Techstars to invest in 30 Korean startups by 2022

Global startup accelerator Techstars plans to invest in 30 startups in South Korea, which has a more mature and open-minded venture capital market compared to neighboring China and Japan, by 2022, said its senior executive.

"Now is the time to invest in Korea's startup market instead of China or Japan. We're planning to work with dozens of Korean startups over the next three years," said Ivan Lopez, the APAC general manager at Techstars, in an interview with The Korea Economic Daily.

Techstars has been expanding its presence in Korea’s startup market, launching the Techstars Korea Accelerator program, which selected 10 startups in August.

The selected companies were not limited to Korean startups, but also included companies seeking to tap into the Korean market.

Lopez says the global accelerator’s interest in Korea is owing to the country’s mature startup capital market.

“Follow-on investments are crucial in terms of startup’s growth and return on investments,” Lopez said. He added, “Korea’s startup market has improved drastically in the last decade and its relevant capital markets are showing high growth rates.”

According to the Korean Venture Capital Association, new capital injection into domestic startups rose from 1.9 trillion won ($1.7 billion) in 2010 to 4.3 trillion won ($3.9 billion) in 2019.

He also pointed out the Korean market’s openness towards foreign investors investing in startups as one of its core strengths.

“China’s regulations are too strict and Japan’s startup ecosystem is too closed off to attract foreign investments,” Lopez said. “On the other hand, Korean startups are open to foreign investors and burst with innovative energy.”

Startups selected under Techstars Korean Accelerator program will be educated with the firm’s know-how and utilize its rich network.

Companies can receive up to $120,000 in investments with $20,000 in cash and the remaining $100,000 as convertible bonds. Techstars has made it a policy to acquire only a 9.5% stake in the startup company in consideration of the startup owners.

“Companies that are well-fit with us may receive additional investments,” said Lopez. “We also operate an independent fund for future investments,” he added.

Lopez said the team members’ abilities and their overall teamwork are important criteria when selecting a company to invest in.

“Business ideas and investment periods are important, but these factors can be easily affected by external variables such as the fluctuating economy and the global pandemic,” Lopez said. “But if there is an outstanding team then they will ultimately rise above and succeed even if external variables are not in their favor.”

Techstars is a seasoned accelerator having invested in over 2,270 startups since its inception in 2006. The market cap for its portfolio companies stands at around $30.5 billion.

The Colorado-based accelerator is noted for its early-stage investment of $50,000 in global mobility company Uber Technologies Inc. which grew over 5,000 times to $250 million.

Write to Min-ki Koo at kook@hankyung.com
Danbee Lee edited this article.