For more than $4,000 a month and tens of thousands of dollars worth of potential prizes, you can accelerate your startup ‘Gangnam style’ – or close enough
Recognizing the power and innovation of startups, the South Korean government announced last week that it is opening a brand new accelerator to host 40 international startups for an intensive three-month accelerator program.
Sponsored by the Ministry of Science, Information and Communication Technology (ICT), and Future Planning office of the government, the K-Startup Grand Challenge is looking to bring new innovation to Korea’s already strong tech sector.
Putting their wallets behind the project, the government has laid out a plan to offer $4,100 a month in living expenses for up to three team members each per startup to come and work out of their brand spanking new $160 million Startup Campus in Pangyo, deep in the heart of South Korea’s tech scene.
Erik Cornelius, a spokesman for the initiative, tells Geektime that the program is aimed at fostering the local startup ecosystem in South Korea which up to this point has been heavily dominated by the big companies like Samsung and LG, just to name a few.
“The government and corporates realized that the economy is too based on the big conglomerates,” he says, noting that there has been a lot of movement on the issue “since President Park Geun-hye came into power in 2013, pumping $2 billion into domestic startups under the Creative Economy initiative.”
This is the first attempt to bring foreign startups into Korea. Cornelius says that the organizers are “very open to different verticals but a few areas that they have identified are fintech, bio tech, IoT and wearables.”
Working alongside the government’s team are four local accelerators, ActnerLAB, DEV Korea, Shift, and SparkLabs, that will help to facilitate the initiative. In addition, a number of the corporate giants in the neighborhood have promised mentors and other resources to the project.
In assessing which companies will be brought into the project, he notes that they are looking beyond the buzzwords of what appears to be hot at the moment and are “really working closely with the accelerators to choose the ones that have the best chance of success.”
Applications and rewards
According to Cornelius, they have had around 250 applicants in the past week and will be taking more through June 14. After applications close, the accelerators will review and interview the startups in their local countries or by video chat during late June through mid July.
The top 80 teams will then be brought to South Korea in mid August for a full week of pitching, interviews, cultural experiences, and networking where they will decide on the final 40 who will be invited to stay for the full program, kicking off in late August.
Cornelius says that while he is not a diplomat for the government, he believes that applicants from nearly all countries, barring North Koreans, will have a shot at the program.
As the program nears its end in early December, they expect to hold their Demo Day where the companies will present to an audience of investors and judges. Those startups that are selected into the top 20 will receive $33,000 of no-strings-attached funding. From that group, the top four will receive an additional amount ranging between $6,000 and $100,000. Cornelius says that the participating accelerators have each signed on to add an additional $100,000 to give to selected startups. While all the prize money comes equity-free, any cash garnered from VCs would of course come with terms.
At the end of the day, the goal of the program is to encourage foreign startups to settle in Korea, strengthening the local ecosystem.
After speaking with Cornelius in the course of the interview for this story, setting up shop in Korea sounds like it definitely has its advantages.
“Companies that could stand to benefit would be looking for Korea’s tech expertise, location in the center of northeast Asia, and the infrastructure that Korea provides with the world’s fastest internet,” he says, explaining the advantages of doing business there.
The average house has either a 100mb or gigabit connection, but he tells Geektime that what is really important is the mobile speed. Beyond Korea’s centrality as a mobile powerhouse, the country’s telecoms have built an infrastructure that Cornelius describes as “working from subways to mountain tops, providing a strong 4G LTE signal.”
On a cultural level, he sees South Korea as having opened itself up more to the idea of startups, and like K-Pop, seems to be taking hold.
Speaking of the recent past, he says that, “If you were a top tier student, you would go to one of the big conglomerates and work there for life. That was seen as the respectable path, barring being a doc or lawyer. Over the past five years, I would say that it’s very far away from what it was. I think that there’s been some local examples of unicorns. People’s parents have been able to see that you can make a successful career working at a startup.”
He notes that while the efforts by the government are now pushing things along, throwing some additional legitimacy behind startups, he believes that the scene is also “emerging in its own right.”
This is not to say that it’s all roses. While he says that Korean VCs recognize that they have to make investments in future companies in order to continue themselves to prosper, he notes that they are generally more conservative than in the U.S. or China. “They see investment as a strategic move to help startups to keep developing or as an acquisition, rather than a financial investment, although there are those.”
“Entrepreneurs coming from abroad should definitely keep an open mind, but look for ways to leverage the positives that Korea offers. These are speed, speed, and speed. People work more hours and get a lot done.”
“If you’re an entrepreneur looking to add hard engineering talent to your team, there’s no better a place to look than Korea,” says Cornelius, adding that salaries for engineers there are significantly lower than in Silicon Valley but not necessarily lower than the U.S. average.
Perhaps the strongest selling point is that while vegetarians might have trouble with the local diet, peanuts are basically non-existent: That’s a win-win if you’re deathly allergic to peanuts and married to a vegan like me.
“Right now is a really great opportunity for foreign startups to come into Korea because there is so much support and funding available,” he says. “It’s the era of startups in Korea.”