|Lee Jong-wan, left, a senior investment analyst of cross-border startup accelerator Chinaccelerator, the first Korean employee with the 10-year-old company headquartered in Shanghai, poses with a Korean intern Kang Myeong-soo inside the company compound, Tuesday. Courtesy of Chinaccelerator|
Korean staff at global startup accelerator in China talk about how startups could turn crisis into opportunity
By Jung Da-min
Lee Jong-wan, 28, and Kang Myeong-soo, 25, at a cross-border startup accelerator named Chinaccelerator, are the only Korean staffers at the 10-year-old company headquartered in Shanghai.
Affiliated with a U.S.-based multi-stage venture capital investor SOSV, Chinaccelerator has been helping online startups cross borders from other countries to China and vice versa.
Having spent more than 10 years in China, Lee discovered the potential of the startup industry in the country that has the world's second-largest GDP. He said China accommodates the regional headquarters of many international companies with a globalized business culture.
Lee has been working as a senior investment analyst at SOSV and Chinaccelerator since January 2019 and is in charge of Korea-focused tasks including portfolio management, fundraising, mentor relations and communication with Korean organizations and startups.
Kang, who has been with Chinaccelerator as an intern for about four months, also said he has found the dynamics in the startup industry in China, with its open culture in which team members freely communicate without concerns about hierarchy and in which different ideas are quickly introduced to the market and tested.
The two Koreans said although the startup industry in China is now undergoing a crisis due to the COVID-19 pandemic, companies working with Chinaccelerator have found ways to survive through the times of crisis.
"The most important thing for a startup in this time of crisis is to survive by all means, including reducing expenditures, so it can flourish later when it has fewer competitors," Lee said during a recent video interview with The Korea Times. "A startup is weak in that it does not have a large budget, but it is strong in that it can quickly move. Startups need to think about changing their business models in times of crisis and this was how startups working with Chinaccelerator have been surviving amid the pandemic situation."
For example, in case of travel service startup Travelflan, which offers recommendations of customized travel packages utilizing an artificial intelligence (AI) chatbot service, big data and machine learning technologies, the demand for its services once dropped by 99.9 percent following the coronavirus outbreak, with sales recording almost zero for about two weeks.
"To find a breakthrough, the company added an e-commerce business model to sell items in high demand, from quarantine items like face masks or hand sanitizers to other daily necessities like cosmetics or coffees," Kang said. "Through the fundamental change in its business model, the company generated approximately 3.2 billion won ($2.61million) in sales in the first quarter of this year."
Another online startup viAct, which offers real-time monitoring of construction and manufacturing sites to increase productivity and safety, has developed AI-based face mask recognition technology since the virus outbreak and has been providing the AI technology-based services to governmental organizations.
"Korean startups can also find solutions to solve the pandemic crisis and they can also find new opportunities if they are quick to respond to new social changes such as the rise of remote working culture," Lee said. "This year can offer more opportunities for startups in Korea following the passage of a revision bill of the Promoting Venture Investments Act."
Passed at the National Assembly in January, the revisions are expected to go into effect starting July at the earliest. The revisions include giving legal grounds to a fundraising scheme called the Simple Agreement for Future Equity (SAFE), in which an investor provides funding to a company in exchange for the right to obtain equity in the company upon a follow-on investment like venture capital. To put it simply, it lets startups raise funds with fewer strings.
The two Korean workers said they would be happy to find and help Korean startups that are willing to expand their businesses in China. "Korean startups have great potential in that the Korean government is trying to make a favorable environment in terms of raising funds for them and also in that they tend to survive tenaciously in time of crisis," Lee said.