Creative ideas 'rare' among young startups

By Choi Sung-jin

Startups are increasing in and around university campuses but most of them are concentrated in the services industry, such as developing smartphone apps, resulting in an imbalance with the manufacturing sector.

According to Seoul National University, out of 215 student teams that applied for support by “Be the Rocket,” a startup incubator program, only five, or 2.3 percent, were startups based on “pure” technology. The number of manufacturing startups that produce goods with their own technology also stood at only 34, 16.3 percent.

Almost half (49.3 percent) of the applicants were platform-based startups and the other 19.1 percent focused on developing content and apps. The imbalance has deepened from last year with the share of platform-based startups rising 16 percent and technology-based ones falling 1.6 percent, the university said.

Out of 215 applicants, 175, or 81.4 percent, were services-related businesses while only 40, 18.6 percent, were manufacturing startups based on technology such as 3-D printers and Internet of Things, widening the ratio gap to 8-2.

Seoul Techno Holdings Inc., in a report analyzing the business areas and practices of startups within the incubator program, stressed the need for a more balanced ecosystem of startups. The share of technology-oriented startups is far lower than that of apps and web services, but the former’s industrial ripple effect could be explosive, the report said.

“There should be far more technology-based startups to enhance the sustainability of the Korean economy led by exports and manufacturing,” said the incubation center’s CEO, Park Jong-rae. “If we provide more money and coaching for the commercialization of technology-based startups, it will create results with far greater economic effects.”

A venture capitalist agreed. “It is a positive phenomenon that we are seeing a sharp increase of startups recently, but unlike in the United States and other industrial countries, ours are unduly concentrating in services sector,” said Han Jae-seon, CTO of Future Play, a venture capital company. “To reinvigorate technological startups with high entry barriers, university research labs armed with many masters’ and doctoral degree holders should more actively engage in starting up businesses.”

He pointed out that prestigious U.S. universities, like Stanford, include the number of startups in assessing professors’ accomplishments.