What's wrong with making money from startup exits?

In South Korea, those who struck it rich from property investments are the subject of envy, but startup founders who make big money from their exits have become the target of criticism, Saeju Jeong, co-founder and CEO of the US healthcare unicorn Noom, said at a recent startup mentoring forum.

His speech resonated with the attendants of the Venture Summer Forum held in Seoul on Tuesday. He drew rousing applause with this question: "What's wrong with startup founders getting rich?"

Jeong drew a comparison in public sentiment toward startup founders in the US and South Korea.

In the US, startup entrepreneurs who exited from their companies for big profits are highly recognized. But in Korea, they are stigmatized as unethical businesspeople solely chasing money instead of growing the company.

Jeong is a self-made Korean American businessman who moved to New York City at the age of 25 and in 2017 established Noom, which tracks its subscribers’ food intake and exercise habits. The healthcare app is now valued at around $3.7 billion.

Kim Bong-jin, former chairman and founder of Woowa Brothers Corp., the operator of South Korea’s No. 1 food delivery app Baedal Minjok, was at the center of public criticism over the fortune he made from exiting.

In 2019, he sold Woowa Brothers to Germany’s Delivery Hero SE for $4.3 billion, sparking public resentment. Some campaigned to boycott the delivery app, saying his exit resulted in Baemin users paying delivery fees to a German company.

But Kim returned to start a new venture. His newly founded Grande Clip has recently acquired a 50% stake in Stayfolio, a Korea-based property rental platform, becoming the latter’s largest shareholder with management rights.

Sam Ahn, former CEO of video chat service company Hyperconnect, established an AI-based social platform after selling Hyperconnect to Match Group, the operator of the world’s largest dating app Tinder, for around $2 billion in 2021.

The deals for Hyperconnect's Ahn and Woowa Brothers' Kim marked the two largest cross-border exit deals in South Korea's history.

Now their ventures into new businesses are forming virtuous cycles for South Korea's startup ecosystem.

But politicians seem to want to turn back the clock.

In just two months since the opening of the 22nd National Assembly, lawmakers have drawn up 283 bills in relation to corporate regulations,

That is nearly double the number of bills proposed during the same period of the 21st National Assembly.

Israel, one of the top startup hubs in the world, has built a strong foundation for fostering startups. Of all the unicorns with a corporate value of $1 billion or more in the world, Israel makes up 2%. In comparison, South Korea, with a population five times larger than that of Israel, claims only 1.2%.

According to the Ministry of SMEs and Startups, the number of startup entrepreneurs under the age of 39 has decreased for four consecutive quarters as of the first quarter of this year.

This is the longest period of decline for the cohort since the related statistics began to be compiled in 2016.

To revitalize our startup ecosystem, we'd be better off cheering on entrepreneurs who have fairly made money than be jealous of their success.

Write to Joo-Wan Kim at kjwan@hankyung.com
 


Yeonhee Kim edited this article.