MarqVision co-founder and CBO DK Lee (center from right) speaks on the stage (Courtesy of MarqVision)
South Korean startups and established corporations are seeking to enhance partnership to ensure a win-win for each of them tapping into funds and resources to scale up and innovative new growth ideas.
MarqVision, a Korean startup developing an artificial intelligence-powered intellectual property (IP) protection platform, has been actively expanding its presence in the global market with support from the international luxury powerhouse LVMH Moët Hennessy Louis Vuitton (LVMH).
The startup joined the LVMH accelerator program, La Maison des Startups, after winning an Innovation Award from LVMH at Viva Technology show in 2022.
The French luxury house is also MarqVision’s most influential, foreign client.
Korean healthcare startup Exosystems has also teamed up with Swiss multinational pharmaceutical company Roche to develop medical devices to diagnose and treat musculoskeletal disorders, a rare disease comprising diverse conditions affecting bones, joints, muscles and connective tissues.
“The collaboration with globally renowned Roche is expected to facilitate our global advance,” said Lee Hoo-man, founder and chief executive of Exosystems.
A Korean software-as-a-service (SaaS) healthcare startup Asleep developing sleep tracking technology is another Korean startup actively pursuing partnerships with multinational companies for global expansion.
Asleep’s sleep tracking API (Screenshot captured from Asleep website)
It won backing from the world’s most famous AI company OpenAI to develop a new sleep management service, which will be available at ChatGPT, said Asleep CEO Lee Dongheon.
Startups and established companies often join hands as fledgling companies with innovative technologies or business models need funds and resources to scale up, and corporations want to apply disruptive technologies at fast paces to foster new growth engines.
But their partnership has faced criticism for failing to bear fruit, and now they are seeking to deepen their collaboration to ensure more realistic and successful outcomes.
GOVERNMENT-LED STARTUP SUPPORT PROGRAM
The enhanced corporate-startup partnership in Korea has been also effectively promoted by the Korean government.
Korea’s Ministry of SMEs and Startups has invited 11 international tech giants including Nvidia, Microsoft, Amazone Web Services, Siemens and Intel this year to work with Korean startups via its Collaboration Program with Global Companies.
(Graphics by Dongbeom Yun)
The program, participated by more than 300 local startups this year, has already met with success, resulting in 12 mergers and acquisitions and a total investment of over 500 billion won ($372.4 million).
Korean private businesses have also turned more active in deepening their ties with startups, going beyond joint proof of concept (POC) projects to come up with real products.
LG Electronics Inc. has been working with Korean AI startups such as Clika and Nation A to develop on-device AI technology for its flagship gram laptop series.
Late last month, D.Camp, a Korean startup accelerator backed by the Banks Foundation for Young Entrepreneurs, took Korean startups to Japan to allow them to unlock opportunities through collaboration with Tokyo Broadcasting System’s (TBS) corporate venture capital (CVC) TBS Innovation Partners LLC to develop products and technologies tailored to Japan.
The CVC selected seven Korean entertainment and content startups, including Stayge Labs, Realdraw and Inshorts, as its partners.
CVC INVESTMENT FALLS SHORT
Corporate funding, however, has fallen short of expectations, said Korean startup industry observers.
South Korean startup founders pose for a photo after winning a pitch hosted by D.Camp and TBS Innovation Partners in Tokyo (Courtesy of D.Camp)
According to data from Korea’s Ministry of SMEs and Startups, private business investment stood at 4.18 trillion won, accounting for 82.0% of fresh venture funds formed in the first half of this year. This is smaller than 87.5% in 2022 and 85.6% in 2023.
A shortage of investment from major conglomerates and financial companies mainly drove the fall.
Conglomerates invested 1.02 trillion won in startup venture funds in the first half, down 42.4% and 12.3% from 2022 and 2023, respectively.
Venture investment by financial institutions, except the state-run Korea Development Bank, also dropped 50% from 2022 and 0.9% from 2023 to 1.48 trillion won.
Korea’s strict regulations on CVC funding are blamed for declining venture capital investment in startups.
Under the current capital law, CVCs are allowed to borrow a maximum of 40% of each fund from external lenders to invest. They are also allowed to invest up to 20% of their assets in overseas targets to prevent major conglomerates’ money fraud.
The Korean government is seeking to lift the ceiling to beef up corporate investments in startups.
By Joo-Wan Kim and Eun-Yi Ko
kjwan@hankyung.com
Sookyung Seo edited this article.
