Despite the strong overall growth of South Korea’s startup sector, local tech startups developing proprietary technology-based products for the market are in the toughest position to succeed, said Naver Chief Technology Officer Song Chang-hyun on Friday.
“Among the 99 local startups which procured more than 3 billion won ($2.65 million) in investment in 2017, only eight, or less than 10 percent, were tech-based startups. This signals that Korea’s startup ecosystem is particularly tough for tech startups,” Song said in his keynote speech at a conference hosted by Naver’s startup accelerator, D2 Startup Factory.
For startups in all fields that procured at least 3 billion won worth of investment individually, the sum total was 790 billion won. But only 5 percent of this amount was invested in tech startups, according to Song.
Naver CTO Song Chang-hyun (Naver)
A tech startup refers to a company looking to create a profitable business model from original information technology capabilities. Tech startups differ fundamentally from companies that focus on building platform services or service-oriented mobile applications.
Despite possessing globally competitive technologies, Korean tech startups tend to be bogged down by hurdles that impede fundraising, the CTO said. These stem from investors’ incomplete understanding of complex technologies and lack of entrepreneurship experience, as well as difficulties in expanding markets.
Meanwhile, many foreign tech companies are evolving into companies with billion-dollar valuations, such as China-based SenseTime, a leading artificial intelligence and facial-recognition technology startup, as well as US-based Dataminr, a real-time information discovery company, he noted.
“(Superior) technology is the core of a tech startup. And tech startups must harbor the ability to quickly develop and introduce technology that is needed in the market,” Song said.
The Naver CTO’s remarks came on the sidelines of the inaugural “Tech Meets Startup” conference hosted by D2 Startup Factory. The event brought together officials from local tech startups, venture capitals and regulatory agencies to discuss ways to resolve challenges faced by Korean tech startups. Discussions focused on how to overcome market difficulties and successfully commercialize products in Korea and abroad.
Presenters included Korean tech startups LetinAR, FuriosaAI, Linkflow, Vuno, Lablup and Sualab, as well as venture capital investors Blue Point Partners, Futureplay and Lotte Accelerator.
This year, Korea’s venture investment volume is expected to hit a record 3.3 trillion won ($2.9 billion), more than double the 1.5 trillion won logged in 2014, according to projections by the Ministry of SMEs and Startups and the Korea Venture Capital Association.
By Sohn Ji-young (firstname.lastname@example.org