'Venture firms face challenges to survival'

Shim Dong-ho

By Park Jin-hai

Shim Dong-ho, CEO of NuriVision, a Seoul-based anti-spam solution provider, says that venture firms holding source technologies face a business environment hostile to their survival in Korea.

“For service firms such as Kakao Talk to survive in Korea is relatively easy. But, it is extremely difficult for a small tech firm holding source technology to survive,” he said.

The reason is because conglomerates want to buy out the source technology from venture firms at cheaper prices, but don’t want to share the profits with the firms.

“It seems hard to imagine a future where big companies such as Google grow with the smaller venture firms together.”

His firm received a Venture Award in 2008 from the Ministry of Knowledge Economy, a predecessor to the Ministry and Trade, Industry and Energy, in recognition of his firm’s innovative technology that reduces spam emails by 99 percent.

NuriVision, once regarded as an exemplary venture firm having annual sales of 680 million won, suffered a setback last year as its sales were cut in half.

Shim said that among 130 tech venture firms that prospered around the venture town in Hongneung, Seoul, in 2005, only six or so companies survived 10 years.

Venture firms are particularly vulnerable in legal grounds. Oftentimes, they fall prey to legal loopholes, he added.

“In cases where there seems to have no legal problem in the contract, they could also be used as a vehicle for those who don’t want to honor the contract and just cash in short-term profits on the stock market.”

Currently, he gives consultation and evaluation services to government organizations, including the Korea Evaluation Institute of Industrial Technology, which have provided aid to aspiring venture firms.

He said that although the government support to nurture venture firms is going in the right direction, but many of the policies ring hollow to the small firms having financial difficulties.

“Some of the conditions that ventures have to meet to receive government aid don’t make sense. For instance, having less than 500 percent equity-debt ratio is really difficult to meet.”

Founding a venture firm is not easy, but it’s worth a try.

“We are living in the fast-aging society and more and more people get out of their jobs in their mid 40s. I urge young students to think about having their own businesses,” Shim said. “When they are young and have nothing to lose, they should challenge and chart their future. Even if they lose everything along the way, that experience will be worth 10 times what they’ve lost in their remaining life.”