Among the Global Top 100 Unicorns, 55 Still Unable to Fully Operate Domestically

Asan Nanum Foundation Announces '2022 Startup Korea!' Policy Proposal Report

Park Kyungsoo, Executive Director at Samjong KPMG, is presenting a report at '2022 Startup Korea!'.

[Asia Economy Reporter Kim Cheol-hyun] The '2017 Startup Korea!' report published by the Asan Nanum Foundation and Google Startup Campus in 2017 revealed that 56 out of the top 100 global unicorns by cumulative investment amount could not fully operate their businesses domestically. Five years later, has the situation improved? A recent report shows that even now, 55 of these 100 companies still find it difficult to conduct their core businesses in South Korea.

The Asan Nanum Foundation, Google Startup Campus, Amazon Web Services (AWS), Startup Alliance, and Korea Startup Forum held a policy proposal presentation on the 7th at the Federation of Korean Industries building in Yeouido, unveiling the '2022 Startup Korea!' report, which studied policy and regulatory improvement directions to revitalize the domestic startup ecosystem.

At the policy proposal presentation, Park Kyung-soo, Managing Director at Samjong KPMG, presented the '2022 Startup Korea!' report. Following this, under the moderation of Choi Sung-jin, CEO of Korea Startup Forum, panelists Kwon Hae-won, CEO of Paycock, Kim Kwang-seop, Director of PM Grow, and Nam Sung-jun, CEO of Dajayo, participated in a discussion on the necessity of regulatory innovation based on their actual business operations.

The newly released '2022 Startup Korea!' report focuses on domestic regulatory innovation systems and, through analysis of the current status and leading overseas cases, proposes three directions for regulatory innovation systems: ▲integrated regulatory resolution and full-cycle support ▲evidence-based social consensus for coexistence ▲operation of regulatory innovation systems from the demand-side perspective.

◆55 of Top 100 Unicorns Unable to Operate Domestically=According to the report, in 2017, 56 of the top 100 unicorns could not fully operate their businesses in South Korea, and as of 2022, this number remains largely unchanged at 55. In particular, ride-sharing, telemedicine, and shared accommodation, which were impossible to operate domestically in 2017, still cannot fully operate in South Korea. Despite the government’s active pursuit of various regulatory innovation policies, the domestic market remains a challenging environment for global major companies to conduct full-fledged business even after five years.

Among the 56 companies that could not fully operate domestically in 2017, 23 foreign companies have since grown from unicorns to publicly listed companies. These 23 companies, which had a cumulative investment amount of 60 trillion KRW at the time, reached a market capitalization of 497.2 trillion KRW as of the end of August this year. This accounts for about 20% of the market capitalization of domestic listed companies as of the end of June this year. This raises concerns about whether domestic companies can survive in competition with global companies once regulations are eased.

Jang Seok-hwan, Chairman of the Asan Nanum Foundation, said, "It has been five years since the Asan Nanum Foundation began research to revitalize the startup ecosystem, but this study once again confirmed that the core businesses of global unicorn companies reviewed at that time still cannot be mostly introduced into the domestic market." He added, "Time and speed are very important for startups and entrepreneurs, so I hope this study will help accelerate the growth speed of startups in South Korea."

The report pointed out that despite discussions on companies’ core businesses, the failure to fully introduce them reflects the ineffectiveness of past regulatory innovation systems. As a solution, the report advocates for integrated regulatory resolution and strengthening full-cycle support measures. Since excessive regulations still exist, it suggests shifting to a negative regulation approach from the perspective of innovative businesses. To address inefficiencies caused by overlapping duties among ministries and increased burdens on companies, the report also recommends strengthening performance management of regulatory innovation systems and unifying communication channels. Lastly, it calls for establishing full-cycle support measures for companies promoting innovative businesses from the perspectives of business introduction and growth.

'2022 Startup Korea' Policy Proposal Presentation Event Site

◆Conflict Resolution Process Should Be Operated Integratively=The report also mentions that innovation in industries, which presupposes changes in existing industrial systems, inevitably causes conflicts between old and new industries. To resolve this, it states that a systematic reorganization from consultation to implementation is necessary, and that the conflict resolution process should be operated integratively within the regulatory sandbox. For this, it is necessary to verify the safety of innovative technologies, assess the necessity of business introduction based on prior review results, and prepare concrete coexistence measures at the government level.

The report further analyzes that when companies enter the regulatory sandbox, uncertainties in the required period and evaluation criteria cause burdens on companies, and excessive additional conditions impose burdens during the demonstration period. It argues that unclear deadline regulations and evaluation criteria at the entry stage of the regulatory sandbox should be revised, and during the demonstration phase, support should be provided to reduce operational burdens on companies. Additionally, it suggests establishing a regional-level priority business promotion procedure to reduce risks associated with delayed approvals for demonstration projects that have proven safety and to facilitate the introduction of innovative businesses.

Choi Hang-jip, Center Director of Startup Alliance, said, "Although it is clear that startups are the growth engine responsible for South Korea’s future, there is still a speed gap between startup innovation and the policies that support it." He added, "I hope the government listens carefully to the recommendations in this report so that regulatory innovation policies can effectively support startup innovation."

Choi Sung-jin, CEO of Korea Startup Forum, said, "The essence of startups is solving problems, but regulations are problems that are difficult to solve on their own." He added, "Since the 2022 Startup Korea! report contains various regulatory innovation measures that help startup growth, I hope it will be carefully reviewed and serve as an opportunity for the startup ecosystem to take a leap forward."

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