Start-ups offer a third way, SparkLabs CEO says

In a world exhausted by the U.S.-China rivalry, Korean start-ups can pave a third path for other countries by polishing software capabilities, founders of start-up accelerator SparkLabs said on Thursday. "Korea has a very strong manufacturing ...

SparkLabs co-founder Jimmy Kim gives opening remarks at the company's 10th anniversary demo day, or start-up showcase, held Thursday at Coex, southern Seoul. [SPARKLABS]

In a world exhausted by the U.S.-China rivalry, Korean start-ups can pave a third path for other countries by polishing software capabilities, founders of start-up accelerator SparkLabs said on Thursday.

"Korea has a very strong manufacturing foundation, perhaps the best in the world,” said Kim Ho-min, one of the four co-founders and co-CEOs of SparkLabs to the local press on Thursday.

“But our awareness on software, especially business-to-business cloud networks, is in a very beginning stage. If we push our software abilities to as high as we are with our hardware industry, then we are bound to become a company leading in both areas.”

SparkLabs is a start-up accelerator specializing in ventures seeking to go global from early stages. It was founded in 2012 by Kim Ho-min, Kim Eugene, Lee Han-joo and Bernard Moon. As a member of the Global Accelerator Network (GAN), SparkLabs offers ventures access to a wide network of investors around the world.

The firm has invested in 270 start-ups so far. Of the companies, 62 percent have received follow-up investment from other sources. The value of the start-ups is 6.7 trillion won ($4.7 billion) altogether, according to company data.

Successful companies include fashion brand Balaan, job-seeking service operator Wantedlab, accommodation booking service H2O Hospitality and smart farm tech company N.Thing. SparkLabs currently has offices in Korea, Taiwan, Australia, and Pakistan.

“Up until now, the world has had to follow the paradigm shifted by either China or the United States, which has frankly led to fatigue and led to countries to look for a third option,” said co-founder Lee.

“Korea has soared as a leader in many fields, especially with content. People greet me in Korean when I walk into a meeting and talk about the Korean dramas they’ve watched. That’s the kind of cultural interest that leads to interest in Korean businesses and investment in Korean firms, and that’s what we should be ready for.”

The four co-founders of SparkLabs, a local start-up accelerator, answer questions from the local press during an interview held Thursday morning at Coex, southern Seoul. From left are: Eugene Kim, Jimmy Kim, Lee Han-joo and Bernard Moon. [SPARKLABS]

Macroeconomic conditions may be difficult now, as interest rates keep escalating and investor sentiment weakens, but economic crises have always proven to be a blessing in disguise for promising businesses, according to Lee, referring to the three financial hardships suffered after the 2000s — the early 2000s recession, the crisis started by the Lehman Brothers bankruptcy in 2008 and the current post-pandemic difficulties.

“People think that the market is worsening for start-ups, but in fact, early stage investments are always on the rise,” Lee said.

“When people are laid off from their companies, they come up with their own businesses. The companies that are thriving now, such as Google and Facebook, were also founded in 1998 and grew exponentially after the economic crash. So anyone looking to establish their own business should not be scared and just jump in.”

The accelerator celebrated its 10th anniversary on Thursday with a Demo Day, where start-ups pitch their business ideas for investors. SK Inc. Chairman Chey Tae-won, U.S. actor Ming-Na Wen and American football running back Marshawn Lynch were featured in panel sessions.

Chey advised start-ups to weather the market storm until late next year.

“Start-ups that go far do not start wanting to make money, but with an aim to give solutions to a problem in society,” Chey said, referring to the Southeast Asian delivery and taxi-hailing app Grab.

“The founder, Anthony Tan, told me that he thought about the social minorities regarding transportation and how he could solve their problems. A good business model has the potential to go far and it’s also easy for people with money to pitch in because they’re led to think, ‘This is the least I can do for the society.’”

Chey Tae-won, chairman of SK Inc., speaks during a talk session at SparkLabs' demo day held at Coex, southern Seoul, on Thursday. [SPARKLABS]

He refrained from identifying specific business models that he thought would be successful, but emphasized the importance of the environmental, social and governance (ESG) initiatives.

“We talk about ESG as something grand, but you should approach it as something you’ve been doing, not something that’s going to cost you extra,” he said.

“It’s about the relationship between us and nature, us and other people and us and the outside companies. We have always been tending to these matters and it’s here to stay. By 2030 when the World Expo is held, ESG won’t be a trend anymore, but something that everyone will be taking for granted.”

BY YOON SO-YEON [yoon.soyeon@joongang.co.kr]