"Half of Startups Expanding Overseas Have No Parent Company in Korea"

KOTRA, Survey on the Status of Startups Expanding Overseas

[Asia Economy Reporter Han Ye-ju] More than half of startups expanding overseas were found to be 'born global' startups that were founded abroad without a parent company in Korea.

KOTRA announced on the 25th the results of a survey conducted in December last year targeting overseas trade offices worldwide to investigate the status of startups expanding overseas within their jurisdictions. A total of 259 overseas startups from 29 countries including North America, Asia, and Europe were surveyed, and 51% of them were identified as 'born global' startups.

Among the 259 startups last year, 26 were newly established startups. Meanwhile, among the overseas startups surveyed in 2021, it was revealed that 26 companies, accounting for 10%, either closed down or successfully exited during the past year. Additionally, it was identified that a total of six overseas startups succeeded in attracting foreign investment last year.

By region, 36.7% of overseas startups were located in North America, with nearly half of them, 48%, based in Silicon Valley. Other regions where startups expanded include China (19.7%), Southeast Asia (15.4%), Europe (10.8%), and Japan (6.2%). Regarding the purpose of overseas expansion, nearly half, 48%, aimed to "target overseas markets with services suitable for foreign markets," followed by "expanding consumers and customer base" at 36%.

Seventy percent of overseas startups were at Series A or earlier stages, and 64% had between 1 and 10 employees, indicating a large proportion of early-stage startups. Meanwhile, annual sales showed a dumbbell-shaped distribution, with 25% earning over 1 million USD and 18% earning less than 10,000 USD.

The method of overseas expansion was predominantly solo investment at 76.5%, followed by joint ventures with foreign companies at 8.1%, and 'flip'?converting overseas branches into headquarters?at 5.0%. Furthermore, about two-thirds of all respondents reported no experience using government support programs. The most common preparation period for overseas expansion was reported as 1 to 2 years.

Jeon Chun-woo, Head of KOTRA’s Small and Medium Business Division, stated, "Overseas expansion is no longer an option but a necessity for startup growth," adding, "In 2023, KOTRA will actively support startups’ overseas expansion by utilizing its 129 trade offices worldwide."

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