South Korea is becoming one of the most vibrant nations in the world and a growing tourist destination. South Korea has come a long way since the Korean War where their national income per citizen was the same as the country Ghana. In 60 years they have become one of the top economic powers in the world. South Korea now makes smartphones, TVs, laptops, and tablets. They even have an up and coming startup ecosystem in Korea. The success of South Korea, in turn, has created many Korean angels and VCs who are looking to invest their money in Korean companies. Korean Fundraising can be hard but here are some things to know.
These are the Basics for Raising Money in Korea
Raising venture capital in Korea is not easy. Many startups in Korea have a hard time raising that initial seed investment. This is because even for seed investments, many investors in Korea want to see growth or some form of traction. For the startups they need that seed investment to show growth and traction. So it becomes a kind of a chicken and the egg situation. This is why getting that initial seed investment is easy for those that know what the typical investor in Korea wants to see.
To be a great fundraiser in Korea takes a lot of skills that can’t be learned overnight. Throughout my years covering Korean startups and meeting great Korean entrepreneurs, I have seen a lot of great fundraisers get seed funding for their early-stage startups in Korea. However, even for these entrepreneurs getting funding in the next few rounds gets difficult. This can also be seen in the blockchain startup scene in Korea where initial funding raising was easy through ICOs however getting the next level series A and etc is very difficult.
Lessons to learn from Korean CEOs
It will take some time to develop relationships with Korean VCs.
When looking to develop a relationship with potential VCs in Korea, it is important to think of the process for the long term. Spend time doing research and ask around your network to find the right VC. Most Korean VCs will not be able to speak English well, however, they have some base level of English. If you are targeting some of the bigger VC firms in Korea, they will have at least one partner that is fluent in English. It is important to develop a personal relationship with VCs and find ones that want to work with you, not just invest. So take time and get to know them and their interest. This will allow them to see who you are as a person. Be their friend first before you pitch them any ideas. They get hit up for investments every week so to stand out, try to build a relationship with them that doesn’t center on funding.
Your mission is to be there for the VC and position yourself as the person to call if a particular issue happens. Therefore make sure you show your skills and what you can bring to the table.
If you are coming from outside of Korea, you will need to sell them on your network in your particular country. VCs in Korea want access to different ecosystems around the world. Make sure you position yourself as the guy that can get them into that particular market. If you are a startup already in Korea, show your value through your network. Show you have partnerships with companies outside of Korea, since Korean investors want to see the potential to expand into different markets like Southeast Asia, Europe, or the States.
Go to as many meetings, events, and meetups as possible.
It is important to take every meeting because you never know who that person knows. This might be hard in 2020 due to the COVID-19 outbreak. However, this will not last for years. Meetups and events will spring back up in Korea at some point. It is all about building a vast network that will allow many pathways to investors in Korea. The meetings don’t have to be formal, Korea has many coffee shops and a quick 15 minute sit down could go a long way. Events are also a great way to meet other entrepreneurs who have gotten funding. Getting close with them could lead you to their VC connections. The same goes for meetups, VCs will probably not be there but companies they have invested in will be.
There are a few investor meetups in Seoul, but what you really want to focus on are meetups organized by the Korean government. The Korean government has often matched Korean VC investments so any events organized by the Korean government will have Korean VCs there. There is always some kind of meetup going on in Seoul, especially in regards to blockchain and cryptocurrency.
Sell the potential for global expansion.
Korean VCs want to find the next big startup. A startup that will not only be big in Korea but the world. These startups are rare. Korean companies/startups tend to think small. It is important to show the VCs a bigger picture, a picture of the global market potential. When pitching to VCs in Korea, make sure you articulate your plans for expansion. Remember to have big goals with big potential, these are the types of investments Korean VCs want to make. What Korean VCs currently find the most appealing is an expansion to the Southeast Asian market. The plan should be to dominate the Korean market first, then the Southeast Asian market, then China, then expand out West.
Look for partners, not just funding.
A great fundraiser is not all about funding. True funding is the main goal but it is crucial to find partners as well along the way. A VC needs to really like your company and if they really like your company they should want to be a partner as well. Korean VCs want to be a part of something. If they are not willing to invest right away, a partnership is another option to go to. This could be your window to impress them and show your companies true potential. Also, there is so much money out there from the Korean government. It is possible to get that investment just by having great partners inside and outside of Korea. We have met several entrepreneurs in Korea that first focused only on partnerships before seeking actual seed investments. A pitch deck looks great with a large network base to show companies believe in your product or service.
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