[Asia Exclusive] "What Good Is Releasing Money Without Lifting Regulations... A Startup Environment That Encourages Bold Challenges Is Needed"

Interview with Han Jeong-hwa, Chairperson of Asan Nanum Foundation
Creating an Environment for Talented Individuals to Join Is More Important Than Increasing the Number of Unicorns
The Core of Venture Policy Is Expanding the Base... Regulatory Innovation Comes First for Market Growth

Han Jeong-hwa, Chairperson of Asan Nanum Foundation, is being interviewed by Asia Economy on the 5th. / Photo by Moon Ho-nam munonam@

"All government policies ultimately depend on the market functioning well to increase their feasibility. It is not simply a matter of increasing resources or subsidies; although it is a difficult issue, I believe we need to create an environment where the market can solve these problems."

The core of venture and startup policies emphasized by Han Jeong-hwa, Chairperson of the Asan Nanum Foundation, is 'expanding the base.' Rather than setting the policy goal to increase the number of unicorns (unlisted ventures valued at over 1 trillion won), Han believes the focus should be on creating an environment where talented individuals with competitive technology and capabilities can start businesses. This suggestion carries weight because he previously oversaw related policies as the head of the Small and Medium Business Administration and is now dedicating efforts to building an innovative startup ecosystem in the private sector.

The Asan Nanum Foundation, where he took office as chairperson last December, also aims to create an environment conducive to youth entrepreneurship. Han emphasized, "For a healthy startup ecosystem, it is essential not only to have investment but also to establish a regulatory environment that allows innovative companies to emerge, and a social, cultural, and educational environment that encourages challenges and tolerates failure." On the afternoon of the 5th, we spoke with Chairperson Han at the Asan Nanum Foundation in Jung-gu, Seoul, about the future of the domestic venture ecosystem.

Han Jeong-hwa, Chairperson of Asan Nanum Foundation, is being interviewed by Asia Economy on the 5th. / Photo by Moon Ho-nam munonam@

-The government has set a goal to expand the number of unicorn companies to 20 within five years. What do you think is necessary?

▲Unicorns have mostly appeared in countries with large markets such as the U.S., China, and India. In Korea, I believe it is more important to expand the base rather than making this a policy goal. The domestic market currently makes it difficult to grow into a unicorn unless a company becomes a 'monopoly.' Emphasizing growth only into unicorns could conflict with policies supporting small business coexistence. If we create an environment that expands high-quality technology startups, unicorns will naturally emerge.

-There are both expectations and concerns, but the government is focusing its policy efforts on nurturing unicorns. What is your view?

▲The government's policy tool is funding, but funding without demand expansion can create a 'bubble.' A market expansion strategy is needed, but it is constrained by regulations. For example, the 'Tada' issue has not been resolved, limiting the growth of the related market. Unlike countries with large markets where unicorns emerge and lead growth, in smaller markets like ours, the government must adopt a market expansion strategy that increases demand.

-What should the government do to grow the market?

▲First, regulatory innovation is necessary. The government should reduce market uncertainty and create future business opportunities. In the case of Tada, the government should play a role in increasing demand and lowering market uncertainty. In summary, the government's important role is to reduce uncertainty and motivate entrepreneurs. Only then can companies challenge uncertainty and increase their willingness to invest. The worst scenario is when those with investment capacity only go overseas. There are reports that a huge number of technical personnel are leaving the country. If money and people leave, there is no solution.

Another important aspect is revitalizing the re-challenge ecosystem. If there is a perception that failure in business ruins one's life, people will not start businesses. A culture where people can actively bounce back after failure must be created for talented individuals to venture into entrepreneurship. There is much talk about activating entrepreneurial spirit, but if you look closely, the cost of failure is too high. If this cost is not institutionally reduced, it will be very difficult. I want to emphasize again the need for systems and cultures that allow excellent professionals to challenge entrepreneurship while minimizing personal sacrifice and providing opportunities for re-challenge after failure.

Han Jeong-hwa, Chairperson of Asan Nanum Foundation, is being interviewed by Asia Economy on the 5th. / Photo by Moon Ho-nam munonam@

-Regarding venture policies, what are the strengths and shortcomings of the current government?

▲The size of venture investment funds has increased. However, on the ground, people only talk about difficulties caused by the minimum wage increase. Companies must respond flexibly in an industry ecosystem full of uncertainty to survive, but if the law removes that flexibility, their ability to respond in crisis situations will inevitably weaken.

-There was controversy recently regarding Woowa Brothers, acquired by Germany's Delivery Hero. While there was positive evaluation of global expansion, there were also many concerns about market monopoly.

▲I think the globalization of Woowa Brothers' 'Baedal Minjok' is desirable. Especially if Baedal Minjok becomes a role model, many startup challenges will occur, and investors can use the profits from Baedal Minjok to make further investments. If former Woowa Brothers members take on new business challenges and create serial entrepreneurs, it will have a very positive effect on the ecosystem. When Baedal Minjok first appeared, the government also created an app with no delivery fees. In response, Baedal Minjok developed a coexistence model with small business owners. If they raise fees and abandon the coexistence model after market domination through mergers and acquisitions, they will face national resistance.

-You mentioned serial entrepreneurs. What policies do you think are necessary to nurture such entrepreneurs?

▲Currently, when investment funds are recovered, investors must pay huge taxes. If reinvestment occurs, capital gains taxes should be drastically reduced to encourage further investment. Incentive systems for investors when technology-intensive companies exit (recover investments) should also be activated. In Korea, it takes 1.5 to 2 times longer to exit compared to other countries, but if incentives are given to both buyers and sellers, mergers and acquisitions will be generally activated, and this cycle can be shortened.

-There is still a strong voice of regret regarding the education system that properly nurtures entrepreneurs. What are the plans of the Asan Nanum Foundation?

▲Entrepreneurs are not made overnight, so I believe youth entrepreneurship education is very important. Young people need to naturally encounter and internalize entrepreneurial spirit from their youth. The Asan Nanum Foundation operates programs such as 'Entrepreneurship Let's Go' and 'Asan Teacherpreneur' for parents and teachers, and runs the 'Asan Youthpreneur' program that provides entrepreneurship education directly to youth in schools. We plan to continue efforts so that various people can encounter entrepreneurial spirit and naturally spread startup culture.

-Many innovative companies have been born at the Asan Nanum Foundation's startup support center 'Maru180.' It has played a significant role in nurturing domestic startups and creating an ecosystem.

▲Based on our experience so far, we plan to expand the scale of the business. Next year, we will open 'Maru360' to triple the number of supported teams and prepare a space where entrepreneurs and creators from various fields such as manufacturing, beauty, and branding can interact.

-What is the focus of the Asan Nanum Foundation this year?

▲I believe we need to globalize. We must build a global network and collaborate with institutions in various countries that share the same purpose to spread entrepreneurial spirit. Also, to create unicorns that grow in the global market, we need to provide many opportunities for startups to go overseas.

This content was produced with the assistance of AI translation services.