South Korea is the world’s 12th-largest economy and the fourth-biggest exporting nation. In addition, exports comprised 34 percent of the Korean economy in 2022. Major corporations have benefited from this substantial export increase over the last decade. As a result, the large, predominantly family-run business conglomerates, also known as “chaebol,” have risen to dominate the economy. In addition, these conglomerates have a great influence on the political scene. To name a few, Samsung, Hyundai, and LG have all grown into behemoths and are international household names. With larger corporations dominating the Korean economic landscape, Korean startups are an afterthought. However, post-COVID-19, it is clear that new startups will be key to Korea’s recovery as they aim to be one of the world’s leading startup hubs.
Seoul Mayor Oh Se-hoon has stated his plans to make Seoul a haven for companies. He plans to bring in foreign companies through Invest Seoul, a Seoul Metropolitan Government division established to bring in foreign firms and capital. In addition, he plans to open a second Fintech Lab and a digital financial support center to help fintech startups in Korea.
The aim is to transform Seoul into one of the world’s leading startup hubs. One investment is its innovation academy, a series of programs to help develop thousands of IT professionals. Furthermore, funds will also be allocated to supporting and fast-tracking startups through financial assistance. They will allocate office space and the necessary infrastructure at a reduced cost to new businesses. Therefore, this would help address Korea’s high youth unemployment rate and break the cycle of larger venture capital firms focusing solely on ROI (return on investment).
Traditionally, Korea’s funding style has focused on fueling local services rather than more complex technologies (core tech), as the former tends to hit profit targets faster. To allow suitable opportunities for Korean startups to grow, the Korean government must support burgeoning startups in their infancy when they are most financially vulnerable. In addition, Seoul’s recent push to become a “smarter” city will undoubtedly make room for new innovative ideas.
“The city has supported promising firms in AI, fintech, biotech, and big data. As a result, Seoul has received a very encouraging report card. For the first time, it has entered the world’s top 10 ranking for the best startup ecosystem, coming in 10th,” said Seoul Mayor Oh Se-hoon.
A city gets the classification of “smart” when people try to mitigate the inevitable difficulties of living in a city. Data is used as a solution for traffic flows and pollution volumes. With Korea’s rising city populations, it’s no wonder they have had a push recently towards developing “smarter” cities and the attractive benefits it presents. Gyeonggi-do has even implemented a UBI in Korea called the Youth Basic Income Program. South Korea is not alone in this development.
The UN stated that nearly 70 percent of the world’s population will migrate to cities for economic opportunity by 2050. With this influx of people comes concerns about efficiency and liveability with increasing population densities. Therefore, in response, the Korean government recently brought to life their “city in a box,” formally known as Songdo. Songdo neighbors Seoul and is considered one of the world’s first “smart” cities.
Songdo is built on approx.1,500 acres of land near Seoul. It has all the “bells and whistles” that one would expect with a smart city. Apartments use digital technology to make communication easier for residents. In addition, computers are built into the streets to help control traffic.
Moreover, they allow neighbors in apartments and condos to do video chats with each other. Therefore, attending college can even be done at home. The State University of New York offers online classes for its students. They also created “America Town” to bring more foreigners to Korea.
To foreign eyes, Songdo may seem like it was pulled out of a sci-fi novel. Therefore, the Korean government’s goal to become one of the leading startup hubs in the world will likely lead them to tap into the ingenuity of their best and brightest startups.
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