The Korea Institute of Startup and Entrepreneurship Development, a subsidiary of the Ministry of SMEs and Startups, recently advertised for a total of 850 promising startups boasting advanced technology but lacking investment.
In an announcement earlier this month, the institute vowed to back the selected startups so that they can better attract investment, pioneer markets, protect technologies and develop prototypes. Each company will also be funded up to 100 million won and supported by 53 selected organizations -- 44 colleges, eight public organizations and one private firm -- in the form of infrastructure and mentoring.
The Ministry of SMEs and Startups has set aside 102.7 billion won ($85 million) for the support packages this year.
Separately, the institute is also recruiting around 1,700 teams with innovative technology ideas. An investment of 101 billion won will be used to help them develop business models.
The support programs are part of efforts by the ministry and the institute to back innovative firms so that they can settle down, weather challenges and grow in the global market.
Minister of SMEs and Startups Park Young-sun speaks to startup CEOs and investors in a meeting held by Lotte accelerator L-CAMP at the Busan Center for Creative Economy & Innovation in the port city on May. 13. (Yonhap)
This year, the organization has set aside a total of 997.5 billion won to help startups through each growth phase: preparation, early stage, full-fledged business and exit.
After years of preparation, startups in the first three years are classified as those in the early stage. From three to seven years, they are defined as full-fledged businesses. After seven years, they tend to exit by way of initial public offerings or mergers and acquisitions.
During the preparation period, the government helps aspiring young people to develop business items. It runs diverse programs, including Youth Bizcool, entrepreneurship centers for colleges, field exercises on launching businesses and a preliminary startup package, in order to improve their entrepreneurship skills and expand their business base.
As for startups in their early stage, the institute also runs various training projects, including the acceleration of “born-globals,” the Center for Creative Economy and Innovation and a startup support center for seniors. It also fosters innovative one-person businesses to help new companies develop prototypes and make business models.
When a business is fully fledged, the government increases its chances of success by helping it avoid “Death Valley,” which refers to the high probability that a startup firm will die off before a steady stream of revenue is established. It runs programs, such as startup-jump packages and successful comeback packages, to improve the startups’ research and development and pioneer markets.
For companies at this stage, the government has set aside 84 billion won this year to back around 1,000 firms. Up to 300 million won will be funded for each company to support the process of scaling up and jumping into markets.
Companies, colleges and research centers will also be appointed to help startups in danger of falling into Death Valley, by providing training in the areas of export, distribution and design. The selected organizations will invest in funds established by KISED to help the startups jump into the global market.
According to government data on 22,334 firms funded by the government from 2009 to 2017, these companies have a 53 percent five-year survival rate, as compared with the national average of 28 percent.
The startups backed the ministry have also created a total of 54,489 jobs during this period. Fourteen companies, including Zaigle and Osteonic, have been listed on Kosdaq and Konex. A total of 2,227 firms have earned “innovative company” certification.
Viva Republica is one such success story. Its financial services platform Toss has become a unicorn valued at over 1 trillion won after being funded by the SMEs Ministry.
Mangoslab, a startup spun off from Samsung Electronics in 2016, was supported by the ministry in 2017 for its payroll and prototype costs. For its internet of things-based printers, which print smartphone memos, the firm received an innovation award at the CES.
Mangoslab CEO Chung Yong-soo said, “On the back of the startup support programs run by the government, we received support to develop products and find markets and we were able to settle down in the early stage.”
“We have seen meaningful outcomes in survival rates and job creation from the startups we supported. We will continue to back new companies to settle down and grow in the global market,” said Kwon Dae-soo, a chief of the SME Ministry’s startup promotion policy division.
By Shin Ji-hye and Lee Kwon-hyoung