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Comparative study of

Startup eco-system between Japan & Korea

Min Hwa LeeKAIST Visiting professorDIGIST Chair Professor

2

Start up Eco-system Models

Source Jungmin Goh‧JungHo Kim(2000) Source JungHwa Han(2000)

Shares

Shares

Funds,Business Support

Invests, Profits

Sale Price Return to Society

Infra such as systems, positions, cultures,

etc

Inorganic Environment

Consumer (Venture Capital)

Producer (Ventures)

Analyzer (KOSDAQ, M&A)

Shares

Wealth Creation

Big company /

Small&Medium Company

/Ventures

Colleges/ Labora-

tory

Angels

Investment Assoc.

Pension Funds

Unlisted market

Foreign VCFacilita-tor

3

Limits of existing Models

Insufficient descriptions of virtuous cycle of value creation and distribu-tion

Insufficient explanations about limits of ideas, business plans, and mar-ket entry

Lack of explanations on critical elements of models

Insufficient explanations on detour route bypass

Lack of complex systematic approach

1

2

3

4

5

Virtuous cycle based new eco-system

4

Business Stage and Start-up CycleSource: Hammerstedt and Blach(2008)

Invention/IdeaAngel/Business

ModelVenture/Marketing

Expansion Cycle Recovery Cycle

Cycle

(Number of Projects) Cumulative Costs (Million Dol-lar)

3,000 Raw Ideas

300 Selected Ideas

125 Small Projects

Medium/Big

Projects

Prototype Produc-tion

Commercial SuccessMarket Launching

New Product development

5

Start-up Cycle 3+2

Invention/

Idea

Angel/

Commercialization

Venture/

Marketing

Expansion

Virtuous

Recovery

Cycle

Business

Activity

Value

Creation

Investment Creativity Tech·IP Product·Service

Leading

Venture’s

Open

Innovation

Re-try

Chance

given

when fails

Output Tech·IP Product Service‧ Customer and Market

Capital

Activity

Value

Distribution

Funds Invention Capital Angel Capital Venture Capital

Recovering

Market Tech·IP Market M&A IPO

3 2

6

Virtuous Cycle Model

Devil’s River Death Valley Sea of Darwin

Research Development Commercialization Industrialization

Research Develop-ment

Commercializa-tion

Globalization

Re-try

Expansion Virtuous Cycle

Recov-ery Cy-

cle

Business Activity

Value Cre-ation

Capital Activity

Value Dis-tribution

Idea Technology & IP Product & ServiceCompetitiveness

Improvement Market Domina-

tion

Inven-tion Cap-

ital

IP & Technol-ogy Market

Angel Capital

M&AVenture Capital

IPO

Invention / Idea Cycle

Angel/Commercialization

Cycle

Venture/Marketing

Cycle


Korea’s Start-up Ecosystem

Comparative study of Startup eco-system between Japan & Korea

1st Venture Boom

1996 1998 1999 2000 2002~2012 2013~ 1997

Establishment of Korea Venture Business Association

1995

Establishment of KOSDAQ

Venture Special Law

Ice Age of Venture 2nd Ven-ture Boom

Laboratory Start-up Movement (Technology Commercial-ization)

INKE Establishment (Globalized)

Korea Technology Transfer Center Establishment

2002 Venture Healthiness Policy

① Conservative Shift of Venture Certifica-

tion

② Conservative Shift of Stock Option

System

③ Merger of KOSDAQ and KOSPI

④ Merger of Technology Transfer Center

History of Korea’s Venture

8

In 2000, high-risk high-return World’s Best Venture Ecosystem

Korea Venture Business Association

Ad-vanced Work-force

Stock Op-tion

Lab-Startup Sys-tem

Technology Transfer Center

KOS-DAQ

Venture Law

INKE

Globalization

World’s First

World’s First

World’s First

World’s Sec-ond

World’s First Competitive System

Number of Ventures: World’s largest in the US (In-

dustry)

KOSDAQ: World’s largest in the US (Finance) 9

Venture’s Outcomes of 19 years

454 Billion Ventures 100 trillion(‘12)

8 of 1 trillion ventures appeared

Only alternative to national growth and employment

Big Com-pany

Global Market Compe-tence

Growth Traction

Polarization Prob-lem

VentureInnovation Compe-

tence

Growth& Employ-ment

Polarization re-solved

Contribution to Economic Growth 1.1%

Total Sales

300 Trillion

10

Total Sales 300 TrillionTotal Employment 150 Trillion

Current Status

•For ventures’ foreign patents and international standards status, ‘Do not possess foreign patents and international standards’ is the highest with 55.3%

Industrial Property Rights & Application Status

•Among ventures, companies previously invested by Angel Investor were 1.9%

Angel Investment Experi-ences

•For ventures’ venture capital investment experi-ence, ‘Do not have any experience’ is 96.0%

Venture Capital Investment Ex-perience

•‘Never consider M&A’ is 94.6%

M&A Consideration level and type

•Only 0.9% among ventures was listed on current KOSPI or KOSDAQ

Listed Status

•On average, founders fail 1.3 times

Average Failures of Founders’98’99’00’01’02’03’04’05’06’07’08’09’10’11’12’13

0

5000

10000

15000

20000

25000

30000

35000

2,042

4,934

8,798

11,392

8,7787,7027,967

9,732

12,218

14,01515,401

18,893

24,64526,148

28,19329,135

신기술

벤처투자

연구개발

기술평가보증

기술평가대출

예비벤처

합 계

Number of Ventures

New Technology

Venture Investment

R&D

Technology Evaluation Assur-anceTechnology Assessment Loan

Preliminary venture

Total

MOT

IP CEO

Policy and Program

Private/Millitary Technology Hold-

ings Company

ACTDsys-tem

Technology Hold-ings Company

Future Technology Holdings Com-

pany

LINCcol-lege

University Tech-nology Holdings

Company

NTB

Accelera-tor Techno Park

Start-up Lead-ing CollegeBiz-Cool

RTTC

TLO

Lab Com-pany

laboratory start-up

Leading Venture-re-lated Technology

Start-up

TIPS

IP-Market

Entrepreneurship Education

Technology Transfer Policy

Start-up Policy

Space for Start-up Policy

Technology Market Policy

Education of Min-istry

Small and Medium Business Administra-

tion

Ministry of Sci-

ence, ICT and Fu-

ture

Depart-ment of

Commerce Industry

Korean In-tellectual Property

Office

Ministry of Na-

tional De-fense

Support Cen-ter for Foun-

dation

1 Creation Company

Re-search

Develop-ment

Commercializa-tion

Globalization


Invention/ Idea Cycle Concept Invention/Idea Cycle is a cycle between Value Creation (Business Activity) in

which ideas transform into technology & IP and Value Distribution (Capital Ac-

tivity) that is composed of Invention Capital, that invests into Value Creation

stage, and IP Market, that transacts and re-collects IP from the stage

The importance emphasized in Creative Economy where venture’s value turns

into Intellectual Property

13


Commercializa-tion

Globalization

Re-try


Recov-ery Cy-

cle

Business Activity

Value Cre-ation

Capital Activity

Value Dis-tribution

Idea Technology & IP

Product & ServiceCompetitiveness

Improvement Market Domination

Inven-tion Cap-

ital

IP & Tech-nology Mar-

ket

Angel Capital M&A

Venture Capital IPO

Invention/ Idea Cycle


Cycle

Venture/Marketing

Cycle


Invention/ Idea Cycle Policy and Program Invention/Idea Cycle is a process of crossing Devil’s River, in which values like

IP are created from creativity · ideas via R&D, so its policy and program focuses

on supports on crossing Devil’s River

In the cycle, its business activity is composed of input stage with en-

trepreneurship education that supports creativity and idea creations and out-

put stage where technology · IP creation and commercialization are supported

14

Invention/ Idea Policy Supportive Programs

Business Activity

Value Creation

Input Creativity Entrepreneurship Education Start-up Leading College, LINC

College, Biz-cool, IP-CEO

Output Tech·IP

Technology Transfer

Commercialization Acceleration

Policy

TLO, Technology Holding

Company,

Laboratory Start-up

Capital Activity

Value Distribution

FundsInvention

Capital IP Finance Activation Intellectual Discovery

Recovery

Market Tech·IP Market IP Market Activation

NTB, NTIS,

IP Market

Invention/ Idea Cycle Status and Problem

15

1. Korea’s IP Eco-system Status

2. Technology Commercialization Status

3. Korea’s IP Finance Status

Insufficient patent quality, but excessively biased to quantity

Rate of technology transfer and technology income shows poor outcomes of technology commercialization

Insufficient public-centered IP Finance, private market activation and ease of access, etc

As a solution, business activity stage should be changed to creative research

In capital activity stage, 1) Invention Capital reinforcement and 2) IP Recovery market

activation are needed

Angel/Commercialization Cycle Concept Angel/Commercialization Cycle is a stage where technology or IP created from

the previous (Invention/Idea Cycle) are transformed into a product or service,

and start-up begins in earnest in this stage

Angel Capitals appear in this cycle, investing on entrepreneurs who have found

business opportunity, and angel investors usually collect funds from middle re-

covery market like M&A

16


Commercializa-tion

Globalization

Re-try


Recov-ery Cy-

cle

Business Activity

Value Cre-ation

Capital Activity

Value Dis-tribution

IdeaTechnology

& IP Product & Ser-vice

Competitiveness Improvement

Market Domination

Invention Capital

IP & Technology Market

Angel Capital

M&AVenture Capital IPO


Angel/Commercializa-

tion Cycle

Venture/Marketing Cy-

cle


Angel/Commercialization Cycle Policy and Program

Technology support and investment that supports commercialization

is important to pass Death Valley in where technology developed via

R&A turns into products and services

17

Angel Cycle Policy Supportive Programs

Business Activity

Value Creation

Input Tech·IP

Venture Certification

Policy

Accelerator

TIPS

Support Center for foundation

Techno park

Guro Digital Valley Output

Product·

Service

Capital Activity

Value Distribution

Funds Angel Capital Venture Funding

Ecosystem Virtuous

Cycle

Technology Guaranteed Fund

Small and medium Business Corporation

Recovery

Market M&A M&A Activation Funds

Angel/Commercialization Cycle Status and Problem Korea’s Angel/Commercialization Cycle (Start-up stage) is composed of Busi-

ness Activity (Value Creation) that completes product and service production based on technology and patents, which are results of R&D, and Capital Activity (Value Distribution) of Angel Capital and M&A market. Both are insufficient

Private Angel Investors Status in Korea

’00 ’01 ’09 ’10 ’11 (’12)

5,493 3,409 346 341 428 522

100M\

Roles of angel investors in the begin-

ning of business start-up are very im-

portant to survive, domestic market

is insufficient (1/40 of US, at least

800 billion needed per year)

Korea’s M&A Sta-tus

Only some markets such as mobile ventures or game industry have relatively active win-win M&A (A&D), when mostly shake-up M&A in Korea

100B\#

Limited government’s supply-driven funding for expanding small scale angel in-vestment

Introduction and activation of cloud funding as micro angel Angel funding recovery market (Korea Technology Transfer Center) needed via

M&A recovery market activation

Venture/Marketing Cycle Concept Venture/Marketing Cycle is a stage that secures domestic markets beyond

commercialization stage and enters global market, crossing Darwin’s Sea, and

it is Maturity/Growth stage in Venture’s developmental stages

The cycle crosses Darwin’s Sea, securing and expanding domestic and interna-

tional customers and markets with products and services succeeded in com-

mercialization, and market entry and expansion requires much more expense

than technology development

19


Commercializa-tion

Globalization

Re-try


Recov-ery Cy-

cle

Business Activity

Value Cre-ation

Capital Activity

Value Dis-tribution

Idea Technology & IPProduct & Service

Competitiveness Improvement

Market Domina-tion

Invention Capital

IP & Technology Market

Angel Capital

M&AVenture Capital IPO


Angel/Commercializa-

tion Cycle

Venture/Market-ing Cycle


Venture/Marketing Cycle Policy and Program Ventures secure domestic markets, and depends on direct financing

via institutional investors like venture capitals and IPO to approach to

global market

Therefore, the core of venture/marketing cycle policy is to make in-

vestment securement from venture capitals and financing in

KOSDAQ market easy

20

Venture Cycle Policy Supportive Programs

Business Activity

Value Creation

InputProduct·

Service Global hidden

champions upbringing

policy

World Class 300 Project

Global hidden champions upbringing policy

Korean hidden champions upbringing

Frontier Champ

Trade Champs ClubOutput

Customer·

Market

Capital Activity

Value Distribution

Funds Venture Capital Venture Funding

Ecosystem Virtuous

Cycle

-

Recovery

Market IPO -

Venture/Marketing Cycle Status and Problem As recovery market has rapidly declined after mergers with KOSPI, listed com-

panies has reduced from 200 per year to 20 per year and overall venture in-vestment and recovery cycle are not operating properly

Ventures has fallen into swamp of growth (history 10~20years): Sales in-creased and net profits decreased

Number of Billion Ventures increased 10 times, Market Recovery de-creased 1/10

2005

2006

2007

2008

2009

2010

2011

2012

2013

050

100150200250300350400450

68 78102

152202

242

315

381416

천억벤처수#

Billions Ventures NumberKOS-DAQIPO

Reduction

Increase

Time re-quired for IPO

Longest 7 yrs

Longest 14 yrs

Long-term element to IPO KOSDAQ New listing reduction

Recovery/Virtuous Cycle Concept Because 98% of small and medium company’s funds are provided from loans,

entrepreneur · CEO can be delinquent borrowers and resurgence can be hard

Due to increase number of delinquent borrowers by business failure, increases

of preference to socially safe jobs occur, and as a result, the young tends to fo-

cus on civil service examinations rather than start-ups

22


Commercializa-tion

Globalization

Re-try


Recov-ery Cy-

cle

Business Activity

Value Cre-ation

Capital Activity

Value Dis-tribution

Idea Technology & IP Product & ServiceCompetitiveness

Improvement Market Domina-

tion

Inven-tion Cap-

ital

IP & Technol-ogy Market

Angel Capital

M&AVenture Capital

IPO

Invention / Idea Cycle


Cycle

Venture/Marketing

Cycle


Recovery/Virtuous Cycle Status and Problem

Lack of ‘Safety net of Innovation’ that can solve ‘Fear of Failure’

- Obstacles to start-up in earnest and re-challenge activation

Very big personal burdens on social· cultural, systematic failures

- Especially joint surety lowers business will, and acts as high exit barri-

ers

Safety Net of Innovation

= Entrepreneur's joint surety + Angel Investment Ecosys-

tem Failure in complex system like venture ecosystem is only matter of

probability. Therefore, should always take account of unpredictable

situations

It is better to have various policies related to resurgence·rechallange

than nothing, but need venture safety net to prevent future credit

defaulters

Japan’s Venture Ecosystem


Sources by Hyung-Oh Lee/ TaeHun Oh

Venture-related Policy History1970s 1980

s1990s

After 2000Appearance of R&D

CompanyGrowth of Venture

CapitalEducational-Indus-trial-National Inte-

grated

Government and Peo-ple Joint Fund Private

sector Activation1st Boom

1970~19732nd Boom

1982~19863rd Boom

1994~19994th Boom

2013~

Venture introduced ‘Knowledge-intensive

industry’ by Industrial Standards Commis-sions

Japan Venture Busi-ness Association launched

Kyoto Enterprise De-velopment (KED) es-tablished

JAFCO established VEC established

Bond with Warrant Sys-tem founded

Japan ASEAN Invest-ment established

First investment asso-ciation, JAFCO 1 estab-lished

KSP established, Techno-police law en-actment

IPO market revolution New Business Confer-

ence, Foundation Tech-nique Laboratory Cen-ter established

Small&medium In-vestment Promotion privatized

JAFCO going public Recruit incident hap-

pened New Business Act en-

actment

New Business Investment foundation

JASDAQ established Ministry of International

Trade and Industry estab-lished New Industry Promo-tion department at Indus-trial Policy Bureau

Small & Medium creative activity promotion law en-acted and Venture Founda-tion established

New Business Law enacted (Stock Option system in-troduced)

Revision of commercial law (Stock Option banned)

Angel Tax founded LPS law enacted University Technology

Transfer law (TLO law) en-acted

Small & Medium Integrated business group started Venture Funding Business

Industry Boost up Law

IT Bubble Decay Planned 1000 University Ven-

tures (Hiranuma Plan) Small&Medium Challenge

support law Small&Medium Invest Busi-

ness Limited Company Law enacted

LLP law enacted Company law, Financial In-

struments Exchange law en-acted, Livedoor shock

Angel Tax Expansion Industrial Innovation Organi-

zation established New JASDAQ launched Listing Standards like Mothers

enacted Financial Strategy, Growth

Strategy presented at Abe-nomics

Japan Stock Exchange group launched

Various National-and People’s fund established

Japan Venture Industry Status

26

There is no venture certification policy in Japan, but about 5-6 thousands of ventures are esti-

mated | Targeted venture type distribution |

Category Jobs% in

2012 111 An-

swered

% in 2013 118 An-

swered

IT-related

Communications/ Network 3.6 6.8

Computer Software 29.8 38.2

Computer Hardware. IT Service 18.0 12.7

Semiconductor/Other Electron-ics 9.0 4.2

Bio/Health-care

Bio Technology 2.7 5.1

Medical, Healthcare related 6.3 7.6

Energy/ Envi-ronment

Industry, Energy 8.1 4.2

Environment related 6.3 1.7

Product/ Ser-vice

Consumer service, Sales 8.1 5.9

Finance, Insurance, Real estate 0.9 0.9

Business Service 7.2 12.7

| Targeted venture stages distribution |

later

expan-sion

early

seeds

2013yr(119 answered)

2012yr(108 answered)

| Targeted venture prospect |

2013 Future Research( 117 answered in March

2015)

2013 Current Research( 117 answered in March

2014)

2012 Future Research( 110 answered in March

2014)

2012 Current Research( 110 answered in March

2013)

Sales decreased/Profit de-creasedSales decreased/Profit in-creased

Sales increased/Profit in-creased

Sales increased/Profit de-creased

| Targeted venture challenges |

Others

Technology Develop-

ment

Market Expan-

sion

Funding

The tal-ented se-curement

2013yr(119 an-swered)2012yr(108 an-swered)

University and Ventures

27

| Number of Ventures founded by Univer-sity |

Number of Establishment each yearCumula-tive

Number of Establish-

ment each year

Be-fore

1994

Planned to estab-lish 1000 of univer-sity ventures for 3 years from 2002 to

2004 (Hiranuma Plan)

| University venture’s income situations (2012) |

New establishments (To-tal2027) Liquidation/closure/dissolution/bankruptcy/suspension/sleep(Total154) Company sale / merger / transfer of some business (Total 49) IPO (Total 24)

New estab-

lish-ments

Be-fore

1994

| Number of New foundations and Changes after the estab-lishment |

Number of Changes after es-tablish-ment

Total Number of

Company

Numbers per years

Com-posi-tion

Ratio(%)

Less than 5 years

Less than 5 – 10

years

Less than

10-15 years

Less than

15-20 years

Over 20

years

Surplus 166 9 66 70 10 11 54.6

Deficit 138 17 52 52 11 6 45.4

Total 304 26 118 122 21 17 100.0

Enterprises and Venture

28

Venture Distribution year distribution

New Business proposal and House Venture System actually used in past 3 yearsThere were systems, but never used in past 3 years

No systems, but interested

No systems, Not interested

No answers

Current Situation of New Projects Proposal System and House venture system (n=308)

Cannot evaluate effectively used values

Lack of matching chances with ventures, High Search Cost

Complexity of cutting parts of company off

When invested, value evaluation of enterprises and business is hard

Decision making process and speed in Big company &

medium company

Taxes on Organizational Di-vision

Taxes on Procurement

External Man-agement

Volunteering Activity

Common

Internal Man-agement

Volunteering Activity

Network formation between Big companys and Ventures

Provide Know-How and support tasks for applicants

Reform of awareness of management class

Incentives by supporting funding and taxation preference

Corporate Venturing related assignments and policy

Japan Venture Industry Financing Market

29

Financing Source (Number of rates : Multiple responses)

Financing Source(Amount Ratio : Multiple responses)

Number of financing highly depends on oneself, relatives,

friends

Financing amount depends on venture capital

Self, Relatives, Friends

Bank (Loans in-cluded)

Venture Capital

Private Company

Public Institutions

Private Investors (Angels)

Foreign Capital (In-vestments from foreign)

2013 (116 An-swered)2012 (105 An-swered)

2013 (116 An-swered)2012 (105 An-swered)

Self, Relatives, Friends

Bank (Loans in-cluded)

Venture Capital

Private Company

Public Institutions

Private Investors (Angels)

Foreign Capital (In-vestments from foreign)

Japan Venture Capital

30

Comparison of yearly VC Investment in US, Eu-rope, Japan VC Invest-ment

Investment per one VC in-vestment in Japan, US, Eu-rope(2006)

USA EU Japan(100M￥ )

(Million ￥ ) USA EU Japan

Japan Angel Investment

31

Number of companies with pre-checkNumber of companies actually in-vestedAnnual Direct Investment

One million yen

Comparisons of Angel Investment in Japan and USA

Japan USA

# of Investors About 10,000 About 230,000

Annual InvestsAbout 1,000,000-3,000,000

yenAbout 50 million yen

Annual Total Invests About 20 billion yen About 2.5 trillion yen

Japan Venture Industry Recovery Market

32

Numbers and gravity for each recovery type

Number

Others

stock repur-chase

disposal

refund

going public

Others

stock repur-chase

disposal

refund

going public

Japan IPO Market

33

Annual IPO numbers

Others

# of com-pany

# of Company in Existing Market

# of Company in New Market

# of Funded Company by VC

Number of IPO has significantly decreased after reaching 188 of IPO in

2006

Number of IPO reached 54 in 2013 after Abe government in 2012

Venture-related Supportive Policy Status

34

Cabinet, Congress

Ministry of Economy, Trade and Industry

Ministry of Education, Culture, Sports, Science and Tech-

nology

Finance Ministry

Ministry of internal af-fairs and communica-

tions

LocalEconomic and Indus-trial De-partment

Local Gov-ernment

JST

Colleges and Com-

panies

Ventures

Japan Fi-nance Corpo-

ration

NICT

IT Ventures

Economic Industrial Policy BureauNew Industrial

Chamber

Small and Medium Business Administra-

tion

SME-based organiza-tions

Industrial Innovation Agency

Korea & Japan Venture Ecosystem Com-

parison


Korea’s Venture Ecosystem Analy-sis

36

특허출원

IP 로열티

엔젤 캐피탈

M&A벤처 캐피탈

IPO

평균 실패 횟수

0.0

0.5

1.0

Korea

Supply-centered Korea’s Venture Ecosystem (Too much government inter-

vention)

Need to activate Angel capitals and Recovery market (M&A, IPO) 요

Strong Patent Applications

IP loyalty deficit

Angel Capital only 1/40 of US

M&A 1/6 of China

1.2 trillion scale of Venture Capi-tal

IPO can’t catch up with Venture capital

Average 1.3 times of failure

Patent Application

Average failures

IP Loy-alty

Angel Capital

Venture Capi-tal

Japan’s Venture Ecosystem Analy-sis

37

특허출원

IP 로열티

엔젤 캐피탈

M&A벤처 캐피탈

IPO

평균 실패 횟수

0

0.5

1

Japan

Technology-centered Japan Venture Ecosystem

Invention/Idea cycle is the strength, rests (recovery market) are

weak

340,000 Patent Applications per year

IP Loyalty Surplus, Competitive Patents

Small Angel Capitals

Small M&A relative to economy

Smallest scale of venture capital among 4 countries

Need to expand IPO scale

Hard resurgence of venturers

Patent Application

Average failures

IP Loy-alty

Angel Capital

Venture Capi-tal

Venture Ecosystem Type and Fea-ture

특허출원

IP 로열티

엔젤 캐피탈

M&A

벤처 캐피탈

IPO

0

0.5

1

특허출원

IP 로열티

엔젤 캐피탈

M&A

벤처 캐피탈

IPO

0

0.5

1

특허출원

IP 로열티

엔젤 캐피탈

M&A

벤처 캐피탈

IPO

0

0.5

1

특허출원

IP 로열티

엔젤 캐피탈

M&A

벤처 캐피탈

IPO

0

0.5

1Patent Application

Venture Capital

IP Loyalty

Angel Capi-tal

Patent Application

IP Loyalty

Angel Capital

Patent Application

IP Loyalty

Angel Capital

Patent Application

IP Loyalty

Angel Capital

Venture Capital

Venture Capital Venture

Capital

Korea China Japan USA

Supply-centered Market-oriented Technology-oriented Balanced

• Highest patent applications relative to populations

• Insufficient excellent patents

• Patent application amount increased

• Can’t keep up with eco-nomic growth

• 340,000 patent applica-tions per year

• Increasing IP loyalty

• 500,000 patent applica-tions per year

• High quality of patents

• Angel capital, , lowest M&A

• University Technology hold-ings company as angel capital

• $20 billion scale M&A mar-ket

• Similar to Korea

• Overwhelming scale of Venture capital

• $ 40 billion scale of M&A market

• Venture Capital with a scale of $1.2 billion

• $ 9,000,000,000 scale ven-ture capital

• World’s largest IPO market relative to GDP

• $ 1.2 billion scale venture capital

• $ 29 billion scale of ven-ture capital

• World’s largest IPO market

Korea·Japan Venture Ecosystem Comprehensive Comparative Anal-ysis

39

Cycle Element Analysis

Invention/Idea Cycle

Patent Applica-tion

○ High number of patent applications relative to popula-tion○ USA, Japan, Korea in order of absolute quantity basis

IP Loyalty ○ More incomes than expenses via IP in USA and Japan○ Deficit in Korea

Angel/Commer-cialization Cycle

Angel Capital ○ Overwhelming scale of USA Angel Capital○ Korea.Japan are short of 0.01% relative to each coun-try’s GDP○ Korea and Japan in similar levels

M&A ○ About 400 billion in US○ Unsatisfied in Korea and Japan

Venture/Market-ing Cycle

Venture Capital ○ USA, Korea, Japan in order of largest GDP relative scale

IPO ○ Especially Japan has small IPO scale ○ Rapidly declined since 2001 in Korea

Recovery/Virtu-ous Cycle

Average failure number

○ On average, 2.8 in US○ On average, 1 in Korea and Japan

[email protected] @koreaventure

Thank you

Min Hwa

Lee

I hope your better future