South Korea Becomes a Hub for Tech Startups
South Korea’s Unicorns
South Korea is becoming a new incubator for big tech companies from Coupang (CPNG), an ecommerce startup that’s listed in the US and has a market capitalization of $69 billion, to Krafton, the video-game maker gearing up for a $3.8 billion Seoul debut.
As it stands, South Korea has 10 unicorns, or startups with a valuation of more than $1 billion. They span a range of industries, from biotech to ride-hailing to digital payments. Driving the growth of these startups is a nation of affluent, tech-savvy individuals, who mostly live in a few large cities. The country also has fast, widely available internet, which enables tech companies to reach consumers.
Fertile Ground for Tech Companies
Nearly every household in South Korea owns a mobile device, which provides opportunities for new digital products. The ecommerce penetration rate in South Korea is the highest in the world and more than 60% of people in the country do their banking online.
Additionally, the South Korean government is supportive of the country’s tech companies. South Korea has an agency similar to the US Small Business Administration which helps startups attract investors and provides training, tax breaks, and research and development support.
Tech Giants Impact South Korea’s Economy
Many of these South Korean technology startups are likely to remain focused on growing on their home turf for now. While they may not have a large international footprint, they are making significant strides at home.
South Korea’s economy has long been driven by large family-owned conglomerates which churned out the technology leaders. Leading smartphone maker Samsung Electronics and semiconductor manufacturer SK Hynix are two examples. New startups are now growing, which is shifting the balance of power. As investors continue to pour money into South Korea, it will be interesting to see how the family-owned conglomerates respond.
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