Renaissance (Wo)men: Do Emerging Markets need Expert- Generalist Entrepreneurs, Or Gov't Oversight?
Traveling and interviewing entrepreneurs as well as investors in South Korea and Taiwan was indeed a transformational experience. I had the opportunity to meet passionate people building and supporting startups financially that can provide significant socio-economic value within the local community. Some of these companies and investment funds impact and influence went beyond South Korea and Taiwan into Vietnam, Myanmar, and more.
In South Korea, Professor Hyun Shin of Hanyang University helped organize the interview meetup with these entrepreneurs. I was able to meet outstanding social impact investors and entrepreneurs who shared me with insights about their projects. Beyond these conversations, I was able to learn about their culture which had an impact on the evolution of entrepreneurship and investments throughout South Korea's history. In summary, most of the investments into startups in South Korea were government funding of approximately 75% compared to 25% from private investors.
One of the entrepreneurs was JongWon Choi, CEO, and founder of Testworks. He mentioned that there was a lot of “ghost companies” because many companies receive government funding without due diligence. In my second interview with an investor and CEO of D3 Jubilee, Doug Duckjun Lee echoed the same reaction of massive government funding into startups. D3 Jubilee is an impact investment intermediary providing capacity-building services and technical assistance to entrepreneurs. I also had the opportunity to chat with Ms. Nayoung Kim, head of Investments at Crevisse, an Impact Ventures Group based in Seoul, South Korea. It aims at tackling impossible problems of the world through innovative technology and business. Ms. Kim also expressed the same rhetoric of Korean large investment presence in the startup ecosystem in South Korea.'
The last interview in Seoul was with the CEO & President of Merry Year Social Company (MYSC), Mr. Jeongtae Kim, in addition to the many other entrepreneurs that I had interviewed. At MYSC, Mr. Kim and his team provided consultation services to large and medium-size enterprises by designing, developing and implementing sustainable business models through its social innovation lab. He also shared with me his passion for supporting social impact related projects across Asia with the plan of opening another office in Vietnam, soon. Vietnam is well positioned to serve companies in Myanmar and Cambodia. He wants to position MYSC as the pioneer in social impact investing in Asia. In conclusion, the government in South Korea provided most of the funding, and the role of private investors was highly limiting. Thus, the opportunities of private investors were available, but it seems that the costs of investments were higher than that of government funding.
In Taiwan, I received similar feedback through my interviews that the Taiwanese government provided most of the funding to startups. However, in recent years, the investment component of large local companies had some role to play in the funding process. One of my interviewees and Babson MBA alumnus, Tai-Ku Chen shared with me with the history of entrepreneurship in Taiwan and how it has directly evolved into this Technology ecosystem. As a serial entrepreneur and Entrepreneur-In-Residence at Darwin Venture, Tai-Ku has had a firsthand experience of the Taiwanese entrepreneurial landscape. Notwithstanding, they are some similarities accompanied by South Korea for the massive amount of government funding, Taiwan had some significant differences. First, the young Taiwanese generation has the mindset to start their own companies and reasonably encouraged by their parents and friends to get into entrepreneurship relative to South Korea.
Second, Taiwan is strategically positioned as a gateway of companies to scale into China as well as benefiting from the Research and Development abilities of its host country, Taiwan. I had an in-depth analysis of the current entrepreneurial landscape of Taiwan in my 2-3 hours discussion with Professor Day-Yang Liu. Professor Liu is the Vice President, an eccentric professor, and an entrepreneurship enthusiast of National Taiwan University of Science & Technology. In this exclusive interview, he exchanged similar views of Tai-Ku on Taiwan being at a frontier of innovative technology in Asia. In this manner, many investors and entrepreneurs tend to be in the technology space. He also mentioned that government funding contributes to a significant portion of direct investment into startups, which was like what I learned in South Korea. However, they are many social opportunities for private investors to come into the Taiwanese market relative to the South Korean ecosystem. I candidly discussed with May Yang, program manager of Epoch Foundation and Jason Lu, astute manager of Epoch Foundation at Garage+. May and Jason both work at Garage+. Epoch Foundation, a non-profit organization, based in Taipei, Taiwan founded Garage+ to amply support a thriving ecosystem led by experienced and successful entrepreneurs.
These recent travels to both South Korea and Taiwan indicated that government funding played a crucial role in funding with more room for private investors in Taiwan Also, all the founders and investors in these markets were social impact driven with the hopes to have an impact on local communities beyond financial return. In South Korea and Taiwan, they undoubtedly existed on large conglomerates family-owned businesses that might typically have some intrapreneurship opportunities to foster entrepreneurship carefully. This direct observation was in distinct contrast to my observation in Peru 3 months ago with an increasingly active manager in private funds rather than government funding. This study showed an excessive reliance on government funding in South Korea and Taiwan, and it will remain that way.