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Start a Start-Up?

  It is no exaggeration today to say that global innovation is dominated by highly successful start-up companies. Indeed, Korea is packed with news stories about start-ups – some started by the young in response to the soaring unemployment rate. In the past, start-ups were mainly the preserve of people in their 40~50s looking to start a second career after retiring. However, the number of young people chancing their luck on a start-up company has been increasing because of the prolonged youth unemployment situation and the increased automation of operating a franchise company. Indeed, start-ups can offer new economic opportunities and create a culture of innovation.

 

Back to the Start of ‘Start-Ups’

  ‘Start-up’, a term first coined in Silicon Valley, refers to a company based on ‘innovative technology’ and a unique ‘idea’. The difference between a start-up company and a simple venture company is that the venture company has raised capital through massive investments, but a start-up has not.

  One contributing factor to the popularity of start-ups in Korea is the increase in the unemployment rate. This year, the number of unemployed people currently stands at 4.5 million. The youth unemployed rate is 9.8%, the real rate is 22%. According to the Federation of Korean Industries, one out of every two university students felt that it was more difficult to find a job this year compared to last. The average salary requirement fell from 3,698 million won to 3,464 million won, and the preference amongst job-seekers for large companies has decreased by 20% compared to last year. Also, last year, the number of people who took the civil service exam was 22 million, the most to have ever taken the civil service exam in a year. The average competition rate is 54 to 1, which is highly competitive.

  Another reason why people are turning to start-ups for their livelihood is the smartphone. Many start-ups center on the development of mobile apps that are relatively cheap to make and can generate profit through mobile advertising. The number of people currently using a smartphone stands at 4,624 million. Often, certain individuals may use two or more.. Airbnb and Uber, for example, can be easily accessed online on mobile and tablets, and the corporate value of ‘Snapchat’, which specializes in sharing photos and videos, is highest per employee. Many start-up companies are enjoying great success in short periods of time.

 

Start-up Companies Founded by University Students

  Jeon hae-na was just a normal university student in 2010, when she introduced the free printing service add2paper for her fellow students. Most students print out every day and, though a free service to students, add2paper makes its profits  by allowing advertising in the margins of the sheets. Just one year after the start-ups foundation, add2paper achieved one billion won in sales, and university students at 128 universities were using this service. Now, the number of university students using add2paper has exceeded 4.6 million. In addition, a money lending service called Additpay is being released to create a family of apps. Add2paper offers students monetary loans ranging from 50,000 won to 300,000 won per person for a two month period. Interest rates are 1.25% per month, but the actual rate of interest does not exceed 2.5% if the loan period is for two months.

 

Jeon hae-na, CEO of add2paper

  Kim Yun-kyu, along with Kim Yeon-suk, founded the Young seller when he was university student in 2011. Initially, they had failed with their first venture - at café in Itaewon - but two months after that failure they opened a ‘potato-bar’ near Gyeongbokgung Palace to great success. They concentrated on rich, authentic flavors and provided an energizing and exciting  atmosphere for customers. They showed their individuality through their uniforms and walls covered with slogans, such as ‘Do you want to buy potato or marry me?’ and ‘Passion rises when you meet enthusiasm.’

  They made 60 million won in one month, and are now in the top 10  profit earners for such a physically small business. Also, they developed a start-up foundation course based on their experience. The program runs for two weeks and 329 people have completed this program, a few of which have joined the Young seller business.

 

The Young Seller

Support for Start-up Foundation

  Currently, there are 5,360 public services related to the foundation of start-ups. Currently, the number of companies supported by the central government and by municipal governments stands at  3623. There is the Small and Medium Business Administration (SMBA), Korea Institute of Startup & Entrepreneurship Development, and the Small and Medium Business Corporation that provide specialized support for start-ups.

   The Young Business Academy selects and trains innovative start-ups created by young people and offers support from establishing a start-up business plan to turning it into a money-making venture. If and when the company is actually launched to the public, the Young Business Academy will provide monetary support of  up to 70 percent of the total operating costs (maximum of 100 million won). An Jun-won, owner of KAPS, received invaluable help related to trading and tax issues at the first global class of the Young Business Academy.  Now, his company is moving toward expanding into China and India.

  The Young Business Support Fund is a project that seeks to support the revitalization and creation of employment in small and medium venture companies that have outstanding technological prowess and business viability but lack funds. The applicants are small business founders under the age of 39, whose companies are less than three years old. One such company was Mobile Flow, which has gone on to produce 13 android apps, 5 iPhone apps, 8 websites, and 6 wordpresses from November 2012 to now. The Young Business Support Fund provides support from submitting a new company application to marketing while forming a partnership with various teams. The CEO of Mobile Flow, Kim Taek-yong, said, “At first, it was hard to get information or cultivate a market because there was no support policy for the IT field. Receiving an office and  funds for our monthly operating expenses through the Youth Startup Center was all that was available to us at the time.”

 

Corporations Support Youth Start-ups, Too

  The Gift-Car campaign, by the Hyundai Group, provides customized support to those experiencing social and economic difficulties. In 2016, the campaign focused on interesting start-up concepts and pre-existing start-ups with founders between 18~34 years old. A board of appraisal composed of experts and individuals from the Green Umbrella Foundation (responsible for executing the project) and a start-up consultation firm evaluated the economic conditions, the business plan of a start-up, and the competency of the founder/s in order to select 10 applicants per month to received tailored support packages. Not only were start-ups provided with vehicles,  road/registration tax was also covered. 500 million won of capital was also made available as well as educational programs related to business start-ups and other customized forms of consultations.

  The SK Creative Innovation Center in Seoul offers monetary and technological support to passionate and creative start-up founders and university students belonging to a foundation. The center has a prototype shop, mobile test bed, and lecture theater. At SK’s Youth Start-up Camp, held  last July, 10 teams were selected to be launched  to market. Of these 10, the start-up that shows the most promise will received support to expand abroad. Some of the teams created an application to provide and save electronic guarantees in the form of a SMS. Others created a mobile platform to share agricultural content or an app that allows communication with consumers through post on SNS.

 

Universities Encourage Student Start-ups with Start-up Support Center

   The Start-up Support Center at Konkuk University holds a contest to choose the most promising and innovative start-up idea (criteria includes capacity of management, business value, marketability, technology to train creative human resources and for expansion). Any university student can participate as part of a group or alone, and they can apply to any field: machine, telecommunication, energy, and design amongst others. The winner receives two million won, while the second placed teams win one million won each and third placed teams earn 300,000 won. Konkuk University offers all participants the opportunity to attend a lecture about venture foundation and provide additional grades when students move into the  Start-up Support Center.

   Our alma mater, Inha University, also provide many services for start-ups. First, the Inha start-up demo-day is a program that provides a stable growth foundation through student consultations by experts about products and services, direction of business and business models. This program was selected for commercialization support (37 billion won for 3 years until 2017) by the Small and Medium Business Administration, so Inha has been providing customized start-up educational programs using a great start-up mentor-network system. The other start-up support service is the Start-up Therapy program, which consists of nine detailed programs spread over a six month period. This program provides customized start-up education and mentoring, support for moving into the Start-up Support Center, and funding assistance with its investment inducement programs.

   In light of the fact that  the employment market is getting smaller and smaller and the average SME is too risky, start-ups are now touted as the best alternative to economic cycles and job creation. However, rather than dwell on the negatives, why not focus instead on the creativity, courage and enthusiasm of those young individuals who put their trust in their ideas and their tenacity and became the CEO of their own company. They were students just like you – same hopes, same fears – but they took a chance. Why can’t you?


 

최유민  sq02248@gmail.com

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