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Bernard Moon on Korean Startups

The BTS of social media: The next Facebook will come from South Korea

Mar 18, 2021 (Gmt+09:00)

The BTS of social media: The next Facebook will come from South Korea

South Korea is hitting its stride as an innovator, but it’s an overnight success story over 20 years in the making. Coupang’s $60B IPO this past week, Hyperconnect being acquired by Match for $1.7 billion last month, Blackpink’s ascension, Parasite winning Best Picture and Best Director at the 2020 Oscars, and BTS taking over the global music scene are just part of South Korea’s success story.

South Korea’s cultural imperialism is nothing compared to the global influence of the US in terms of entertainment, music and technology, but this nation of 50 million is punching far above its weight class. Focusing on technology and innovation, Korea’s rise has been felt for the past decade with Samsung’s leadership in mobile and semiconductor chips and LG’s impact in the electronics and adjacent industries.

Separate from Korea’s own big tech giants, South Korea’s startup innovation engine is reaching a tipping point. It’s been a long journey since Nexon created the world’s first MMORPG game and then led in the innovation of micropayments with Hangame (later merged with NHN) in the late 1990s. CyWorld arguably became the first major social network in the world with over 19 million users, which was created in 1999. Fast forward to 2010, Kakao launched its mobile platform, becoming an innovator in content distribution through mobile networks, with companies such as Tencent following suit.

A Cyworld mini-homepage in the early 2000s
A Cyworld mini-homepage in the early 2000s

Probably one of the most unknown stories in Korea’s startup history is that of Transact In Memory, which was founded by Dr. Sang Cha in 2002. This cutting-edge database company was acquired by SAP in 2005 and developed into the core of SAP HANA, which was SAP’s flagship product for several years and the driver of its US$200 billion market cap during that period (currently it’s around $160 billion). I believe if Dr. Cha’s company was founded during the current climate and under different circumstances, it would have become a company worth tens of billions.

But all these firsts in the world were limited for various reasons from the language limitations of early tech founders in Korea to go truly global, a lack of supportive capital in Korea’s ecosystem (a factor in CyWorld’s early exit to SK Communications in 2003), more restrictive laws and regulations against startups, and the fact that Korea’s small domestic market was still big enough to create multi-billion tech unicorns. Some of these unicorns had a great regional impact in Asia, but nothing global.

Today’s entrepreneurs in South Korea are more bilingual and globally minded. Their vision is not only to conquer the domestic market but multiple markets. Coupang’s IPO will help educate the world about the size and dynamism of Korea’s internet market and show it is a nation lead by innovation.

Even before the recent events listed earlier, Bloomberg recognized South Korea as the most innovative nation seven out of the past nine years, and was once again No. 1 in 2021.
The BTS of social media: The next Facebook will come from South Korea

In venture capital, a couple of years ago Softbank Korea became Softbank Asia to lead early-stage activity for Softbank out of Seoul. This was a signal to the market of South Korea’s growing prominence in early-stage venture capital in Asia. As a side note, my SparkLabs co-founder, Jimmy Kim, and I are former Softbank Korea portfolio founders when we were backed by them in 2000 for our second startup together.

Our young firm, as it hits the eight-year mark, recognizes all the years, founders and firms in the making that have elevated South Korea’s startup ecosystem to near-global heights. We have done a small part to evangelize South Korea’s startup scene and create the world’s largest startup demo day, where over 3,000 people have attended our one-day events twice a year.

But technology and innovation is not enough. It has been culture and innovation that has led South Korea’s wave of influence across the globe, especially with the incredible rise of BTS. I believe Korea’s startup ecosystem will ride this BTS wave along with the new generation of entrepreneurs and strengthening ecosystem. The ubiquity of technology has allowed different cultures to bridge and create commonalities of understanding and communication.

Which is why I believe within the next decade, the next Facebook will come from South Korea. With its global leadership in culture and technology, there are not many nations that have the qualities and building blocks to create a global internet giant. As BTS grew within the borders of South Korea, a BTS of social media will be born here, too.

By Bernard Moon

The BTS of social media: The next Facebook will come from South Korea
Bernard Moon is co-founder and partner at SparkLabs Group, a network of accelerators and venture capital funds.

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