004B 2013StartupConference SBC Hyun

September 25, 2013

APEC Start-up Conference Ⅱ

Korea’s Start-up Promotion Policy - Young Entrepreneurs Start-up Academy -

Moderador

Notas de la presentación

I Korea’s Economic Growth and Role of SMEs

II Importance of Youth Start-ups

III Korea’s Youth Start-up Promotion Policy

Young Entrepreneurs Start-up Academy IV

Contents

Moderador

Notas de la presentación

- GNI(Gross National Income): (1953) $67 → (2012) $22,720

Korea has transformed from one of the poorest countries into one of the tenth largest economies in just about 50 years of economic development.

The economy has grown 300 times in 60 years since the establishment of Korean government.

’96 ($12,518)

’07 ($21,632)

As i an Ec o n o m ic

Cr is is ($7,607)

1st( `73) & 2nd( `79) Oil S h o c k s

Oly m p ic Ga m e s

( 1988)

5 - Ye a r P la n fo r Ec o n o m ic

De v e lo p m e n t ( 1962~1981) Ko r e a n Wa r

( 1950~1953)

Fin a n c ia l C r is is

( $17 , 041)

Rapid Growth → Economic Stability

(1970s~1980s)

Transition (1990s)

Mature Stage (2000s~)

Industrialization (1960s)

’48 ’55 ’65 ’75 ’85 ’95 ’05 ’12

Fis c a l C r is is (2012)

($22,720)

K orea’s Economi c Growth and Rol e of SMEs Ⅰ.

Devel opment of t he K orean Economy 1

- 1 / 2 1 -

Gov . Establishment

( 1948)

No. of Businesses No. of Employees Added Value

■ SMEs: (1980) 29,779 (96.6%)

→ (2010) 112,897 (99.5%)

* Large Companies: (1980) 1,044 (3.4%)

→ (2010) 618 (0.5%)

■ SMEs: (1980) 1,000,000 (49.6%)

→ (2010) 2,289,000 (77.1%)

* Large Companies: (1980) 1,015,000 (50.4%)

→ (2010) 679,000 (22.9%)

■ SMEs: (1980)KRW 4.2 trillion(35.2%)

→ (2010)KRW 215.7 trillion47.4%)

* Large Companies: (1980)KRW7.7 trillion(64.8%)

→ (2010) KRW 239 trillion(52.6%)

267 422

1,000

1,864 1,962

2,289

135 439

1,015 1,156

690 679

1963 1970 1980 1990 2000 2010

(Unit : thousand)

18 073 23 406

29 779

67 679

97 379

112 897

237 708

1 044 1 193

731 618

1963 1970 1980 1990 2000 2010

SMEs Large Companies

52,8%

28,5% 35,2%

44,3% 52,2% 47,4%

47,2%

71.5% 64,8%

55,7% 49,8% 52,6%

1963 1970 1980 1990 2000 2010

중소기업 대기업

Ⅰ. K orea’s Economi c Growth and Rol e of SMEs

- 2 / 2 1 -

Growi ng St atus of SMEs 2

Source of Technological Innovation

- 3 / 2 1 -

Key to National Economic Growth

R&D budgets of SMEs have grown to a 18.6% of annual average since the year of 2005.

* Much higher compared with large companies (10.5%) and medium companies (9.6%)

Job Creation

SMEs created 320,000 new jobs in a decade (1999~2009) .

(Unit: thousands)

Growth Rate of R&D Budgets No. of Employees (with 5 or more employees) (Unit: KRW 100bn) Added Value (with 5 or more employees)

Added value from SMEs has continually increased in a decade (1999~2009), making bigger contributions than large companies.

* Added value contribution rate (2009) - SMEs: 50.5%, - Large Companies: 49.5%

Rol e of SMEs 3

Ⅰ. K orea’s Economi c Growth and Rol e of SMEs

`99 `09 `99 `09

678

648

1,830

2,150

4.5%↓

Large Companies

Medium Companies SMEs

10.5% 9.6%

18.6%

1,038

1,945

971

1,982 87.4%↑ 104.1%

`99 `09 `99 `09

17.5%

(2005~2010 Annual Average)

Large Companies SMEs Large Companies SMEs

* Large companies saw a decrease of 30,000 jobs

The number of new businesses is on the rise in recent years, but youth start-ups have been slowing down.

Korea’s entrepreneurship index has been on a declining trend.

Youth joblessness, being twice higher than national unemployment, has become a social issue.

Im p o r t a n c e o f Yo u t h S t a r t - u p s II .

Yo u t h Un e m p lo ym e n t

2.0

4.0

6.0

8.0

10.0

`09 `10 `11 `12.1 `12.6

- 4 / 2 1 -

Ent repreneursh i p Index CEOs i n t hei r 20s and 30s

0

20

40

60

80

0

20

40

60

80

`03 `05 `07 `09 `11

Star

t-up C

EOs

under

30s

(%

)

(Source: SMBA)

(47.6%)

(18.3%)

(53)

(65)

- Young people afraid of failure and taking chances

`00 `09 `00 `09 `00 `09

(11th)

(16th) (19th)

(13th)

(6th)

(3th)

(Source: Donga Ilbo Entrepreneurship Center-Deloitte Consulting)

- Downward in innovative start-ups, but upward in self-employed for a living

Unem

plo

ymen

t ra

te (%

)

(7.6)

(8.1)

(3.6) (4.2)

(Source: Statistics Korea)

- Preference for government jobs and large companies

(7.7)

(3.2)

(8.5)

Inc reas i ng jobs and encouragi ng ent repreneursh i p t hrough yout h s t ar t - ups N

o. o

f st

art-

ups

(thousa

nds)

Break through i n Cur rent Economi c Di f f i cu l t i es 1

Unemployment (Total)

Unemployment (Youth)

No. of start-ups CEOs under 30s

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< Empl oyment / St ar t - up Rat i o and L i fet i me Income >

•Annual sal ary of co l l ege- grad- ent ry - l evel jobs : Large f i rms (K RW 3.5m) , Medi um f i rms (K RW 3m) Smal l f i rms (K RW 2.25m) , Government f i rms (K RW 2.8m)

( Job c reat i on)

II. Im p o r t a n c e o f Yo u t h S t a r t - u p s

Dr iv in g fo r c e o f In c o m e a n d J o b Ge n e r a t io n 2

Annual Income

K RW 100m

30 35 40 45 50 55 60 Age

Success fu l s t ar t - up bus i nesses Empl oyment St ar t - up

Empl oyment = Star t - up

Empl oyment

Star t - up

Ret i rement

Fai l ure

Lay - Off

Fai l ure

- 6 / 2 1 -

Nur tur i ng i nnovat i ve ent repreneurs by promot i ng youth s tar t - ups

- Innovat i ve young ent repreneurs : l eaders o f job c reat i on and c reat i ve des t ruc t i on

Inventor

Promoter

Entrepreneur

Manager

Creat i v i t y

High

Low Managerial skills and networks Lo w High

A t h r u s t o f k n o wle d g e / c r e a t ive e c o n o m y ( Ne w Ko r e a n Go ve r n m e n t P o l ic y ) b a s e d o n s c ie n t i fic a n d t e c h n o lo g ic a l a d va n c e m e n t Cr e a t ive s t a r t - u p s e xp lo r in g t h e b lu e o c e a n

Ad va n c in g Ch a lle n g e r En t r e p re n e u r s h ip 3

II. Im p o r t a n c e o f Yo u t h S t a r t - u p s

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III . K orea’s Youth Star t - up Promot i on Pol i cy

Grants Loans Investments

Type Grants for opening a business

and developing technology

Loans for particular policy

(e.g. start-up promotion)

Investments for expected

returns

Repayment responsibility

Low (none) High

(principal and interest) Medium

Period 1 ~ 2 years 3 ~ 10 years 5 ~ 10 years

Key components

- Young Entrepreneurs Start-up Academy - Business Incubation College - Start-up Tailored Program

- Young Entrepreneurs Loan

- Venture Start-up Loan

- Small Merchant Loan

- Young Entrepreneurs Investment

- Start-up Angel Investment

- Hybrid Financing

P o lic y Dir e c t io n

Building infrastructure that harnesses any entrepreneurs with ambition and marketable technology

Creating an environment for advancing entrepreneurship and giving second chances

Programs

Pol i cy Di rec t i on and Programs 1

Realization of S ta rt- up ( KRW 1 2 9 b n )

- 8 / 2 1 -

Start- up

• 16 programs • K RW 187bn

Start- up Training (K RW 11.5bn)

• Teenager Biz School: from elementary to high school students

• Start-up School: prospective entrepreneurs and businesses less

than 1 year old

•Biz Incubation College: prospective entrepreneurs &

businesses less than 1 year old

•Young Entrepreneurs Start-up Academy: entrepreneurs under 39

•Start-up Tailored Program: prospective entrepreneurs and


•Research Start-ups: scientist-turned entrepreneur(s)

•Leading Venture Start-ups: prospective entrepreneurs and


•Global Youth Start-up : prospective entrepreneurs and

businesses less than 6years old

• Start-up Capability Building Training: prospective entrepreneurs

over the age of 40

• Senior Biz Plaza: prospective entrepreneurs over the age of 40

S enior S ta rt- up ( KRW 1 . 5 b n )

• Start-up Infrastructure: members of business incubators

• Commercialization: one-person business

• App Factory: prospective entrepreneurs and businesses less than 1 yr old

Others ( KRW 4 5 b n )

Gr a n t s 2

Ⅲ. Ko r e a ’s Yo u t h S t a r t - u p P r o m o t io n P o lic y

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Major Star t - up Grants (Real i zat i on of Star t - up)

Purpose Eligibility Total

Budget (2013)

Implementing authorities

Business

Incubation

College

Overview: 18 colleges providing entrepreneurs with packaged

services for each preparation phase to start up a business

Service: business launch; training; mentoring; office space, etc.

* Grants: within 70% of individual project costs, up to KRW 50m

Prospective

entrepreneurs ;

businesses less

than 1 year old

40.2 18 colleges

Young

Entrepreneurs

Start-up

Academy

Overview: a one-stop shop for entrepreneurs under the age of 39

with high technology; and businesses less than 3 years old

Service: business launch; training and coaching; office space;

equipment for product development, etc.


Prospective

entrepreneurs

under the age of

39; businesses less

than 3 years old

25.4 SBC

Start-up

Tailored

Program

Overview: supporting product/technology commercialization via

colleges and other relevant organizations

Service: prototype production; marketing activities, etc.


Prospective

entrepreneurs;

businesses less

than 1 year old

50

Colleges and

private

institutions

(KR W b i l l io n )


- 1 0 / 2 1 -

Loans for start- ups (KRW 1.43 tri l l ion)

• Venture Start-up (KRW 1.27 trillion): SMEs less than 5 years old

• Young Entrepreneurs (KRW 160bn): Entrepreneurs under the age of 39;

SMEs less than 3 years old

Purpose Eligibility Interest rate

Total budget

Loan Limit

Venture Start-up Loan

Facilities, Equipment and working capital Businesses less than 5 years old

3. 29% 1,270 KRW 3bn

Young

Entrepren

eurs Loans

Flexible

repayment

Working capital

(manufacturing, knowledge-based

services, and cultural contents industries)

Entrepreneurs under 39; businesses less than 3 years old

2. 70% 80 KRW 100m

Matching with

private lenders

Working capital

(manufacturing, knowledge-based

services, and cultural contents industries)

Entrepreneurs under 39; businesses less than 3 years old

2. 70% 80 KRW 100m

Ⅲ. Ko r e a ’s S t a r t - u p P r o m o t io n P o lic y

Lo a n s 3

(K RW bi l l i on)

- 1 1 / 2 1 -

Mechanism of Young Entrepreneurs Loan

Lending up to KRW 100m for start-ups

Failure in business

Bona Fide (Debt relief)

Moral hazard (Credit delinquents)

Success in business Regular repayment (5-year installment plan)

Start-up consultancy

Due diligence for debt relief

Debt-equity swap (if the business is most likely to turn around)

Up to 100% of the principal may be relieved.

Young Entrepreneurs Loan → Minimizing the fear of failure

Fixed annual interest rate of 2.7%

Repayment obligation (past-due interest)


- 1 2 / 2 1 -

Fund Management Mechanism

Fund of funds

Public org./College/ Research institutes

Angel Investment Matching

Fund

Start-ups

Angel investors

Angel Investment

Support Center

Invest

Matching /Investment & returns

Investment and returns

Follow-up support

Services

In ve s t m e n t s 4


Yo u n g En t r e p r e n e u r s In ve s t m e n t Fu n d ( Ko r e a Ve n t u r e In ve s t m e n t C o r p )

Fu n d S iz e : KR W 1 2 0 b n

El ig ib i l i t y : y o u n g e n t r e p re n e u r s u n d e r 3 9

In v e s t m e n t u p t o KR W 0 . 5 ~1 . 5 b n p e r b u s in e s s

An g e l In ve s t m e n t Ma t c h in g Fu n d ( KVIC )

Fu n d s iz e : KR W 3 5 0 b n

El ig ib i l i t y : p ro s p e c t iv e e n t r e p re n e u r s ,

b u s in e s s e s le s s t h a n 3 y e a r s o ld

In v e s t m e n t u p t o KR W 3 0 0 m p e r b u s in e s s

Hyb r id F in a n c in g ( S B C ) Gro wt h - s h a r in g : KR W 4 0 b n (C B p u rc h a s e )

P ro fi t - s h a r in g : KR W 1 1 0 b n

(S u p e r - lo w in t e r e s t r a t e lo a n s u n d e r t h e c o n d i t io n o f

s h a r in g in a s l ic e o f o p e ra t in g p e r fo rm a n c e )

- 1 3 / 2 1 -

Yout h and h i gh- t ech s t ar t - ups have dec l i ned sharp l y despi t e s t eadfas t i nc reases i n s t ar t - ups .

No. of start-up SMEs Venture CEOs in their 20s & 30s

No. of start-ups in high-tech manufacturing

C o m p r e h e n s ive p a c k a g e o f fin a n c e , t r a in in g , c o a c h in g , o ffic e s p a c e , p r o d u c t d e ve lo p m e n t e q u ip m e n t , a n d fo l lo w- u p s e r v ic e s ( m a r k e t in g a n d lo a n s ) is n e c e s s a r y t o o ve r c o m e u n c e r t a in t ie s a t t h e b e g in n in g o f b u s in e s s s t a r t - u p .

Promoting youth high-tech start-ups + Generating jobs for youth + Addressing aging SME CEOs

Young Entrepreneurs Start-up Academy opened in March, 2011.

Ⅳ . Young Entrepreneurs Start-up Academy

Ba c k g r o u n d 1

* Fear of fai l ure dec rease i n youth s tar t - ups ag i ng CEOs of SMEs economi c growth potent i al t hreatened

- 1 4 / 2 1 -

Loans (po l i cy fund)

Providing loans to SMEs - Business start-ups (prospective start-ups, SMEs, venture businesses), new growth, commercialization of R&D results and business conversion loans - Emergency business stabilization, small merchants and hybrid financing

Developing HR for SMEs and promote start-ups by young entrepreneurs - Enhancing management skills of CEOs (CEO course) and capabilities of employees - Running the young entrepreneurs start-up academy

Ma rk e t in g

HR (HR d e v e lo p m e n t )

Supporting early stages marketing and global cooperation - Bolstering local and overseas marketing of SMEs’ products: (domestic) HIT500, (overseas) trade delegations, etc. - Korea Desks(Malaysia, Indonesia), SME Support Center (Qingdao), Industrial Coordinators (U.S., Japan, Germany and Dubai)

Technology (consul tancy, et c .)

Resolving problems through company diagnosis and mismatch of jobs for SMEs - Providing tailored support through company diagnosis (consulting, foreign employment support, etc.) - Addressing job mismatch by improving likability of SMEs to young job seekers (Smile Story)

SBC’s 33 ye a r s o f e xp e r t is e in S ME s u p p o r t Ze r o in o n yo u n g e n t r e p r e n e u r s s t a r t - u p s

Ⅳ. Yo u n g En t r e p r e n e u r s S t a r t - u p Ac a d e m y

- 1 5 / 2 1 -

Establishment

Research projects

Helping start-ups head off Death Valley

Success rate of R&D commercialization in Korea: 10-40% (past 2 years: 37.7%)

(UK: 70%, USA: 69.3%, Japan: 54.1%)

Overcome Deat h Val l ey

< Young Entrepreneurs Start-up Academy > •Technology development & loans

•Specialized training & 1:1 coaching

• One-stop services for

Marketing & HR management •Government fund

- Loan: K RW 3.8t r i l l i on - Guarant ee: K RW 57.2t r i l l i on

•Inves t ment •Pr i vat e funds

•Government R&D (KRW 16 trillion) •P e r s o n a l In ve s t m e n t (KRW 30-100m)

Fi nanc ing

Easy

Di f f i cu l t Devel opment / pro t ot ype Commerc i al i zat i on Bas i c research

Rol e o f Young Ent repreneurs Star t - up Academy 2


- 1 6 / 2 1 -

Budget

Eligibility

K RW 25.4bn for 2013 (K RW 20bn i n 2012)

Ages under 39; CEOs whose s t ar t ups are 3 y rs or l ess * Te c hno log y - inte nsive SMEs tha t stre ng the n job a nd va lue c re a tion (ma nufa c turing a nd knowle d g e se rvic e s)

Support

System

Operat i on and Process 3


70% of the total expenses up to KRW 100 mil

R&D Grants

Office, R&D rooms, etc.

Space

Entrepreneurship + practical skills

24 Experts 1:1 coaching

Loans, investment, marketing, etc

L i nk s Educat i on Coaching

- 1 7 / 2 1 -

K orea’s a n u n p a r a l le le d one- s top (one- roof) s t ar t - up suppor t pack age

for young ent repreneurs - Prov i d i ng comprehens i ve suppor t i ng t ool s t o i nc rease h i gh- tech s tar t - up and

i mprove t he success rate

Focus on fos t er i ng qual i f i ed ( fu t ure- or i ent ed) young CEOs - Zoomi ng i n enhanc i ng CEOs ’ at t i t ude and abi l i t i es as wel l as t hei r success i n new produc t devel opment

A dropout sys tem ( t wo m i d- t erm t es t s , bot t om 10% of t rai nees depar t ed)

- Guaranteei ng t he fu l l i ndependence t o t rai nees but ru l i ng out undevoted t rai nees by

i n t er i m eval uat i on

eval uat i ons Fol l ow up Serv i ces - Cont i nui ng pos t - graduate suppor t s Trac i ng bus i ness records i n a span of 5 years af t er graduat i on * Reward i ng d i s t i ngui shed graduates wi t h an addi t i onal l oans up t o K RW100 mi l for one year

Bo

ostin

g su

ccess rates

Diffe r e n t ia t e d Fe a t u r e s 4


- 1 8 / 2 1 -

- Regi onal expans i on: ( ’11) An s a n a c a d e m y ( ’12) Gwa n g u , Ky e o n g s a n , Ch a n g wo n

Class 2011 Class 2012

Ansan center 188 167

Regional centers 24 46

Total 212 213

Ma jo r a c h ie v e m e n t s fo r t h e p a s t t wo y e a r s

No. of start-ups 212 213

Revenues KRW 47bn KRW 14.1bn

No. of new jobs 757 686

No. of new intellectual property rights

793 584

- All g r a d u a t e s h a ve s t a r t e d u p t h e ir b u s in e s s e s , p o s t in g s t r o n g r e ve n u e s a n d c r e a t in g n e w jo b s .

Ma jo r Ac h ie v e m e n t s 5


Ⅴ. Case Study

The Hi ve 1

Company Profi l e Produc t : El ec t r i c sc rewdr i vers

Pres i dent : Sang- mi n Lee (27, jun i or year i n co l l ege)

Es tabl i shed: Jan 3, 2012

Jobs c reated: 19

Sal es : $1.8 m i l (2012) $ 4 . 6 m il ( 2 0 1 3 ) $ 9 . 2 m il ( 2 0 1 4 )

P ro d u c t la u n c h e d in : J a p a n , Ko re a

Achi evements

In v e s t m e n t a t t r a c t e d : $ 4 6 2 , 0 00 (S B C g ro wt h s h a r in g )

C u t e p ro d u c t d e s ig n

R e c h a rg e a b le b y US B c a b le ( la p t o p s , c e l l p h o n e c h a rg e r s , c a r s , a t h o m e )

Success Factors

At t r a c t iv e p r ic e s ($ 3 0 wit h l i t h iu m p o ly m e r b a t t e r ie s , J a p a n e s e Ma b u c h i m o t o r )

Hig h p e r fo rm a n c e ( s c r e w/ u n s c re w 4 0 0 s c r e ws t h ro u g h 9 0 - m in u t e r e c h a rg e )

- 1 9 / 2 1 -

JD Sound 2

Company Profile P ro d u c t : P o r t a b le DJ in g e q u ip m e n t

P re s id e n t : He e - c h a n Kim (3 7 , c o l le g e g ra d u a t e )

Es t a b l is h e d : Ap r i l 2 2 , 2 0 1 1

J o b s c r e a t e d : 8

S a le s : $ 1 m il ( 2 0 1 2 ) $ 4 . 6 m il ( 2 0 1 3 ) $ 1 3 m il ( 2 0 1 4 )

P ro d u c t la u n c h e d in : US A, C a n a d a , La t in Am e r ic a , EU

Achievements

In v e s t m e n t a t t r a c t e d : $ 4 6 2 , 0 00(S B C g ro wt h s h a r in g )

On e o f t h e wo r ld ’ s fi r s t p o r t a b le DJ in g e q u ip m e n t

Success Factors

IF De s ig n Awa rd (2 0 1 2) , Go ld Me d a l a t t h e US A In t e rn a t io n a l In v e n t io n Fa ir ( 2 0 1 2 )

Glo b a l d is t r ib u t io n a g re e m e n t wi t h US Mo n s t e r Gro u p ( J u ly , 2 0 1 3 )

R e c h a rg e a b le b a t t e r ie s , S D- c a rd r e c o rd e r , n o n - p ro fe s s io n a l DJ in g e q u ip m e n t

Ⅴ. Ca s e S t u d y

- 2 0 / 2 1 -

Publ Stud i o 3

Company Profile P ro d u c t : Ed u c a t io n a l g a m e s , in t e r a c t iv e b o o k a p p s

P re s id e n t : Ha e - wo n Le e (3 4 , c o l le g e g ra d u a t e )

Es t a b l is h e d : Ap r i l 1 8 , 2 0 1 1

J o b s c r e a t e d : 2 6

S a le s : $ 2 7 7 , 00 0 (2 0 1 2 ) $ 1 . 8 m il ( 2 0 1 3 ) $ 1 8 m il ( 2 0 1 4 )

Ma jo r c l ie n t : F in la n d ’ s R o v io

Achievements

In v e s t m e n t a t t r a c t e d : $ 0 . 9 m il ( v e n t u re c a p i t a l )

In t e r a c t iv e fe a t u re s , u n l ik e o t h e r e - b o o k s

Success Factors

P a r t n e r s h ip a g re e m e n t wi t h Fin la n d ’ s R o v io (Ma rc h , 2 0 1 3 ) De v e lo p e d c o n t e n t s fe a t u r in g An g ry

B ird s c h a ra c t e r s P u b l is h e d b y R o v io

B e s t - s e l l in g p a id e d u c a t io n a p p in Ap p le ’ s Ap p S t o re ; 5 t h p la c e in a l l a p p s in t h e s t o r e

S t r a t e g ic a r t is t s a n d c r e a t iv e p ro g ra m m e rs ; C EO wh o s t u d ie d fi lm in US A

Ⅴ. Ca s e S t u d y

- 2 1 / 2 1 -

004B 2013StartupConference SBC Hyun

Documents

value smes

rol e of smes

role of smes

job creation smes

ko r e

n c e o f yo

n c ia

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