"South Korea Creates 1 Unicorn Company While the US Produces 58"

FKI's Analysis and Implications of Global Unicorn Companies

[Asia Economy Reporter Dongwoo Lee] A survey revealed that the quantitative growth speed of Korean unicorn companies lags behind overseas companies and that their fields of entry are also concentrated. It is pointed out that a virtuous cycle ecosystem from startup to reinvestment needs to be established so that unicorn companies in future high value-added fields such as artificial intelligence (AI) and edutech can emerge.

The Federation of Korean Industries announced on the 16th that, based on an analysis of data from the US market research firm CB Insights, as of the end of last month, there are a total of 501 unicorn companies worldwide, with the US (243), China (118), the UK and India (25), Germany (12), and Korea ranking 6th (11 companies).

Unicorn companies are unlisted startup companies with a corporate value of over 1 billion dollars (about 1 trillion won). Korean companies include Coupang, which started in 2014, Yellow Mobile, L&P Cosmetic, Krafton, Viva Republica (Toss), Yanolja, Wemakeprice, GP Club, Musinsa, Aprogen, and Socar, which joined in the second half of this year.

This year, a total of 92 new unicorn companies were born worldwide, with the US (58) having the most, followed by China and India (6), the UK (4), and Korea (1). The number of unicorn companies has rapidly increased over the past five years, with about one company emerging every three days since 2018.

However, Korean unicorn companies are relatively concentrated in the e-commerce sector (Coupang, Wemakeprice, Musinsa), which has a lower average corporate value, and 9 out of the 11 companies have corporate values below the industry average. There are no companies entering high-value fields such as AI, drones, cloud centers, which have the highest average corporate value, or the rapidly growing edutech sector after the COVID-19 pandemic.

In particular, there have been no successful cases of investment recovery through IPOs or mergers and acquisitions (M&A) among domestic unicorn companies. 'Woowa Brothers' (Baedal Minjok), which signed a $4 billion acquisition contract with Germany's Delivery Hero at the end of last year, is currently facing a warning due to a halt by the Korea Fair Trade Commission on the acquisition process.

Experts pointed out high regulatory barriers in the domestic AI industry, a shortage of personnel, and difficulties in attracting large-scale investments. The venture industry complained that, compared to overseas, there is a lack of corporate valuation cases and capable venture capitalists for M&A, making it difficult to receive proper corporate valuations. Additionally, negative perceptions of M&A act as obstacles to corporate growth.

Contrary to this, the Federation of Korean Industries emphasized the need for continuous nurturing policies by pointing to successful exit unicorn companies overseas, such as the video service company TikTok's parent company ByteDance and the video conferencing software Zoom. ByteDance surpassed Baidu, a leading Chinese IT company, in revenue last year, and Zoom grew more than tenfold within a year of its Nasdaq listing, surpassing IBM's market capitalization.

Kim Bong-man, head of international cooperation at the Federation of Korean Industries, said, “To foster unicorn companies and activate exits, it is necessary to build a virtuous cycle ecosystem linking startup, growth, exit, and reinvestment,” adding, “A favorable corporate environment should be created, including easing regulations on corporate venture capital, so that investment recovery through IPOs can be activated.”

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