January 26, 2016
Two years ago, Fortune released an article titled “Why Startups Fail, According to their Founders”. Of the 101 founders interviewed, 42 percent attributed their failure to a lack of market for their product or service. Think of Korean startups as the opposite right now: a lot of people want a piece of the Korean cultural wave, but very few beyond the peninsula have access to it.
President Park Geun-hye, who has championed what she calls a “Creative Economy”, stepped in to try and address the issue in 2012, creating government-funded programs and urging investors to take interest in startups. But if the global success of Korea-centric megahit startups like Viki, MEMEBOX, and up-and-comers like Eggbun is any indication, supply is still unable to meet demand.
This inability to capitalize on foreign markets is not new, but it is growing at pace with Korea’s startup ecosystem. As is the case with many growing and potentially lucrative problems, startups are emerging to help other Korean startups and SMEs gain access to foreign markets. With the popularity of Korean dramas and skincare products skyrocketing, Korea’s seeing a bit of a cultural craving across Asia and to a lesser extent the West.
So how are these Korean startups addressing these global cravings that now extend beyond bibimbap? I’ve profiled two startups in this space that are approaching the problem from different angles. Membersheep helps bring Korean products directly to foreign businesses and OpenTrade, well…they bring the actual startup to be invested in.
They have both seen tremendous growth by aiding their fellow startups from home. While I can’t guarantee exactly how long these global cravings will last, what I can say is that these startups have emerged as serious entrants in the race to take Korea to the world.
Membersheep offers a B2B platform that helps fashion brands expand into other countries. (Foreshadowed above, perhaps?) Since launching in 2014, they’ve amassed an impressive collection of clients — both from Korea and abroad — including Korea’s SBENU, SIWY and global favorites like Carhartt, Adidas, and Levi’s.
When Chinese e-commerce giant Alibaba wanted to step away from the cheap domestic products found on the platform, they asked Membersheep to be one of the initial 50 to be granted ‘VIP Partner’ status.
Once a brand is accepted by Membersheep, CEO Kim Jinsung states that “the team handles everything from uploading the product online to customer service. Thereby providing a comprehensive service on behalf of the brand.”
In September, the company reported having helped over 50 brands launch across Taiwan, Korea, Southeast Asia and China, seeing 170 percent growth in their service during that time.
As the Hallyu (literally “the Korean wave”) continues, there’s no doubt that Korean brands will seek to capitalize on the market in Asia Pacific and Southeast Asia. Banking on their existing successes, Membersheep is primed to service those brands.
While Membersheep may be banking on consumer goods, OpenTrade is the bank.
OpenTrade offers an equity investing platform to support startups’ growth. The investor is given all the rights of a shareholder and the startup receives the funding without an obligation to repay any principal or the interest.
“Communicating with potential investors is an enormous obstacle for Korean startups, especially if they are seeking the much larger pool of funds available overseas,” said CEO McCeo of Opentrade. “Our platform helps startups by acting as an open and continuous communication conduit with potential investors, which builds the trust needed for investors to feel comfortable putting their capital into an early-stage company.”
OpenTrade is not the first equity crowdfunding platform; however, they have a firm grasp on investors’ needs and have attracted Korean institutional investors such as SK Telecom and Primer, as well as 21,223 other investors on the platform. And, while OpenTrade is predominantly filled by Korean investors at the moment, there are no limitations to foreigners investing through the platform.
Going beyond the bare essentials, OpenTrade also connects budding entrepreneurs to to mentors who can offer advice based on their experience.As Korean startups continue to seek funding, OpenTrade provides an opportunity for the rest of the world to get in on the latest startups coming out of Korea.
While both Membersheep and Opentrade are well positioned to connect Korean startups to Koreaphiles abroad, their success will depend on more than just the Korean wave. It will require continued growth in the Korean startup ecosystem, excellent execution and some luck at picking (and attracting) winner. But perhaps, next time Fortune writes about why startups fail, they can cite the counterpoint of Korea, where everyone wants more.
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