Korea's struggle to create its own Silicon Valley

Korea's struggle to create its own Silicon Valley
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Han Min-jin, a 26-year-old engineering student at a local college in Seoul, is living his dream. He founded a small business named Byit last year offering services for community sports events.

"Starting a business was a dream come true after a mundane internship with a local accounting firm," Han said in an interview last week.

Han is among the thousands of Koreans in their 20s and 30s who founded their own companies in the ongoing South Korean start-up boom of the 2010s.

They are the Korean millennials refusing to follow in the footsteps of an earlier generation, who considered it a family honor to get a job at one of the country's top conglomerates such as Samsung Electronics or Hyundai Motors.

But these inexperienced entrepreneurs must fight an uphill battle to even dream of reaching the levels of start-up success achieved by Steve Jobs, Jeff Bezos or Mark Zuckerberg.

Not only do they face the typical start-up problems ― money, for instance ― they also must overcome a conservative consumer culture, while fighting a virtually impossible battle against the likes of big conglomerates.

"If (smartphone) app-makers create a pay-walled smartphone app, consumers are likely to avoid the app. They're bound to think paying for the apps is something wrong," Han said.

Pledging to break down such barriers, President Park Geun-hye came up with her proposed panacea of "creative economy." She promised to spawn a start-up-friendly environment and replace Korea's current conglomerate-based growth model in the long run.

Two years in, the creative economy has achieved some success.

The Growth Ladder Fund, a government-funded program dedicated to linking new businesses with venture capital and other financial buttresses, has produced 2.6 trillion won ($2.3 billion) in investment since its inception in May 2013.

The fund will strive to boost an extra 2 trillion won this year, said Seo Jong-gun, head of the fund's secretariat.

The Youth Startup Fund, another public money scheme for start-ups here, has lent 250 billion won to up to 3,200 businesses since 2012. The fund restricts its loans to business starters under age 40 and is operated by the government's Small and Medium Business Administration.

"Most loans are functioning," said a SMBA spokesperson who spoke on the condition of anonymity. "The initial repayments are not due until earlier this year with most of the loans not being excessively burdensome in amount," the spokesperson added.

Some local start-ups also reported impressive milestones under the Park administration, such as the 4-year-old smartphone app-maker Channelbreeze, which reportedly attracted up to 21 billion won (S$26 million) from venture capitalists earlier this month.

"The high-tech start-up environment is certainly better than it was in the 1990s," said Kim Won-shik, professor of economics at Konkuk University. "The IT atmosphere is much more developed than 20 years ago when the technology was still in its developing stages."

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