Heated in all but the metaphorical ways, Young Lee, minister of SMEs and startups in South Korea and Jae-wook Park, CEO of SOCAR, held a cozy fireside chat at COMEUP 2022, a startup event at the Dongdaemun Design Plaza (DDP). The conversation revolved around the plans for supporting new companies, and what the most common hurdles are for startups as they try to make their debut.
Investment, regulation, globalization – The greatest startup hurdles
Opening the conference at 10.10 am, Young Lee and Jae-wook Park both listed what they each consider to be significant issues that concern startups. Young Lee emphasized globalization, and the multitude of hurdles that startups need to overcome as they enter the global market, as well as reforms for regulations that concern them.
In terms of supportive action, her ministry and the financial industry have been providing investment as well as guidance, bridging many divides between the startups and their international success. She emphasized, that the investments done by VC was comparatively small among domestic startups, at just under 2%. The support does not end at financial aid however. Instead, policy changes reaching deeply into the roots of laws, system and the economy are to be made. This means completely transforming regulations that were made during the industrialization era, into policy that suits the “4th industrial revolution”, as minister Young Lee put it.
She praised the progressive development of the startup ecosystem, especially in comparison with its past. As a result of the aforementioned efforts, Korea now has more than two dozen unicorn companies, now pushing for global recognition.
Chairman Park addressed pressing issues pertaining to the current economic downturn. Low levels of liquidity in times of financial instability mean that the “method of simply spending money to grow” are now void. Instead of this, new business models are now needed, that can earn real profits.
Eventually, minister Young Lee presented four strategies to help startups. The first one was funding, made possible through various financial supports. A 8.3 trillion KRW venture fund is already in place for this purpose. Secondly, private funds are to be added, with the additional benefit of connecting companies.
The third strategy she suggested was attracting global funds as well as domestic ones. Given the aforementioned uncertainties in the global market these may be sparse, though the main purpose of investment into startups remains, with hopes of mutually beneficial collaborations and potential for growth to be anticipated.
Lastly, her fourth strategy was one of survival. Promising startups may well grow into unicorns in due time, but as many factors stunt their evolution, financial aids from multiple sources become indispensable. For this, multiple strategies are now being reviewed by the Ministry of SMEs and Startups.
Finally, Minister Lee spoke on a planned announcement at the end of the year – An additional mid-term financial support plan of 50 trillion KRW will be used to expand the loan and guarantee sector.
