Tel Aviv, Seattle … Seoul?

South Korea’s capital — perhaps better known for corporate behemoths such as Samsung and Hyundai– is increasingly brought up in conversations about the world’s most promising startup hubs.

And perhaps it should. Quietly but surely, the bustling East Asian metropolis of 11 million people has built one of the world’s most dynamic startup ecosystems. According to Startup Genome’s authoritative 2020 Global Startup Ecosystem Report, the city placed 20th overall with an ecosystem valued at US$39 billion, nearly quadrupling the global average and early stage funding of US$1 billion.

Startupblink ranked the city 21st overall in 2020, up a staggering nine spots from the previous year.

And Seoul might only be getting started as the city aims to become one of the world’s top five startup hubs, and it’s backing that ambition with over US$ 1.7 billion through 2022.

Seoul has clearly become venture capital pay dirt. But why?

Seoul: where unicorns are born

If there’s a sign that your startup ecosystem has arrived, it’s unicorn production.

As of November 2020, South Korea had no fewer than 12 active unicorns, good enough for sixth worldwide and nearly double that of widely acknowledged tech giant Israel.

The latest company to join the list was ride-sharing company Socar, which achieved unicorn status in October on the back of US$ 52.2 million from local private equity funds SG Private Equity and Songhyun Investment.

Also Read: How South Korean startup Aqua Development is mimicking aquaculture for sustainability

Socar is the first South Korean mobility startup to go unicorn. Previous South Korean companies to achieve unicorn status include e-commerce giant Coupang, the so-called Amazon of South Korea that is valued at US$9 billion; fintech pioneer Viva Republic, the developer of popular P2P mobile payment service Toss; and biotech firm Aprogen, developer of bio-similar products.

Indeed, when you take into consideration former unicorns that have since exited through IPOs or M&A, South Korea has produced an impressive 20 unicorns, a number that compares favourably with any country not named the US or China.

The best-known ex-unicorn is Woowa Brothers, the operators of South Korea’s largest food delivery service Baemin, which was acquired by Berlin-based company Delivery Hero in a blockbuster US$4 billion deal last year.

The Baemin acquisition was a wakeup call to investors, entrepreneurs and journalists worldwide that one ignored Seoul at their own peril. At TechCrunch, Danny Crichton wrote at the time:

“While the country remains dominated by its chaebol tech conglomerates — none more important than Samsung — it’s the country’s startup and culture industries that are driving dynamism in this economy. And with money flooding out of the country’s pension funds into the startup world (both locally and internationally), even more opportunities await entrepreneurs willing to slough off traditional big corporate career paths and take the startup route.”

The second venture boom: letting the money roam free

Driving the rise in unicorn startups – and the growing dynamism of Seoul’s startup scene, more generally – is a much improved financial scene that no longer punishes risk-takers. Describing the bad old days, Andy Salmon writes at the Asia Times:

“Banks customarily lent to giant businesses with plentiful collateral; entrepreneurs who lacked such major assets were forced to take on perilous liabilities, and early-generation Korean venture capital firms were not much better.”

Also Read: South Korea’s thriving startup ecosystem: How “aggressive” VC investment, gender diversity play a role in it

But no longer. Startups now have access to money, both from local VCs and international investors – the latter playing an especially key role in unicorn creation. Even South Korea’s traditional corporate giants such as Samsung have gotten into the act, creating internal incubators to nurture and support promising startups.

Last year, new venture investment in South Korea hit record numbers, posting US$2.3 billion in the first three quarters alone. And those numbers may soon spike even higher on the back of recent regulatory changes that allow major corporations to establish venture capital funds, freeing them to invest in startups directly.

The government takes an active role

In addition to regulatory changes, the government is aggressively cultivating Seoul’s startup scene as well. Startup Genome CEO Jean-Francois Gauthier told TNW earlier this year:

“The national government has multiplied policies to help it grow. Everyone knows that’s important but no one acts as boldly as the national government and the Seoul Metropolitan Government to grow startups right now. The mayor recently announced a massive investment to become top five in the world — a very ambitious goal.”

For starters, Seoul Metropolitan Government has launched a KRW1.9 trillion (about US$1.6 billion) initiative to become one of the world’s top five startup cities. The city is actively helping local startups not only overcome the COVID-19 pandemic but to use it as an opportunity to prosper.

Also Read: How South Korea’s smart city startups curbed the spread of COVID-19

For example, the city is providing US$54 million in support this year to promising startups, including support for labour costs of “10,000 technological professionals” of promising startups.

At the national level, the country has earmarked US$62 billion for a “Digital New Deal” that will revolutionise the information landscape, while programmes such as the Tech Incubator Program for Start-ups (TIPS) make South Korea a rising startup hub according to the World Economic Forum:

“South Korea’s economy is primarily driven by large conglomerates like Samsung and LG, called chaebols, which have acknowledged the importance of startups as a driver of their continued economic success. TIPS (Tech Incubator Program for Start-ups), a state-led incubation programme, discovers and nurtures promising start-ups by selectively matching them with government funding. As the government takes no equity and provides these funds without any strings attached, start-ups can aim high without having to worry about potential failure – and this has been a game-changer, especially when considering the risk averseness of South Korean society.”

Meanwhile, South Korea’s highly successful high-tech response to the COVID-19 pandemic is winning global praise. South Korea’s government is pledging to nurture the startup sector as a leader of the country’s post-coronavirus society, and US startups are now looking to South Korea as the country wins its war on COVID.

To be sure, South Korea’s big conglomerates will continue to play an outsized role in the country’s economy. But in Seoul, they no longer will be the only game in town.

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We, humans, are social creatures. We crave interactions. 

The mirror neurons within our brain allow us to connect unconsciously. For the majority of us, we are most comfortable when we connect and share our emotions. 

Human psychology plays a pivotal role in shaping retail experiences. We have realised that retail experiences do not centre around purchasing goods.

Addressing the need for people to connect when retailing, shopping malls were created in the late 1950s to bring people together.

Amenities such as indoor waterfalls and gardens serve to increase the engagement of shoppers. By enticing them to remain within the mall longer, they are more likely to increase their spending. 

While we have cracked the code for creating an engaging offline shopping experience, its online counterpart is proving a tougher nut to crack within the region.

Popularity of interactive e-commerce in China

However, one does not have to look far for successful examples of the rise in interactive e-commerce.

Also Read: Is China the new global e-commerce leader?

Led by Pinduoduo’s rapid rise since 2015, Chinese e-commerce players have started to embrace the model due to its lower user acquisition costs and high networking effects to grow their customer base.

Pinduoduo claims it has over 731 million active users on its platform. Leveraging on the universal usage of WeChat within the Mainland, the e-commerce giant has been able to incorporate it within its platform to increase engagements between customers.

By introducing gamification elements such as Candy Crush, Pinduoduo further promotes user engagement and interactions to offer customers a different online shopping experience.

“Our interactive features were welcomed by our users. Previously, the e-commerce shopping experience was solitary where the user simply typed in what they wanted into the search bar,” Frank Di, Director of International Corporate Affairs for Pinduoduo, shared in an interview with e27.

Di shared that the company has adopted a push-based model rather than a search-based one where users browse through items rather than search for a specific product.

Why creating an interactive experience is key

Pinduoduo had recognised that games play a pivotal role in improving user experience when one visits its platform. The interactive nature of games increases engagement and entices users to remain on the platform for longer periods.

Also Read: 5 reasons to work interactive video into your marketing strategy

A popular game asks the user to choose a specific tree to water regularly. To supply it with water, users need to buy from the app, share offers or invite their friends to join. When the virtual tree matures, the user wins a box of real fruits from their tree.

Through this, user-app interaction increased and new users are acquired organically through existing customers.

Importance of infrastructure

However, the rise of Pinduoduo and the rapid growth of the e-commerce industry should be attributed to pioneers within the field too, Di remarked.

Spearheaded by Alibaba in 2003, the first wave of e-commerce companies within China led to the development of the appropriate infrastructure to support online commerce.

From logistics networks being set up across the country to online payment solutions, these services form an important cog within the e-commerce industry.

He also shared that rising smartphone penetration within the nation is further fuelling this growth.

According to a Deloitte report in 2018, China ranks first globally in smartphone ownership, with a staggering 96 per cent of the population owning one.

This has led to a shift in the daily behaviours of the population. Gone were the days where computers represented the sole access to the internet.

Today, we have the internet and its capabilities at our fingertips.

The convenience of accessing a smartphone has led to what Di terms, “more fragmented time to browse our phones.”

Citing the example of one browsing through their phone while waiting for the subway, he remarked this was the key behind Pinduoduo’s decision to adopt a push-based model.

User demographics

Much has been discussed about Pinduoduo’s customer demographics and how the majority of their users reside in lower-tier cities in China. However, Di was quick to debunk the myth that Pinduoduo deliberately targets these rural cities.

“Our user distributions merely mirrors the population distribution in China. We want Pinduoduo to benefit all users. Therefore, we serve all kinds of users across China and the majority of them reside in the lower-tier cities,” Di shared.

However, he remarked that there were factors that have led to the favourable growth of interactive e-commerce within these cities.

Firstly, those residing in these lower-tier cities lead a more sedentary lifestyle compared to their Tier 1 counterparts in Beijing or Shanghai. This results in more disposable time for them to browse through e-commerce platforms such as Pinduoduo.

Secondly, the offline options in these rural cities are less desirable than Tier 1 cities. This results in a shift to online commerce as the primary option for purchasing quality goods. 

Influence of live streaming

While numerous e-commerce platforms in the region have introduced live streaming features onto their platforms, Pinduoduo embraces it on a different scale.

For its recent Singles Day shopping event, the e-commerce company partnered with a prominent local television company to host a gala night featuring performances from various Chinese superstars on their platform.

“Our users could watch the gala on the app and at the same time, purchase products on our platform,” Di shared.

 Also Read: 3 considerations to ensure viewer satisfaction with live streaming events

Given the importance of establishing trust within a customer’s retail journey, Di opined that live-streaming will represent the new normal in e-commerce.

“Mainly because of the nature of live-streaming, it’s easier for users to better understand a product. From a merchant perspective, it’s going to help the merchants to build trust with the users,” he said.

Will Southeast Asia be ready?

While the concept of social commerce has been widely adopted by e-commerce firms in Southeast Asia, interactive e-commerce remains nascent within the region.

This can be attributed to the lack of a widely-used social media platform where these interactions can occur. Unlike in China, where over 90 per cent of the population is on WeChat, users within the region have not gravitated towards a dominant social media platform.

This has resulted in e-commerce players facing difficulties integrating platforms within the app to capture the benefits of interactive e-commerce.

Although one can certainly argue that China, with its homogenous demographic and lack of competitors for WeChat, represents an unfair ecosystem for a diverse region like Southeast Asia to emulate, there have been inroads made.

Twitter has emerged as a possible platform to unite the region given its ease of posting short-form content.

Tokopedia utilised the social media platform for its #TokopediaWIB show, which had BTS fans across Indonesia interacting with the boyband through exclusive content and interviews.

According to Twitter’s recently released Global mCommerce 3.0 study, Shopee Live received 120 million views in Indonesia for its live streaming event in April, marking a new record for the brand.

Remarking that the future of e-commerce would centre around interactivity, Di suggested firms should focus on creating an engaging user experience to capture and retain users.

“Most importantly, one needs to focus on the user experience. Users always want to have deals with some element of interactive experience to it. Therefore, gamification features should be released to better serve the needs of the users,” he concluded.

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Image Credit: Pinduoduo

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Today’s guest – James Mayes

Today’s guest is James Mayes, the CEO and co-founder of a company called Mind The Product, and the world’s largest and brightest community of product managers. After 15 years of building high-performance technical teams for banks and startups alike, Mayes decided to found his own startup TweetJobs.

After exiting TweetJobs, he worked with a few great companies to learn more about the world of products. During this time, he found that there were meetups and conferences for CEOs, HR managers, and many other career paths, but nothing existed for product managers. So he embarked on creating a small meetup in the city and people from other companies would gather for a beer and chat about their craft and share stories about their work experience over time. Some of the people from that group decided to band together more seriously and create what is now Mind The Product.

Mind The Product now has five annual conferences, including MTPcon, meetups in over 200 cities and a highly engaged community of over 200,000 product professionals. He is also a jovial British man with such a clean accent that it makes you want to listen carefully to every word he says. So I hope you enjoy hearing from him as much as I do.

Also Read: The future is hybrid: What will events look like post-COVID-19?

Let’s give a warm welcome to James Mayes.

Twitter: @James_Mayes
LinkedIn: James Mayes
Website: Mind The Product
Podcast: The Product Experience

You’ll learn

• What it takes to run offline and online events
• How the pandemic is affecting events and how you should adapt
• What does the future of events (and work) look like

Resources

And remember, Entrepreneurship is a Marathon, not a Sprint, so take care of yourself every day, so that you can live and love, and have the energy and the passion to run your business, and to invest in your team, and to find a way to appreciate those moments of happiness.

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This article was first published on We Live To Build.

Image Credit: Michal Czyz on Unsplash

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Singapore- and Malaysia-based fintech company MyCash Online has launched a campaign on equity crowdfunding (ECF) platform pitchIN to raise RM5 million (US$1.2 million).

The money is being raised to increase the company’s paid-up capital to RM5 million, which is mandatory to obtain an eMoney license in Malaysia.

The eMoney license will allow MyCash to operate a wallet for the migrant community. It is planning to offer a Visa prepaid card for them.

Also Read: Is Southeast Asia ready to give birth to interactive e-commerce platforms like Pinduoduo?

“As Malaysia has a significant numbers of unbanked migrant workers, we believe that there will be a huge demand for our wallet and prepaid card. We will also add remittance services to our wallet. For this, we are signing a partnership with a local remittance giant. We are in the midst of getting necessary approval from the central bank of Malaysia,” Co-founder Mehedi Hasan Sumon told e27. 

Asked why MyCash is taking the ECF route to raise the money for paid-up capital, Sumon said the company’s successful track record of raising money through ECF previously and the positive feedback it received from the crowd prompted it to consider it.

“We want to give our previous backers an opportunity to support us to build MyCash together. We are also in talks with a few VCs,” he shared.

Since its raising of a funding round from 500 Startups last year, it lunched its remittance services in Singapore. Sumon said that the firm has already bagged more than 10,000 customers in the city-state.

“During the COVID-19 lockdown, we worked with the Ministry of Manpower and visited foreign workers’ dormitories to help them to send money home,” he added.

In January, MyCash is also opening a physical customer support centre in the Little India in Singapore.

Also Read: (Exclusive) All female-led MadEats ropes in Tinder co-founder as investor to scale its internet food brands in Philippines

He also shared that over the past year, MyCash has grown from being just a mobile marketplace for migrants to a licensed financial institution. It is now fully licensed in Singapore and Australia.

The company now intends to apply for SandBox in Qatar with the help of Qatar Development Bank (QDB).

“We are also now in the middle of registering our entity in Qatar with the help of the Qatar Financial Centre and QDB. We are also part of QDB’s FinTech Accelerator. We hope to start our operations in Kingdom in early 2021 with the Sandbox approval from the Qatar Central Bank,” he concluded.

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Image Credit: MyCash

 

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Pickupp, a Hong Kong-based logistics startup, has secured an undisclosed sum in Series A investment from a clutch of investors.

The names include Vision+ Capital, Alibaba Entrepreneurs Fund, Cyberport Macro Fund, Swire Properties New Ventures and SparkLabs Taipei.

Pickupp will utilise the funds to accelerate its expansion in Southeast Asia, with an aim to serve 10 major markets within the next five years.

As per a press note, the startup will also seek to diversify its product portfolio and offerings, focusing on the retail and e-commerce industries.

Also Read: In October, logistics tech startups continued to gain investors’ attention as the world struggled through a pandemic

Founded in December 2016, Pickupp began providing customised last-mile delivery services for bulk and ad-hoc deliveries in mid-2017. It has since expanded rapidly and is now operating in Hong Kong, Singapore, Malaysia and Taiwan.

Pickupp claims it currently serves more than 50,000 users and businesses across Asia, including companies such as Charles & Keith.

“Pickupp is redefining logistics with a data-driven approach. Our technology, agility, transparency and innovation enable our customers to effectively scale and thrive,” said Crystal Pang, CEO of Pickupp.

The startup further claimed that its flexible delivery services will help retailers optimise their business strategies and enable them to understand the needs of their customer better.

The logistics startup also runs an e-commerce platform and offers free islandwide delivery for businesses listed on it.

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Image Credit: Pickupp

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