to be getting better.”

Change agents

As is so often the case in Korea, leading-edge best-practice has been top down: From both big business and government.

On the corporate front, steel giant POSCO last year created a 1 trillion won venture fund, Oh noted, while Cornelius cited an in-house program at the country’s flagship corporate, “Samsung C-Lab.” Under that program, employees with an idea for a business present it before a board of internal judges. If the board OKs the proposal, the employee retains his/her Samsung salary while also being offered start-up funds.

Though some critique conglomerate-incubation efforts as foxes guarding henhouses, the Samsung program insulates the wannabe entrepreneur from failure-related risk: if his/her project does not take off, he or she is offered his previous position in the firm, no questions asked.

Government has also waded in. A fund of funds with 4 trillion won was started in 2005, based on Israeli and Singaporean models, to kick-start the sector. Since then, venture investments have skyrocketed. As of last year, they were worth 3.4 trillion won, up from 2 trillion in the first venture boom in 2000, according to data provided by the ministry.

“The first venture boom was led by the government,” Oh said. “The second venture boom is being led by the private sector, so it is more sustainable; 67% of venture investment is private today.”

The data tell their own story. The number of newly established companies has set a record high for three consecutive years, from 93,768 in 2015 to 102,042 in 2018, according to ministry data. Meanwhile, Korean unicorns have surged from three in 2018 to eight today – “evidence of a mature infrastructure and eco-system,” Oh said.

The changes may be seeping through to youth, who dub their country “Hell Joseon” (the latter being the name of Korea’s last kingdom) – a purgatory in which it is impossible for the young to get ahead, particularly given high graduation rates, which have devalued the currency of a university degree.

While it was previously unthinkable for students to ditch their studies to create a start-up, a Seoul university student anecdotally told Asia Times that a number of her fellow students are now doing exactly that.

Old habits die hard

Even so, the formal Korean financial sector remains a bastion of conservatism.

Oh noted that in the US, about 40% of pension funds invest in VCs; in Korea, that number is just 13%. Seoul’s 2005 fund of funds was designed, “to make up the missing investment,” Oh said.

And he conceded that Korean traditional financial institutions retain problematic practices. “Joint liability regulations are quite unique,” he said. “Founders of failed companies have to pay back loans and we understand that this system prohibits entrepreneurs from having a second chance.”

Once again, government is taking up the slack. As of 2018, loans from government-run financial institutions ceased to demand these onerous liabilities, Oh noted.

Join the Conversation


  1. Thank you for some other wonderful article. Where else may anybody get that kind of info in such a perfect approach of writing? I have a presentation next week, and I’m on the look for such info.

  2. What i do not realize is in truth how you’re not actually much more neatly-favored than you might be right now. You are very intelligent. You recognize thus considerably with regards to this subject, made me in my opinion believe it from so many various angles. Its like women and men aren’t interested unless it is one thing to accomplish with Lady gaga! Your personal stuffs great. All the time care for it up!

  3. Hey there. I discovered your web site by means of Google while searching for a similar topic, your site came up. It looks great. I’ve bookmarked it in my google bookmarks to visit then.

  4. Nice post. I learn something more challenging on different blogs everyday. It will always be stimulating to read content from other writers and practice a little something from their store. I’d prefer to use some with the content on my blog whether you don’t mind. Natually I’ll give you a link on your web blog. Thanks for sharing.

  5. I was suggested this web site through my cousin. I’m no longer certain whether or not this publish is written by way of him as nobody else recognize such particular approximately my trouble. You are amazing! Thank you!

  6. It is appropriate time to make some plans for the future and it’s time to be happy. I have read this post and if I could I want to suggest you some interesting things or suggestions. Maybe you can write next articles referring to this article. I wish to read more things about it!

  7. Among me and my spouse we’ve owned even more MP3 players higher than the decades than I can depend, like Sansas, iRivers, iPods (classic & touch), the Ibiza Rhapsody, etcetera. But, the ultimate couple of yrs I have fixed down in the direction of 1 line of players. Why? For the reason that I was satisfied towards come across how well-designed and exciting towards hire the underappreciated (and broadly mocked) Zunes are.

  8. Pretty great post. I just stumbled upon your weblog and wished to say that I’ve really enjoyed surfing around your weblog posts. In any case I’ll be subscribing to your rss feed and I hope you write again very soon!

  9. Hello very cool site!! Guy .. Excellent .. Superb .. I will bookmark your site and take the feeds additionallyKI’m satisfied to search out numerous useful information here within the submit, we’d like develop extra techniques on this regard, thank you for sharing. . . . . .

  10. I would like to thnkx for the efforts you have put in writing this blog. I am hoping the same high-grade blog post from you in the upcoming as well. In fact your creative writing abilities has inspired me to get my own blog now. Really the blogging is spreading its wings quickly. Your write up is a good example of it.

  11. hi!,I love your writing very so much! proportion we communicate extra approximately your post on AOL? I require a specialist in this house to unravel my problem. Maybe that is you! Taking a look forward to see you.

  12. Hello! I could have sworn I’ve been to this blog before but after browsing through some of the post I realized it’s new to me. Anyways, I’m definitely happy I found it and I’ll be book-marking and checking back frequently!

  13. I have been exploring for a little bit for any high-quality articles or blog posts in this kind of space . Exploring in Yahoo I at last stumbled upon this site. Reading this information So i¦m satisfied to convey that I have a very just right uncanny feeling I came upon just what I needed. I so much no doubt will make certain to do not forget this web site and give it a glance regularly.

  14. Greetings! I know this is kinda off topic but I’d figured I’d ask. Would you be interested in trading links or maybe guest authoring a blog post or vice-versa? My site discusses a lot of the same subjects as yours and I think we could greatly benefit from each other. If you’re interested feel free to send me an e-mail. I look forward to hearing from you! Awesome blog by the way!

  15. Thanks so much for providing individuals with an exceptionally nice opportunity to read from this site. It is always so ideal and packed with a great time for me and my office co-workers to search the blog no less than thrice in a week to see the latest guides you will have. And of course, I’m also at all times contented considering the tremendous inspiring ideas you give. Certain 4 areas in this posting are in reality the most efficient I’ve had.

  16. It?¦s really a great and useful piece of info. I am satisfied that you shared this helpful info with us. Please keep us up to date like this. Thank you for sharing.

  17. Admiring the commitment you put into your blog and in depth information you provide. It’s good to come across a blog every once in a while that isn’t the same outdated rehashed information. Great read! I’ve saved your site and I’m including your RSS feeds to my Google account.

  18. Thanks for sharing superb informations. Your website is very cool. I am impressed by the details that you have on this web site. It reveals how nicely you understand this subject. Bookmarked this web page, will come back for more articles. You, my friend, ROCK! I found simply the info I already searched everywhere and just couldn’t come across. What a perfect web site.

  19. Howdy would you mind sharing which blog platform you’re using? I’m planning to start my own blog soon but I’m having a hard time choosing between BlogEngine/Wordpress/B2evolution and Drupal. The reason I ask is because your design seems different then most blogs and I’m looking for something completely unique. P.S My apologies for getting off-topic but I had to ask!

  20. you’re really a good webmaster. The website loading pace is amazing. It seems that you are doing any unique trick. Also, The contents are masterpiece. you’ve done a wonderful activity on this topic!

  21. certainly like your web-site but you have to check the spelling on several of your posts. A number of them are rife with spelling issues and I find it very troublesome to tell the truth nevertheless I will definitely come back again.

  22. I would like to thank you for the efforts you have put in writing this website. I’m hoping the same high-grade web site post from you in the upcoming also. Actually your creative writing skills has encouraged me to get my own website now. Actually the blogging is spreading its wings rapidly. Your write up is a good example of it.

  23. Today, while I was at work, my cousin stole my iPad and tested to see if it can survive a forty foot drop, just so she can be a youtube sensation. My iPad is now destroyed and she has 83 views. I know this is entirely off topic but I had to share it with someone!

  24. Some truly good posts on this web site, regards for contribution. “Be absolutely determined to enjoy what you do.” by Sarah Knowles Bolton.

Leave a comment

Your email address will not be published.