Start-ups have been a new force for the economies of many technologically advanced countries in recent years, more notably after the beginning of smartphone/ applications era with the many application start-ups that have an expansive platform to connect with customers. The number of Korean start-ups has almost doubled to over 28,000 from just over a 15,000 in 2008.1 A lot of this has to be attributed to the smartphone revolution and the opportunities that tech savvy entrepreneurs saw with applications for smartphones. Kakao Talk is the prime example of a successful start-up as a text application that is most successful in Korea.2 It is now setting its sights on the world stage with new innovative ideas incorporated into a simple text application.
This new field of growth is now the focus of an economy that is barren in natural resources and relies heavily on its human capital and exporting. And after seeing the success of entrepreneurs in this emerging realm, the South Korean government has actively been involved in trying to assist and aid various start-ups and to make a friendlier environment for venture capital. And as with many government projects and interventions, there has been numerous criticism of the government’s active involvement in its country’s venture capital market.3 However, what most critics do not take into account is the capability of the Korean government to adapt in order to make policies that reflect what these start-ups truly need. Yes, red-tape and bureaucracy lead to inefficiencies but one has to see the history of the Korean government taking an active role in the whole economy since it became a republic, with obvious success.
“The new motto for its economy is “Creative Economy” under the new Park Presidency in Korea today.4 Within the center of that motto being entrepreneurship, it is an initiative for the government to provide bright, motivated individuals, the best possible environment to succeed. But some overzealous organizing and overlapping bureaucracy has led to some disgruntled voices within the start-up community and among critics.5 One of the concerns stems from the overlap of processes that the government has made, hence hindering the efficiency of the venture capital ecosystem in Korea. 6 Another criticism the Korean government is facing is the lack of exit opportunities. Experts continue to advocate for more support of start-ups that eventually fail rather than leaving the fail experiments out to dry. However, although the government is supporting entrepreneurs through preferential measures and lacking exit opportunities compared to the environment in the United States, involvement goes deeper than just policy incentives and tax breaks. In the eyes of the government, this is a field that it plans to continue supporting. There will be trial and error in the initial stages of government involvement. However, what makes this grand plan appealing is that the Korean government is thinking further and planning to support infrastructures and secondary-tertiary fields of venture capital.7
The two major areas the Korean government is striving to improve are the educational system and a fallback web mechanism for unsuccessful ventures. For improvements in the educational system, it seems like there needs to be more emphasis on the entrepreneurial curriculum taught at higher learning institutions and in the secondary curriculums. In the United States, the best and the brightest decide to enter and begin start-ups.8 However, in Korea, there is no educational curriculum on entrepreneurship until a student reaches college and therefore, young students more likely dream working for the government or for a multi-national corporations. From being a great “fast-follower” to also becoming the “first-mover” should be the goal of the innovation of the education system. In order to achieve this, it is important for the government to identify areas where the Korean system can improve by benchmarking educational systems having more success in promoting healthy entrepreneurism.
Another area that the government is trying to focus is an area that is continuously criticized not just in the start-up realm, but in society in general. A culture where failure is deemed unacceptable is not very healthy for entrepreneurs and start-ups.9 Most start-ups are like going to fail. This is a fact because of economic reality. It is what the government can do to help the people who are unsuccessful, get them back on track that will determine the longevity and eventual success of Korea’s grand plan to incorporate entrepreneurism and start-ups as an integral part of the future “Creation Economy”. After the initial success of government’s policies for start-ups and venture capital, there has been some criticism of government involvement hindering the very same exact field it is supposed to assist.10 However, with meticulously planned policies and the continued innovation its infrastructure, this may be one of the crowning achievements of the current administration. It is going to be an uphill task, but with ample human resources able to supply the ideas of new start-ups, it will be important to see if the Korean government will be able to foster more “Kakaotalks” in the future and give a boost to an economy that needs one.
Jeong-yeon Han, No Slowdown in South Korea’s Startup Scene, WALL ST. J. ASIA (May 31, 2013), http://blogs.wsj.com/digits/2013/05/31/no-slowdown-in-south-koreas-startup-scene. ↩
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Jonathan Cheng, Seoul Bankrolls Burgeoning Startups, WALL ST. J. ASIA (Feb. 10, 2014), http://online.wsj.com/news/articles/SB10001424052702303874504579373922317838510. ↩
Ji-Ae Sohn, President Park proposes ‘creative economy’ for Job Creation, (Sept. 9, 2013), http://www.korea.net/NewsFocus/Policies/view?articleId=112338. ↩
See Cheng, supra note 2. ↩
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Alan McGlade, Why South Korea Will Be The Next Global Hub For Tech Start-ups, FORBES (Feb. 06, 2014), http://www.forbes.com/sites/alanmcglade/2014/02/06/why-south-korea-will-be-the-next-global-hub-for-tech-startups/. ↩
Yoon-Jae Lee, Creation Economy’s stepping stone: Entrepreneurship, THE BELL (Feb. 17, 2014), http://www.thebell.co.kr/front/free/contents/news/article_view.asp?key=201402130100021120001279. ↩
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See Cheng, supra note 2. ↩