Foreign Start-ups Flock to Pangyo Techno Valley

Young foreign entrepreneurs pose at Pangyo Techno Valley in Gyeonggi Province last Thursday.

Pangyo Techno Valley south of Seoul is quickly becoming a haven for foreign tech start-ups who are drawn by the fast-paced and efficient work environment. On a recent visit to a 607 sq.m office at the Start-up Campus there, several groups of foreigners were in evidence, giving the impression of a library at a university overseas.

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Sampsa Siitonen of Finnish water-treatment company SansOx said, "Korea has the potential of becoming a test bed for cutting-edge technology. We chose Korea as our foothold in foraying into the Asian market".

The company developed water purification technology using ozone and infrared light. "A small Korean manufacturer will start making our product soon", Siitonen said, and the company is hiring two Korean workers this year.

Most foreign tech start-ups setting up shop at Pangyo Techno Valley are small players with fewer than 10 workers established just two to three years ago. At present, there are around 40 of them, specializing in artificial intelligence, fintech and high-tech medical devices.

They were selected by a government start-up support program called the K-Start-up Grand Challenge, which aims to attract foreign promising businesses to make the country a Asian hub for tech start-ups. Last year, it drew 1,770 teams from 108 countries vying for a spot.  

Mario Aguilera is the Bolivian founder and CEO of Tespack, which develops backpacks, helmets and vests equipped with solar panels that can recharge smartphones and other electronic devices. "We plan to move our headquarters from Finland to Korea this year and use Korea as our manufacturing base", he said.

"Until now, we entrusted production to companies in China and Vietnam, but we were concerned about the high rate of defective products", Aguilera added. "But small and mid-sized Korean companies have better technology and we can produce high-quality products cheaper than in Europe".

Foreign start-ups are impressed by the speed of production and innovative environment here. Julian Osborne of Swiss fintech company AAAccell said, "I've traveled around the world, but Korea is nearly the only country where decisions are made in just a few days. For start-ups, whose success or failure is determined in just a few years, the fast pace of work in Korea is its biggest strength".

Young foreign entrepreneurs also pointed to the world-class communications infrastructure and hardware technology like semiconductors and displays in Korea. They say the U.S.' Silicon Valley may have talented workers and wealthy investors, but Korea has the world's best communications infrastructure and hardware.

Another plus is the fact that Korea is home to legions of tech-savvy customers who are eager to try out the latest gadgets and technologies.

The program, which began in 2016, selects 40 companies from around the world and grants them W100 million in support funding and free office space for a year as well as assistance in finding investors (US$1=W1,132).

The program drew criticism for supporting foreign companies instead of Korean ones, but some start-ups have already hired Korean workers or entrusted small and mid-sized manufacturers here with making their products.

Tour operator Travelplan, which uses AI chatbots for travel reservations, has surpassed 1 million users and employs 14 Koreans. And Bear Robotics won a US$2 million investment from food delivery app developer Woowa Brothers to jointly develop food-delivery robots.

Still, red tape remains as a drawback even for foreign start-ups at Pangyo Techno Valley. No foreign start-up there is involved in the ride-sharing services, which has faced fierce resistance here, while Lineus Medical is the only one specializing in healthcare services.