Korean startups have achieved remarkable success in the domestic market in the last few years. Many of them have expanded to the overseas market, with the USA being the topmost preference. According to a survey report by the Korea Trade-Investment Promotion Agency (KOTRA), four out of 10 domestic Korean startups that have entered the overseas market have chosen North America. Nearly half of them have their headquarters overseas. The KOTRA survey was conducted on the status of overseas expansion of 198 startups, with at least one of the founders being Korean through the overseas trade center for one month in December last year.
Mobile tech & AI startups top overseas expansion
As per the survey report, 40.4 % of startups surveyed entered North America, with 60 % choosing Silicon Valley. Next, many startups entered China ( 20.2 %), Southeast Asia ( 15.25 %), and Europe ( 11.1 %) in that order. The fields entered are mobile ( 10.1 %), Artificial Intelligence ( 9.6 %), lifestyle ( 7.6 %), Edutech ( 7.1 %), beauty ( 6.6 %), games and entertainment ( 6.1 %) and others were evenly distributed without being concentrated in a specific field. As for the types of products and services of companies entering the market, ‘intangible services/applications/solutions ( 62.6 %) were the main ones, followed by ‘tangible products/intangible services’ 20.2 %, and ‘tangible products’ 11.1 %.
The most common reason for choosing an overseas expansion for the Korean startups was ‘to target overseas markets with services suitable for overseas markets ( 45.5 %), followed by ‘to increase consumers and customer base’ (39 %), ‘Because it is easy to attract foreign investment’ and ‘to cooperate with overseas partners’ were each answered by 4.5 %. In addition, 49.5% of the surveyed Korean startups have their headquarters overseas. As for overseas expansion, ‘establishing an overseas corporation’ was the answer given by the majority of startups with 97 %. By way of entry, ‘independent investment’ was 71.2 % and ‘joint venture with foreign companies’ (FLIP) was 8.1 %.
This year, KOTRA plans to conduct a business event that connects startups with global companies to demonstrate their technology while also supporting startups to participate in major competitions and win awards to secure public credibility. In terms of annual sales, 28.3 % of startups got ’10 000 dollars or less, and 27.8 % had ‘1 million dollars or more. Regarding the preparation period for overseas expansion, 65.2 % answered ‘1 to 2 years, while ‘less than one year’ and ‘3 years or more accounted for 11.1 % and 17.9 %, respectively.
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