Seoul, The Hottest Startup Hub In Asia?

A look into Korea’s tech infrastructure and Startup Ecosystem

Nathan Millard @Nathan_mill

Autumn, 2014

It wasn’t always like this…

Gangnam 1950s

Gangnam 2013

Understanding Korea

25.6M in Seoul Metropolitan Area (1/2 of population)

Home of Samsung, LG, Hyundai, Hanlyu

Hard working (10-12 hours per day)

Tech-savvy & Engaged

Homogenous & Impressionable

Trend setters Pop culture, tech, fashion

Korea’s Economic Landscape

• $22,500 per capital GDP (higher than EU)

• Asia’s third largest e-commerce market (12%+ annual growth since 2006)

• Increasingly vibrant exit market (M&A and IPO)

• Engaged consumer base, eager to spend through tech

IPhone

• Fastest mobile broadband (excellent for content consumption)

• High smartphone penetration: 75%+

• Android-oriented (85% Samsung & LG)

• Kakao games platform boosting Google Play

• Currently, no serious challenge against Kakao Talk

• Telegram?

Korean Mobile Market Overview

Large (Korean) Corporations Dominate

= 85% M/S

= 96% M/S

= 2.5% M/S

= 97% Penetration

= 14% M/S

•#3 in the world for downloads

•#3 in the world for revenue

•25%+ online for 8+ hours/day

$100M USD monthly app revenue

App Opportunity in Korea

Whole population engaged

Gaming in Korea

• First country to have professional PC gamers

• PC rooms used to dominate free time (now mobile)

• Highly experienced gaming market place

• Exceptionally high consumer expectations

• Infrastructure supports ‘heavy’ games and apps

Anipang: First Kakao Game

Foreign games have arrived

80%-90% of app revenue from games

Koreans as App Consumers

•Highly trend-focused, social, and fickle

• 90% of top games released in previous month

•Local apps / services often triumph over imports

•Large marketing budgets are [now] required for engagement

•Localization can not be stressed enough

• World leader in mobile payments

• Extensive NFC enabled devices (SK Planet’s ‘T Cash’)• Used for 54% of in-app purchases

• Connected devices offer future opportunity

• Samsung aims to be IoT leader

• Korea is a great test market / gateway to Asia

• Bitcoin emerging (Korbit, Coinplug, CoinOne)

Mobile Payments Situation

Korean Unicorns

Unit: $Billions

“10 companies belong to what we call the “Korean Unicorn Club” (by our definition, Korean software companies valued at over $1 billion by public or private market investors)” – John Nahm, Strong Ventures (9/11/2014)

US Population: 318 million | S. Korea Population: 50 million (15.7% of US) US GDP: $16,8 trillion | S. Korea GDP: $1,3 trillion (7.8% of US) All Rights Reserved

• Traditional: Kstartup, Sparklabs, Tribeluga

• Corporate: Hanwha, Samsung Innovation Centre, Google Campus, SK Planet, Daum Accelerator

• Entrepreneurs: Future Play, The Ventures

• VCs: Bon Angels, CCVC, DEV Korea, Bootstrap Labs

• Universities: Innopolis, Yonsei, Postech

Startup Ecosystem

Accelerators

• Corporate funded: D Camp & Maru180, Startup Alliance

• International: Tribeluga, Google Campus, Intel Innovation, The Hub

• Government: Seoul Global Centre, Guro Valley

• Local: Dream Enter, SVI

Startup Ecosystem

Co-Working Spaces

• 130 Angels (around 5 active)

• Seed Investment: KOISRA

• Series A: Capstone, CCVC, Venture Port, Formation 8, K Cube Ventures, Strong Ventures, Smilegate Investment

• Series B: Altos Ventures, CyberAgent Ventures, Softbank Ventures, Qualcomm Ventures, IMM Investment, NeoPlux, Stonebridge Capital, DSC Investment, SL Investment

Startup Ecosystem

Investors & VCs

• $3.7Bn pledged for ‘Creative Economy’

• Legitimizing entrepreneurship

• Innovation centers in major cities

• TIPS program (1:5 & 1:7 matching)

• Doing too much?

Startup Ecosystem

Government

• Hanlyu (Kpop, Dramas, Movies)• On mobile and Global

• Gaming: Devsisters, Smilegate, NCSoft, Nexon, WeMadeEntertainment

• Online content distribution: Viki, DramaFever

Startup Ecosystem

Content Heritage

• IT infra that supports IT development

• Quality engineers, with strong work ethic

• Greater understanding of risk

• Entrepreneurs with global vision and bigger, better quality ideas

• Mentor networks and Angel investors

• Government support (money, PR, education, economic diversity)

• Exchange of students & ideas (Korea – West)

• Economic conditions that can support entrepreneurship

Startup Ecosystem

Reasons for Growth

Entrepreneurship in Kore has never been this hot. Korean founders are passionate, talented and building companies that are having a real impact in the region, and across the world. While there is much still to achieve, the future looks very bright.

•Highest number of startups per capita in the world• China has highest number of startups of any country• USA has ‘the best’ startups

•Mostly consumer facing mobile services

•Gaming, E-commerce, social-powered platforms, Content

Startup Ecosystem

Startups

Hottest Startups

• Maturing platform situation (dominated by 1 – 2 players)

• Kakao–Daum merger could create super-company?

• Global competition (hardware, software, services)

• Opportunities in IoT & smart home

• Korean tech startups & SMEs more determined globally

• Korean consumers will lead global mobile trends

• Closer relationship with China

Today’s Trends

Keep in Touch

• Contact me for more information

• Nathan@besuccess.com / @Nathan_mill

• +82 (0)10 8723 7702

Thank You!!