Eli David Rocca, CEO of Startup Blink, pointed out the culture of institutional subsidies-centered models and overprotection that analyze the competitiveness of startups in different regions around the world, and said, “The policy of fostering through huge subsidies is now limited.”

Ellie David Rocca, CEO of Startup Blink 사진 확대

Ellie David Rocca, CEO of Startup Blink

“The Korean startup ecosystem is collapsing right now. The biggest problem is that the government and start-ups, which have huge subsidy policies, are overly close together.”

Ellie David Rocca, CEO of Start-up Blink, which has been evaluating the startup ecosystem in major cities around the world, recently diagnosed the startup ecosystem in Korea during an interview with Maeil Economy.

Startup Blink, a market research firm specializing in startups, evaluates and announces the ranking of ecosystem scores of more than 1,000 cities around the world every year. CEO Rocca, who travels around the world to analyze the startup ecosystem, visited Korea and made a diagnosis.

CEO Rocca, who pointed out the Korean government’s excessive cash support, said, “The healthy startup ecosystem is a structure in which startups make good products and sell them,” adding, “There are many companies in Korea that aim for government subsidies instead of good products. This will inevitably weaken the momentum for startups to make good products and advance overseas,” he explained.

As Korea has been relatively late in forming a startup ecosystem, it has focused on funding businesses and boosting startups through policies such as government parent funds, government-led venture capital (VC), and initial start-up packages. The budget for startups and ventures organized by the Ministry of SMEs and Startups next year also reached 4.3886 trillion won, up 23.3% from this year.

CEO Rocca evaluated that these support measures may be effective in reaching a certain level of ecosystem, but there is a limit to reaching a global level of startup ecosystem. According to startup Blink, Seoul’s startup ecosystem is ranked 20th worldwide, far behind Beijing (5th) and Tokyo (13th).

In particular, he said, “Korea seems to be dragging from place to place while holding the hands of a child (startup) in a playground,” adding, “The government’s role is to create a playground itself that is good for startups to run around,” and he advised that the policy should focus on creating a good environment for business.

It is pointed out that such excessive interference could rather harm the autonomy of startups or lead to overprotection of domestic companies.

“If you want to grow, you have to head to overseas markets”

Startup BLINK's ranking of the best cities in the startup ecosystem. Seoul, South Korea, is ranked 20th. In Asia, China's Beijing (5th) ranked the highest, while Japan's Tokyo is 13th. [Source = Start-up BLINK] 사진 확대

Startup BLINK’s ranking of the best cities in the startup ecosystem. Seoul, South Korea, is ranked 20th. In Asia, China’s Beijing (5th) ranked the highest, while Japan’s Tokyo is 13th. [Source = Start-up BLINK]

Of course, in the case of deep technology fields that require long-term R&D, such as quantum computing, and startups that are directly connected to national strategies, such as defense technology, the government’s initial support plays a big role in growth.

CEO Rocca said, “We need support for deep tech startups,” but he believed that strategies on what types of startups to apply for should be reset.

In particular, he stressed that support for startups that only stay in the Korean market should be cut off boldly. “Protected children can never achieve greatness and do not want to leave home,” CEO Rocca said. “Continuing to create startups that only target the Korean market does not help revitalize the economy.”

It is explained that if start-ups stay only in Korea, start-ups will eventually compete with existing start-ups for a limited domestic market. He added that it is necessary to support start-ups that have English proficiency from the start-up and are aiming for the global stage.

CEO Rocca cited Israel and Singapore as countries with excellent startup ecosystems and said, “The Singaporean government is also highly interested in startups, but it focused on the business environment itself, such as simple corporate establishment and low tax rates, rather than financial support. Our current achievements are the result of that,” he said.

The situation in which “unicorn” companies (unlisted startups with an enterprise value of more than $1 billion) rarely appear in Korea is also an example of the limitations of the domestic ecosystem.

CEO Rocca cited “Sendbird” and “Num,” which Korean entrepreneurs started in the U.S. and grew into unicorns, as impressive startups, and said, “It is a representative example of success in Korea without relying on government support and showing the excellent start-up capabilities of Koreans.”

He cited high-level talent and global-level hardware competitiveness such as semiconductors as strengths of the Korean startup ecosystem. It also noted that Korea already has success stories in global markets such as Samsung Electronics and LG Electronics.

“It is desirable for the private sector, including these large companies, to fill the vacancy and contribute to the revitalization of the ecosystem while gradually reducing the role of the government directly involved in the ecosystem,” he advised.