Transcript Nathan-Millard-Korean-Tech-and-Startup-Intro-Jan

Seoul, The Hottest Startup Hub
In Asia?
A look into Korea’s tech infrastructure
and Startup Ecosystem
January, 2015
Nathan Millard @Nathan_mill
S
It wasn’t
always
like this…
Gangnam 1950s
Gangnam 2015
Understanding Korea
•
25.6M in Seoul Metropolitan Area (1/2
of population)
•
Home of Samsung, LG, Hyundai,
Hallyu
•
Hard working (10-12 hours per day)
•
Tech-savvy & Engaged
•
Homogenous & Impressionable
•
Trend setters
•
Pop culture, tech, fashion
Korea’s Economic Landscape
•
$25,997 per capital GDP as of 2013
•
Asia’s third largest e-commerce market
(12%+ annual growth since 2006)
•
Increasingly vibrant exit market (M&A
and IPO)
•
Engaged consumer base,
eager to spend through tech
Korean Mobile Market Overview
•
Fastest mobile broadband (excellent for content
consumption)
•
High smartphone penetration: 80% as of
September.2014
•
High Android-powered smartphone
penetration:90% of smartphone user
•
15 % for web-surfing & 85% for using mobile
apps ( high usage in mobile-app services)
•
Kakao games platform boosting Google Play
•
Currently, no serious challenge against Kakao
Talk
IPhone
Large (Korean) Corporations
Dominate
= 85% M/S
= 14% M/S
Samsung & LG hold 80% m/s
while Apple 20% in device market
3 big Search Engine companies
= 15% M/S
92 % m/s for Kakaotalk & 4% for LINE in
messenger service (as of Sep.2014)
App Opportunity in Korea
•#3 in the world for downloads
•#3 in the world for revenue
•25%+ online for 8+ hours/day
•$100M USD monthly app revenue
<Whole population engaged>
Gaming in Korea
<Clash of Clans: #1 ranked in Google & Apple app store>
<Anipang: First Kakao Game>
•
First country to have professional PC gamers
•
PC rooms used to dominate free time
(now mobile)
•
Highly experienced gaming market place
•
Exceptionally high consumer expectations
•
Infrastructure supports ‘heavy’ games and apps
•
80%-90% of app revenue from games
Koreans as App Consumers
•
Highly trend-focused, social, and fickle
•
90% of top games released in previous month
•
Local apps / services often triumph over imports
•
Large marketing budgets are [now] required for
engagement
•
Localization can not be stressed enough
Mobile Payments Situation
•
World leader in mobile payments
•
Extensive NFC enabled devices
•
SK Planet’s ‘T Cash’
•
Used for 54% of in-app purchases
•
Connected devices offer future opportunity
•
Samsung aims to be IoT leader
•
Korea is a great test market / gateway to Asia
•
Bitcoin emerging (Korbit, Coinplug, CoinOne)
Korean Unicorn
14
13
Unit:
$Billions
12
11
10
9
8
“10 companies belong to what we call
the “Korean Unicorn Club” (by our
definition, Korean software companies
valued at over $1 billion by public or
private market investors)” – John Nahm,
Strong Ventures (9/11/2014)
7
6
5
4
3
2
1
0
Coupang
US Population: 318 million
Com2US
USGmarket
GDP: $16,8
trillion Daum
|
|NC Soft
S. Korea Population: 50 million (15.7% of US)
Smile Gate
Naver(7.8% of
Kakao
LINE
S.Nexon
Korea GDP:
$1,3 trillion
US)
All Rights Reserved
StartupEcosystem
Ecosystem
Startup
Accelerators
Startup Ecosystem
Ecosystem
Startup
Investors & VCs
•
130 Angels (around 50 active)
•
Seed Investment: KOISRA
•
Series A: Capstone, CCVC, Venture Port, Formation 8,
K Cube Ventures, Strong Ventures, Smilegate Investment
•
Series B: Altos Ventures, CyberAgent Ventures, Softbank Ventures,
Qualcomm Ventures, IMM Investment, NeoPlux, Stonebridge Capital,
DSC Investment, SL Investment
Startup
Startup Ecosystem
Ecosystem
Co-Working Spaces
Startup
Startup Ecosystem
Ecosystem
Government
•
$5B USD pledged for building “creative
economy”
•
Legitimizing entrepreneurship
•
Innovation centers in major cities
•
TIPS program (1:5 & 1:7 matching)
Startup
Startup Ecosystem
Ecosystem
Content Heritage
•
Hanllyu (K-pop, Dramas, Movies)
•
On mobile and Global
•
Gaming: Devsisters, Smilegate, NCSoft, Nexon,
WeMadeEntertainment
•
Online content distribution: Viki, DramaFever
Startup
Startup Ecosystem
Ecosystem
Reasons for Growth
•
IT infra that supports IT development
•
Quality engineers, with strong work ethic
•
Greater understanding of risk
•
Entrepreneurs with global vision and bigger, better quality ideas
•
Mentor networks and Angel investors
•
Government support (money, PR, education, economic diversity)
•
Exchange of students & ideas (Korea – West)
•
Economic conditions that can support entrepreneurship
Startup
Startup Ecosystem
Ecosystem
Startups
Entrepreneurship in Korea has never been this hot. Korean founders are passionate, talented
and building companies that are having a real impact in the region, and across the world.
While there is much still to achieve, the future looks very bright.
•
•
•
Highest number of startups per capita in the world
•
China has highest number of startups of any country
•
USA has ‘the best’ startups
Mostly consumer facing mobile services
•
80% of the country own smartphone & Per capita, 280$ annual mobile spend in
Korea vs. 105$ in U.S
•
Fastest broadband service: 25 Mbps in Korea vs. 4.5Mbps global average
Gaming, E-commerce, social-powered platforms, Contents
Hottest
Hottest Startups
Startups
ProblemsProblems
with M&A in Asia
•
Not enough M&A (around 98% of exit in Korea is through IPO. Figure is similar in r
est of Asia, except China where is around 50%-50%)
•
Large Asian corporations don’t acquire enough startups in Asia.
(except China)
•
Japanese companies are most active, but mostly high value, rather than volume. E
xamples are Viki and Viber. (only a small number of startups / VCs benefit)
•
US companies don’t know how to engage with Asian M&A opportunities. Also US c
ompanies are also more focused on technology, rather than users / sales. (Asian st
artups are more service than tech driven)
•
In Asia, M&A is generally focused around users / revenue.
•
There is general disconnect between what US companies are looking for and
what Asian companies can provide.
M&Aand
& IPO
M&A
IPO
d
<More inbound, cautious of outbound deal>
Why is there NOT a healthy M&A culture in
-Why is M&A so weak in Korea?
d
Samsung & LG – want to do things internally,
because they think it’s cheaper / easier / quicker
(they were wrong). Samsung is now doing M&A,
but mostly overseas.
Lack insight to see the future (unlike like
Softbank)
Struggle to deal with post-merger integration
(doesn’t work due to company culture)
.
•
Inbound merger in H1 2014 reached 11.1bn, x12times from H1 2013. But
51% drop in outbound deal(1.4bn) compared to H1 2013 (2.9bn).
•
Inbound mergers were mostly big corporate mergers.
•
Korean companies are getting cautious in acquisition with new companies.
•
Survey among 317 CEOs (Korean/Chinese/Japanese) on willingness
on M&A plans shows: only 5% of korean CEOs willing new M&A
while 34% of jananese strongly willing to new M&A , and 53 % of
them seeking for outbound M&A.
Today’s Trends
Today’s
Trend
•
Maturing platform situation
(dominated by 1 – 2 players)
•
Kakao–Daum merger could create super-company?
•
Global competition (hardware, software, services)
•
Opportunities in IoT & smart home
•
Korean tech startups & SMEs more determined globally
•
Korean consumers will lead global mobile trends
•
Closer relationship with China
Keep in Touch
[email protected]
@Nathan_mill
+82 (0)10 8723 7702
Thank You!!
S