The commercial landscape in South Korea is shifting dramatically, with the emergence of a new breed of fast-growing tech groups – many of them securing unicorn status in sectors such as ecommerce, gaming and finance. And, for western tech firms, the best way to make headway in the Korean market is changing with it.
No longer is expanding into Korea exclusively about forging links with the traditional conglomerates like Samsung, LG and Hyundai. While these groups undoubtedly remain important, there’s now a much wider range of opportunities that many western tech firms are currently overlooking to their disadvantage.
Let’s take a closer look.
Rise of Korean unicorns
For many years, there was a perception that it was difficult for new companies to gain a foothold in Korea because of the dominant role played by the major conglomerates.
But times are changing fast, with the number of unicorns in Korea growing from 13 to 18 in 2021, even without counting well-known companies like Coupang and Krafton which went public. And these new unicorns have become well-known brands in Korea.
They include peer-to-peer marketplace Danggeun, valued at USD $2.4 billion, grocery ecommerce platform Market Kurly ($3.3 billion), house hunting app Zigbang ($1 billion) and interior design platform Bucketplace ($1.5 billion).
The pipeline for future unicorns in Korea is strong as well: there are almost 400 companies valued between $100 million and $1 billion.
Explosion in funding & support
So, what’s behind this fundamental shift?
Rapid growth in customers and investment have certainly helped to create these new highs in Korean startup valuations. Viva Republica, for example, which operates fintech platform Toss, is now valued at around $13 billion as it closes an almost $1 billion funding round.
Similarly, travel platform Yanolja is estimated to be worth $8 billion after receiving a $1.7 billion investment from Softbank last year. And it joins big Korean names like Kakao and Coupang, which began as startups and achieved massive growth to become unicorns before going public.
In addition, the past 10 years have seen an explosion in startup funding and support from the Korean government, as well as venture capital and even the traditional conglomerates themselves.
On the government side, agencies including the Ministry of Science & ICT and the Ministry of SMEs & Startups have provided more than $10 billion for new companies to develop and commercialize their technologies.
Beyond funding, government-backed accelerators like Born2Global are crucial as well, having incubated, for instance, chat API unicorn Sendbird and AI diagnostics company Lunit, which is now valued at just under a billion dollars.
And major Korean conglomerates are getting in on the act, investing in startups at home and abroad and often establishing their own VC arms for this purpose.
Hyundai Motor, for example, made the news last June when it acquired US robotics innovator Boston Dynamics; while Lunit has received investment from Naver, Kakao and LG.
Importantly, the emergence of dozens of cash-rich new tech companies which are seeking to scale their businesses - often globally - is opening huge opportunities for international firms.
Companies with cutting-edge solutions in areas as diverse as cybersecurity, ecommerce, logistics and adtech may well find lucrative customers in this new class of Korean tech group.
I can’t stress strongly enough how significant a change this is for western tech firms.
Just five years ago, Korean prospects for many of our clients were limited to a relatively short list of major conglomerates such as Samsung, LG, Hyundai and SK.
These days, that list looks increasingly diverse and includes many of the unicorns I’ve mentioned.
In recent months, for example, I’ve met Coupang, Kakao and Bucketplace to discuss our clients' solutions - and we’ve identified business opportunities amongst them that easily rival or exceed those from the legacy conglomerates.
So, whether you’re an old hand at doing business in this country or just starting to explore the market for the first time, I’d strongly recommend a reassessment of the Korean business landscape.
Too many western tech firms are overlooking the new breed of Korean corporation and missing the considerable business potential they represent. Don’t be one of them!
To discuss the opportunities for your business in South Korea, you can contact Adeel at firstname.lastname@example.org