This article first appeared in Digital Edge, The Edge Malaysia Weekly on May 8, 2023 - May 14, 2023

South Korea may be renowned for its K-pop and technology prowess but, recently, it has also been making waves as a thriving global business hub. The East Asian nation has, over the last few decades, transformed from being one of the world’s poorest countries into an economic powerhouse, with a GDP per capita that ranks among the highest globally. This success is due largely in part to its vibrant entrepreneurial ecosystem, advanced infrastructure, skilled workforce and government support for innovation.

South Korea has found it necessary, however, to open its doors to international businesses in recent times to continue to promote entrepreneurship and innovation within its borders. That is why initiatives such as the K-Startup Grand Challenge (KSGC) have assumed a pivotal role in attracting new talent from across the globe — the aim is simple: to establish South Korea as a business hub that provides a gateway to the broader region.

An annual accelerator programme organised by the South Korean government’s Ministry of SMEs and Startups, the KSGC is designed to attract bright, fresh talent from around the world to establish their roots in South Korea, with the promise of helping them launch their businesses in the Korean market.

As a result, the programme has attracted an increasingly diverse group of start-ups from various industries and backgrounds. The inaugural edition in 2016 received more than 1,500 applications from around the world. These numbers have steadily grown since then, with 2,653 applications from 122 countries in the 2022 edition.

“Although 60 were selected from the auditions [in 2022], eventually 51 of them flew to Korea to participate in the all-expenses paid acceleration programme,” says Amanda Lim, marketing manager of the Korea IT Cooperation Centre in Singapore.

The KSGC is open to businesses in fields such as IT and software, e-commerce, healthcare, cloud computing, green energy and sustainability, and fintech. Candidates selected to participate in this three-month accelerator programme are flown to South Korea, where they will receive extensive support in the form of funding, mentorship and networking opportunities to help them gain a footing in the country’s favourable but competitive start-up environment.

“Four Korean accelerators manage the selected start-ups,” says Lim, adding that each is assigned 15 start-ups, with the task of helping them develop their business model to better fit the Korean market.

Signing up for the challenge is a rather straightforward process. The KSGC seeks to identify and support innovative start-ups and pre-start-ups that have exceptional technologies and ideas that are up to seven years old. Specifically, the programme targets start-ups represented by individuals of foreign nationalities who have a clear growth objective to expand into Asia by using the Korean market as a stepping stone.

More importantly, the programme imposes additional limitations such as investment requirements or revenue status. Also, an impartial selection process and the participation of competent and passionate organisations ensure a diverse cohort of participants every year, says Lim.

“Start-ups will be evaluated and selected based on their business plan, technologies, the level of creativity in ideas and fit in the Asian market. We will also be looking at their strategy and execution plan, all through their overall presentation,” she adds.

Singaporean and Malaysian start-ups have also been flocking to the KSGC, drawn in by the promises of expert mentoring, funding opportunities and access to South Korea’s booming tech ecosystem. So far, KSGC has seen a total of 458 applications from Malaysian start-ups in six years — 68 start-ups made it through to the initial auditions and 12 survived to the final rounds.

One such start-up in the 2019 edition of KSGC was Anzene — its main product offering is a safe, hot-swappable universal energy block and station that stores renewable energy from solar and wind in a portable, modular form factor. This product can then be used in homes, offices as well as micro mobility applications, allowing everyone to be a part of climate change solutions. The idea of potentially making renewable energy accessible to the general public was one of the reasons Anzene joined the KSGC.

“South Korea has a lot of established battery companies like LG Chemical and Samsung SDI that we would like to partner with for our production and pilots,” says Joshua Lin, Anzene’s co-founder. Anzene made the cut and joined the final 20 candidates in its batch, which then led to its furthering its business ambitions in South Korea with another three months of government support.

In addition, the KSGC makes it easier for foreign start-ups to bridge the cultural gap. According to Lin, start-ups looking to thrive in a foreign environment face similar challenges — navigating the local laws and language and getting customers to know their brand in the market.

“When expanding into a new country, localisation is very important and the KSGC helps bridge the gap through this programme by encouraging the hiring of locals to ensure we have the strong local presence needed to grow in South Korea,” he says.

“We hired local staff, set up a website in Korean and got down quickly to building customer testimonials from Koreans about our product. They want to know that companies are there for them in the long run and everything is done legally.”

The programme also provides opportunities to partner with Korean conglomerates and small and medium enterprises (SMEs) to create business results. “They will also receive coaching on Korean business culture and get to attend seminars on topics such as patents, tax laws and commercialisation,” Lim says.

Although the KSGC offered Anzene new-found opportunities, Lin’s team faced a myriad of challenges and learnt valuable business lessons along the way.

“The three months were a dive in the deep end of the pool that is the Korean market. It was up to each participant to continue to build on the foundation, and to explore and grow in the Korean market further,” says Lin.

Anzene continues to build links with the Korea Battery Association and secure pilot projects with key customers, in addition to growing product sales in the market.

For many start-ups, office space can be an expensive investment that they struggle to afford in the earlier stages. That is why participating start-ups get free office space in Pangyo — also dubbed South Korea’s “Silicon Valley” and the beating heart of the country’s start-up ecosystem. Data from the Born2Global Centre shows that South Korea’s top 60 start-ups and the K-Global 300 start-ups are located in Pangyo.

Lim says: “Korea’s start-up ecosystem is active, well designed and provides advanced infrastructure and an ideal environment for start-ups to attract the attention of investors, accelerators and incubators from around the world. SMEs and start-ups can also mutually exchange information with high-tech research institutes and large firms across different industrial sectors to foster the growth of start-ups.”

During the programme, start-ups will receive free office space; one-on-one expert mentoring, matching and meetings with other Korean conglomerates; and administrative support on issues such as visa applications and opening bank accounts.

They are also provided with a Korean intern who is fluent in English and Korean to help overcome the language barrier. Moreover, participants have the opportunity to expand their network in South Korea through networking events with industry leaders, facilitating further professional development and growth.

At the end of the 15-week acceleration programme, a Demo Day is held to select the top 20 start-ups, which will go on to receive additional financial rewards and support from the South Korean government, should they choose to establish their businesses in the country.

According to Lim, the KSGC programme has also earned rave reviews from other start-ups that have found a sturdy footing for their game-changing innovations. Lin concurs: “This programme attracts numerous start-ups from all over the world, and in it lies a huge resource and more talented people whom we can learn from, bounce ideas off and collaborate with.”

Beyond the multitude of opportunities and robust support system, South Korea’s rich cultural influence, unparalleled tech expertise and, more importantly, the local consumer’s unyielding appetite for innovation, has driven the country’s role from innovation follower to that of a leader.

Not only is the country one of the world’s most connected, thanks to 100% high-speed mobile internet coverage, says Lim, but its citizens are also known to be early adopters of new technology.

“Start-ups can look to test their products with a consumer base that’s ready to adopt new technologies. It is also a perfect gateway to launch business into Asia, thanks to its location and strong cultural and economic ties with China and Japan.”

The benefits do not stop there, Lim says, as South Korea also boosts the start-up scene’s success by endorsing tax breaks; providing incentives for angel investors and venture capitalists; offering tax benefits for mergers and acquisitions in the technology and R&D sectors; and making improvements in visa regulations for start-ups and entrepreneurs from abroad.

“The government also plans to operate collaborative programmes among Korean corporations and start-ups, as well as organise systematic cooperation between Korean and global venture companies,” she adds. “The government is also supporting sustainable R&D investment to develop an innovative ecosystem, and plans to invest in start-ups and ventures over the next three years as part of its plan for future innovation and economic growth.”

The KSGC has also played a role in fostering stronger trade ties between South Korea and Malaysia by serving as a platform for companies on both sides to exchange ideas and share resources. By supporting the growth and success of Malaysian start-ups, the KSGC aims to promote economic cooperation and bilateral trade between the two countries, strengthening commercial ties and generating new opportunities for collaboration.

“The domestic market size of Korea is about US$736.21 billion, making it the 15th biggest internal market in the world. Despite the population and the small domestic market size, the Korean domestic market has great purchasing power — a fact continuously acknowledged by many global firms. Such an environment may provide a stepping stone for various global start-ups, and South Korea will pose as a window to global expansion for Malaysian start-ups,” says Lim.

Malaysian start-ups looking to sign up for the 2023 edition of the KSGC should first identify their objectives for joining an accelerator programme such as this one, advises Lin.

He says: “Once that goal is clear, immerse yourself in the Korean business culture and hustle as hard as possible to make the best use of the resources and programmes offered by the KSGC. Running a company in fast-paced South Korea can be tiring, but the journey will be enjoyable.”

The 2023 edition of the KSGC will offer 60 international start-ups a 3½-month residency programme from July 25 to Nov 10. Applications close on May 18.

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