I have visited the Smart Content Center in the G.Square building In Seoul: it is a South Korean government-supported incubator that helps startup by providing a low-cost working space (rent is free for successful applicants) that comes equipped with a well-furnished mobile testing lab, a video-editing studio, along with logistical and marketing support. Startups are still responsible for securing enough funding to pay its employees and other expenses of course.
At the moment, the Smart Content Center is operating at near capacity with 45 startups out of a maximum of 50. Each startup gets its own space (“rooms” as they say here), which seemed enough to host between 3-4 to 7-8 people (or more), depending on the size and cubicle layout. Most of the companies that I’ve met are software or web companies, which is not surprising since these categories represent the bulk of startups worldwide. I also talked to Kang Kyong Seog, the manager of the Smart Content Center (he’s in the above photo), about how this entity works, since I wanted to know how different things were when compared to the privately held incubators that we have here in Silicon Valley.
Interestingly, Smart Content Center does not seek “rent income” or a “big exit” through startup equity, although it does hold some equity as a mean to have some kind of influence or oversight mechanism. As companies get more successful, the incubator actually steps back instead of trying to increase its participation – this is probably the biggest difference between incubating “as a public service”, rather than “as a business”. At the moment, it is still early to see how this structural difference will translate in terms of success (measured in “wealth generated”), but keep in mind that startup creators a somewhat mavericks in a country where “failure” can be a stigma, professionally-speaking, so this a nascent, but remarkable development.
Since the incubator was launched in 2012, there are not yet big success stories, but they hope that this will happen in time. Since Smart Content Center mentioned some kind of oversight mechanism, I was curious to know when they would deem necessary to intervene, and asked Mr. Kang directly about it. He told me that the incubator typically only intervenes upon an explicit request from a startup, so it doesn’t seem like they are micro-managing startups, which is critical for innovation to happen.
Like other incubators worldwide, Smart Content Center can provide startups with the knowledge of consultants and mentors that have experience in a particular field. That comes free of charge for the startups that would otherwise had to pay expensive consultant fees. This is one of the great perks of good incubators, and for entrepreneurs there are little downsides to join as long as they don’t lose too much equity – or control.
The incubator also builds relationships with Universities and can help startups in terms of recruitment, which a very difficult endeavor in Korea just like it is in the USA (there is just a shortage of highly skilled workers). Because the most precious assets of any startup are its employees, this could provide an edge to companies that are participating in the program.
Finally, the Smart Content Center also has deep relationships with the local major wireless carriers and handset makers, which can result in having one of their Startup product preloaded in a handset or as a carrier app. This is a huge boost for the startup, and keep in mind that in Korea, a handful of mega-corporation like Samsung, LG or SK control large swaths of the economy, so a closer connection to those entities (and to the government) is definitely a good thing, if not a mandatory thing for local success.
The Korean startup scene is growing steadily, and although Smart Content Center is one of the better known local incubator, there are others and more will likely emerge. One of the difficult part for Korean entrepreneurs is that the Korean market is much smaller than the U.S or Japanese market, so it is hard to become big when building a local service. The good thing that comes out of this is that most of the startups that I have met try to think “global” from the get go, and design multi-cultural and globalization efforts as a core feature rather than an afterthought.