SEOUL, SOUTH KOREA, April 4, 2019 – The Seoul Metropolitan Government said it will fully support startups with new technologies as part of the key strategy for the “economic revival,” the main task of the seventh popularly elected municipal administration, and as an alternative measure to sustainable jobs. Though this scheme, the city government plans to drastically invest in ideas that change the world and new technologies that create new jobs in order to change the structure of Seoul’s economy.
To this end, the Seoul Metropolitan Government will marshal all its authority and capabilities to support technology startups at their whole business stages from the early stage to the one of overseas advancement. First of all, the number of startup support facilities in Seoul will be increased to 44 from 17 in 2011 to focus on fostering global companies and innovative economic models to create new growth engines that are needed to overcome the low-growth era. For the past seven years, the city government has successfully fostered around 10,000 enterprises, achieving a certain quantitative expansion.
According to the new scheme, the Seoul Metropolitan Government will nurture 10,000 innovative talents who lead the technology startup, such as those specialized in technologies for the fourth industrial revolution and foreign start-up entrepreneurs, by 2022, while doubling the number of business spaces for technology start-ups related to AI and bio-industry to 2,200 in four years, and increasing the infrastructure for new technology start-ups.
In addition, it will provide further support to companies that will successfully start their businesses based on such an infrastructure to take them one step further as a global company. The Seoul Metropolitan Government will boldly invest funds in start-ups and companies at their early stage that are having difficulties in attracting investment from the private sector, and offer a total service for them to analyze business feasibility, design products, produce prototypes and connect them to manufacturers so that innovative ideas can be realized within 180 days or six months.
Focusing on such strategic investment and supports, the Seoul Metropolitan Government announced the master plan for “Global TOP 5 Start-up City Seoul” and its seven projects to make Seoul one of the world’s top five start-up cities.
According to the plan, the city government is to invest a total of 1.9 trillion won (960 billion won from the city government, 680 billion won from the central government, and 300 billion won from the private sector) over the four years until 2022 to increase the number of unicorns (privately held venture firms valued at over 1 trillion won) to 15 from the current seven, and raise the share of venture firms’ sales volumes to 7 percent (3 percent in 2017). As the central government also announced that it will set “making Korea a start-up country” as the national agenda through the second venture boom expansion strategy and focus its capacity on boosting the start-up ecosystem, Seoul plans to play a role of fast track for new technology startups in active cooperation with the central government.
Seoul’s seven projects are 1) “Global Talent Pipeline” to foster 10,000 technology talents; 2) “Tech Space 1000” to increase the number of technology startup spaces by 1,000; 3) “Strategic Growth Investment” to provide financial support to 3,000 startups by the business stage; 4) “Growth Promotion Platform” led by the private sector and supported by the public sector; 5) “Productization 180” to implement ideas rapidly into business; 6) “Testbed City Seoul” to demonstrate innovative technology products and cultivate new markets; and 7) “Global Market” to help 160 promising startups advance the global market.
Centering on six new industrial hubs, including Hongneung (Bio), Mapo (Fintech, Blockchain), Gaepo and Yangjae (AI, Big Data, etc.), about 6,400 technology talents specialized in the fourth industrial revolution (annually 1,600) will be trained. In upcoming November, jointly with the Ministry of Science and Technology, the city government will found the “Innovation School” in the Gaepo Digital Innovation Park and foster 2,000 problem-solving software-converged talents (annually 500). Within the Seoul Startup Hub, “Startup Academy” will be operated (to open in June 2019) to teach how to establish a company, how to raise funds, how to solve diverse business problems, nurturing 1,200 start-up people (annually 300). In order to expand the startup boom to universities, entrepreneurship lectures will be provided at universities that participate in “Campus Town.” Around 500 rounds of lectures will be made so that up to 30,000 people, 10 times the current number, take them until 2022.
The Seoul Metropolitan Government will also make efforts to attract and foster global (foreign) core talents who want to start their technology startup in Seoul. In cooperation with the Ministry of Justice, the procedures for the issuance of “technology start-up preparation visa” will be simplified for them to receive it within a week and launch a fast track for startups that successfully attract more than 100 million won in investment from venture capitals or accelerators to get a visa immediately. To minimize inconveniences in living and settling in Seoul, Seoul-style houses exclusively for foreigners will be offered to international start-ups who reside in the six new industrial hubs, and “residential vouchers” with an annual rent of up to 15 million won will be provided to meet the demand of foreigners starting next year.
Working spaces with a capacity of more than 1,000 innovative companies will be newly built centering on new industrial hubs, such as in Yangjae (AI) and Hongneung (Bio Medical). The number of companies that the spaces house will be doubled to 2,200 from the current 1,043, while the area will be expanded 2.4 times to 480,000 square meters from the current 200,000 square meters. The Seoul Startup Hub in Mapo will be the initial incubation base for technology startups that are difficult to find working spaces.
○ Yangjae (26 → 226 companies’ working spaces)
R&D Innovation Hub located in Yangjae, where currently houses 26 companies, will increase the number of companies to 226. In the short term, it will lease surrounding private buildings or use the city-run spaces, such as the Quality Inspection Office, (spaces capable of 200 companies, 18,161 square meters). In the long term, it will create a “Yangjae R&D Campus” at the 32,095 square-meter site of the Grain Wholesale Market.
○ Hongneung (20 → 230 companies’ working spaces)
Hongneung Biohub, which currently has 20 corporate spaces, will be created as a “Global Bio-medical Cluster in Northeast Asia,” where 230 companies are able to work.
And the existing Biohub spaces will be expanded (130 corporate spaces, 20,347 square meters); the “BT-IT Convergence Center,” which will be an expanded space of the former Defense Venture Center (30 corporate spaces, 2,986 square meters) in 2020; and “High-tech Medical Device Development Center” will be opened at the area of the Jeongneungcheon Stream in 2021. (50 corporate spaces and 19,000 square meters)
○ Mapo “Seoul Startup Hub”
The Seoul Startup Hub, the largest start-up incubation organization in Korea and the control tower of the city’s start-up facilities, will create and operate an additional incubation space for new technology startups. Meanwhile, 20 blockchain companies will move into the Hub in April this year.
Since the success or failure of startups depends on the early stages, the Seoul Metropolitan Government will strengthen investment in the early stages of startups and in the productization stage to help them overcome the Death Valley and grow into a unicorn company. It will also expand opportunities of Exit, at which an investor or founder sells his or her stake realize his gains.
○ Strengthening Investment in Seed Funds (1,000 startups at the early stage)
It is an early investment step to invest, for instance, in making prototypes of ideas. At this step, the city government will invest 19 billion won in about 400 companies by 2022 with financial resources of the Seoul Business Agency, and will raise seed funds under the name of Seoul Metropolitan Government’s Small and Medium Business Promotion Fund worth 60 billion won from next year for three years until 2022
to support about 600 companies.
○ Series A-phase Intensive Investment (2,000 startups)
Series A-phase investment is making an investment in a stage when real products or services are made in order to overcome the Death Valley of companies. The Seoul Metropolitan Government will create a 1.2 trillion won fund for startups, retrying companies and fourth industrial revolution-related firms, to invest in 2,000 companies by 2022.
○ Promoting startup’s EXIT
The city government will establish the matching system between start-up companies and conglomerates or small and medium-sized enterprises for their better cooperative partnership and help them lead to M&As. It also plans to form a network of overseas venture investors through the participation of foreign-invested funds by the Seoul Business Agency and make cooperation with the private sector that have global corporate networks, such as the Korea International Trade Association, to indirectly help startups attract an investment.
The Seoul Metropolitan government will open the startup incubation area, which has been led mainly by the public sector, to the private sector with expertise, such as qualified companies and venture capitalists. It is a “startup platform” led by the private sector and supported by the public sector. First of all, it will open the operation of the Seoul Startup Hub to global investors and accelerators from the second half of this year so that they will run the overall incubation programs from selecting startups to incubation, investment and global expansion, and it will expand the way to operate to Yangjae and Hongneung Hubs from next year. Such an attempt is to enhance the expertise of start-up incubation and increase the competitiveness of startups by encouraging global investors to join the process of the evaluation for the startups’ performances.
If a private company provides a space, the city government support the rent fee of the space and programs, such as a start-up business fair or a contest. The city will utilize some parts of the private sector’s shared office as working spaces for foreign start-ups, and support startups working at private buildings when they participate in international IR or other promotional events. The business information database for startups from a total of 44 the city-run startup facilities, including Seoul Startup Hub, will be established and opened to accelerator and venture capitalists to increase an investment opportunity. In addition, the “Seoul Startup Membership” will be created to encompass startup facilities, companies and startup entrepreneurs and established the system for mentoring and sharing startup facilities.
The Productization 180 Project will be launched to provide comprehensive support for innovative ideas of the startups to produce prototypes within 180 days or six months. It is to unify the process of the production through which prototypes will be made in professional maker’s spaces after analyses of business feasibility and designs of optimal product. To do so, the city government will strengthen the functions of the city-run prototyping factories, including the Productization Support Center of the Seoul Startup Hub, the Makerspace G-Camp and Digital Blacksmith’s Workroom, and establish a database of privately-owned prototyping workrooms at, for instance, a university or a research institute. Afterwards, a cooperative network will be established with domestic and international manufacturers so that they can be connected with optimal ones during the mass-production phase of products.
Even if innovative technologies are succeeded in productization, many startups still have difficulties because of lack of demonstration and markets. For those startups, the city government will become a test bed for innovative products. By 2023, it will provide an opportunity to demonstration to 500 innovative companies. It will also support their technology development, commercialization and marketing. Validated innovative products and services will be bought by the Seoul Metropolitan Government through public purchase.
Also, the city government will support promising innovative startups for their strategic “going global” so that they are able to serve as a key player of job creation and economic growth. It is essential for a company to advance into overseas markets for further growth, however 89 percent of sales of startups in Seoul are occurring only in Korea, and there are just seven unicorns in Korea. (150 unicorns in the U.S. and 92 in China)
In addition, it supports overseas accelerating from the stage of productization by linking them with global accelerators, such as China’s iMakerbase and Switzerland’s Society 3. It will also support the startups’ global market exploration and investment attraction through overseas offices of public organizations such as the Korea Small and Medium Businesses and Startups Agency, KOTRA and Korea Venture Investment Corporation. The 2019 Global Accelerator Conference will be held in May jointly by the Seoul Metropolitan Government and Hanyang University, inviting global accelerators and venture capitalists to Seoul to introduce Korean start-ups and provide various networking for foreign investment.
It will also lay the foundation for overseas advancement to, such as Silicon Valley, Israel and London in conjunction with leading foreign accelerators like Plug&Play, KICKstart, Yozma and P&G Venture.
Meanwhile, the Seoul Metropolitan Government will also hold the Seoul Startup Week and a large-scale investment competition, which brings together global networks owned by the public and private sectors, such as global startups and players, 44 start-ups support facilities and private shared offices, in the first week of every September.
Seoul Mayor Park Won-Soon said, “Fostering startups is the most important for Seoul’s future growth engine and it is located at the center of the citizens’ lives. Now, supporting startups is the way we should go to change the economic landscape of Seoul. It is not an option to revive the economy.” He also added, “I will improve the structure of Seoul economy and make a “miracle of startup.” I will do my best to make Seoul a city of dreams for young startup entrepreneurs in Asia like Silicon Valley, an innovative ecosystem created by the world’s talents.”