[Inside Chodong] Korean Startup Overseas Expansion: 7% vs Singapore's 90%

Kim Cheol-hyun, Deputy Director of the Bio-Startup and Venture Department

‘ComeUp 2023,’ which concluded on the 10th, was an event that confirmed the global market's interest in South Korea's startup ecosystem. According to the organizing body, Korea Startup Forum, innovation ecosystem stakeholders from 35 countries worldwide, including the United States, France, Austria, Hong Kong, Saudi Arabia, UAE, Senegal, and Cambodia, gathered at the Dongdaemun Design Plaza (DDP) in Seoul, where ComeUp was held. The number of visitors also reached a record high of 66,000. It was evaluated as having taken a full-fledged leap as a global festival connecting startup ecosystems worldwide.

However, the global status of our startup ecosystem does not automatically rise just because the festival was successful. In that regard, the session titled ‘2023 Startup Korea! Policy Proposal Presentation: A Study on the Global Openness of the Korean Startup Ecosystem’ held at this year’s ComeUp is meaningful. Korea Startup Forum, Asan Nanum Foundation, D.CAMP, and Startup Alliance presented policy directions related to helping the Korean startup ecosystem take a step further in the global market. Looking at the content, the current status of overseas expansion in the global openness of the Korean startup ecosystem is quite shocking. Contrary to the worldwide attention poured into ComeUp, it fell far short of the level of leading countries. As of last year, the number of startups founded by Korean entrepreneurs overseas or Korean startups expanding abroad was about 300. Singapore had about 2,000, and Israel about 16,000, showing a significant gap. When considering the proportion relative to the total number of startups within the ecosystem, the difference is even more pronounced. Korea’s overseas expansion ratio was about 7%, while Singapore’s was about 90%, and Israel’s about 80%. Korea’s current startup ecosystem was described as a ‘government-led, domestically focused activated ecosystem.’

It is not that Korean startups lack the will to expand overseas. When asked about plans for global market entry at the reporting site, most CEOs of startups founded domestically said they ‘have plans.’ According to a survey by Startup Alliance, nearly 50% of founders considered overseas expansion. The target regions were mainly Southeast Asia, North America, Japan, and Europe. The biggest reason for planning expansion was to open new sales channels. Some startups aimed to enter overseas markets to secure a growing market. A few even set ambitious goals to receive higher corporate valuations in foreign markets. If they proceed as planned, the global openness status of our startup ecosystem, which lags behind leading countries, could change. However, startups themselves did not consider their preparation for overseas expansion sufficient. According to a survey by the Seoul Business Agency, only about 23% responded that they were satisfied with their level of preparation for overseas expansion.

Startups with the will and plans to expand overseas also face practical barriers. The voices from the field indicate many issues to be resolved. One CEO said, “It was very difficult to find business partners with our own personnel, and it took a long time and was challenging to build trust.” Another lamented, “Unless funds for overseas expansion are raised domestically, it is virtually impossible to receive investment abroad.” Someone else said, “There was no place to get advice on different laws, regulations, and insurance in each country we aimed to enter.” The Ministry of SMEs and Startups is introducing various policies aimed at nurturing startups competitive in the global market. While the big picture is important, details must not be overlooked. Attention should also be paid to the trial and error startups experience when entering the global market.

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