4 Years Since the Implementation of the Startup Planner Registration System, Surpassing '300 Companies'

Investment of 225.3 Billion KRW in 1,703 Startups, Creation of Over 7,000 Jobs, and Achievements Including Follow-up Investment Attraction

A chart showing the average of Korean accelerators and the performance of invested companies.
[Image=Ministry of SMEs and Startups]

[Asia Economy Reporter Kim Jong-hwa] Four years after the implementation of the startup accelerator registration system, the number of registered startup accelerators has surpassed 300. On the 10th, the Ministry of SMEs and Startups announced that KIMC Co., Ltd. became the 300th registered startup accelerator.

Startup accelerators are specialized companies where experts in various fields select, nurture, and invest in startup companies to support their growth. They differ from venture capital firms, which primarily focus on investment.

The concept of startup accelerators began in 2005 with Y-Combinator in the United States, the world's first accelerator, which combined investment and nurturing, and has since spread worldwide, supporting over 2,000 companies including Airbnb and Dropbox. In Korea, the legal basis for startup accelerators was established with the amendment of the "Small and Medium Enterprise Startup Support Act" on November 30, 2016.

Since the first registration of I-Built Co., Ltd. in January 2017, about 80 companies have registered annually, and KIMC Co., Ltd. has now become the 300th registered company. Some venture capital firms that previously operated both as venture capitalists and startup accelerators have returned their accelerator registrations, leaving 290 active startup accelerators currently.

According to a survey conducted by the Ministry of SMEs and Startups in September on 272 startup accelerators and 1,655 companies nurtured and invested in by these accelerators, startup accelerators, which are required to invest 40% to 50% of their investment funds in early-stage startups, have invested a total of 170.3 billion KRW (approximately 13 million KRW per company) in 1,703 companies over the past four years.

Allowing corporate investments in personal investment associations formed by startup accelerators has increased the size of these associations, leading to growth in annual investment scale and average investment per company. The 1,655 companies that received investments from startup accelerators created a total of 7,013 new jobs after investment, with average employment and sales per company increasing by 4.2 people (66.7%) and 260 million KRW (92.8%), respectively, showing clear growth trends.

As companies invested in by startup accelerators grew, follow-up investments also followed. The startup "FarmSkin," which produces colostrum cosmetics using colostrum processing technology, received 10 million KRW from Mashup Angels (a startup accelerator) in December 2017 and was later selected for the government-supported TIPS program. Subsequently, it successfully attracted 8 billion KRW in follow-up investments from venture capitalists and others.

Graph showing employment and sales changes of invested companies.
[Image=Ministry of SMEs and Startups]

The new drug development startup NextGen Bioscience Co., Ltd. received reinvestments of 10 million KRW in December 2018 and 40 million KRW in July 2019 from Schmidt Co., Ltd. (a startup accelerator), and in July last year, it attracted 20 billion KRW in follow-up investments from venture capitalists and others.

Despite being in the early stages of the system's introduction, there have been 12 cases of exits through mergers and acquisitions (M&A). Hancom Mobility Co., Ltd., which developed the parking sharing platform "Parking Friends" using IoT sensors and received 15 million KRW in investment and consulting from Actner Labs Co., Ltd. in August 2017, was acquired by Hancom Inc. for 1.5 billion KRW in January last year. Additionally, Specllips Co., Ltd., which possesses AI-based skin cancer diagnosis and treatment technology, received an initial investment of 10 million KRW from Bluepoint Partners Co., Ltd. in January last year and was acquired by Cellreturn Co., Ltd. for 40 billion KRW in November of the same year.

Startup accelerators are distributed with 66.1% in the metropolitan area and 33.9% in non-metropolitan areas, showing a higher proportion in non-metropolitan regions compared to venture capital firms (89.7% metropolitan, 10.3% non-metropolitan), thus contributing to regional investment activation. The average Korean startup accelerator has capital of 590 million KRW, a nurturing space of 491.4㎡, 2.7 professional staff, and operates 2.3 nurturing programs on average.

Park Yong-soon, Director of Venture Innovation Policy at the Ministry of SMEs and Startups, said, "The increase in startup accelerators is significant in expanding the base of investors within the startup ecosystem," adding, "They are properly fulfilling the role of an investment ladder connecting early-stage startups and growth stages."

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