APAC 5G LEADERS’ CxO SUMMIT, SEOUL: South Korea can’t support venture capital funds focused solely on technology because the country’s conglomerates, including all the mobile operators, are reluctant to invest in start-ups, argued Simon Baek, who handles fund management in Southeast Asia at InterVest.

Baek (pictured) pointed out that the top two tech starts-ups in the country have only about $30 million in total funding – Chinese start-ups are 100-times better funded than in Korea. Only one Korean AI start-up is in the top 100 globally.

“The conglomerates, like Samsung, SK, LG and Hyundai which all have acceleration programmes, say they care about start-ups, but they don’t really believe in start-up technologies. They think ‘why do we have to collaborate with them?’,” he said.

He said talent from renowned companies want to set up start-ups outside of Korea because it’s easier to get funding, noting Axiata, Ooredoo and Etisalat invest in more start-ups than SK Telecom and KT, the country’s two largest mobile players.

More support
He insisted efforts in Korea to support newcomers are insufficient: “They are trying hard, but they have to try harder,” adding many companies have the notion that talent in start-ups is not as good as in big companies.

5G can accelerate things like AI development, but “developing a 5G platform is not enough,” he said. In addition to incubation and acceleration of promising companies, they also need hands-on financial support.

Baek said the government also needs to ease regulations and complained the regulatory sandbox in the country is not flexible enough.

InterVest, with $1.2 billion in assets under management, is the fifth largest VC company in Korea. The Korean VC sector is growing rapidly, with about $3 billion invested in 1,400 companies last year, with most of the funds going into non-tech ventures.