Rancho's Korea Startup Story

Busan & Daegu Startup Ecosystem Analysis?

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Busan?

Busan, often called the "Summer Capital of South Korea," is a dynamic port city renowned for its stunning beaches, vibrant markets, and thriving cultural scene. As South Korea’s second largest city, it has experienced significant economic growth and is a major hub for international trade, finance, technology.?

Ranked 2nd best startup ecosystem in South Korea by the Global Startup Ecosystem Index 2024, Busan is home to many startups and innovation. It is worth noting however that this is not a close second. While the Global Startup Ecosystem Index ranks Seoul at 21st best startup ecosystem in the world, Busan is ranked 366th. This large gap reveals an incredibly noticeable disparity between the startup growth in Seoul and other regions in South Korea. While it’s true that the overpowering nature of the capital is shocking, Busan is making strides as it continues to grow and build its startup ecosystem, especially in the past few years.?

South Korea’s startup ecosystem is different in that the government is highly involved in funding and supporting startups. Government funding is very prevalent, so it’s no surprise that Busan is also home to government initiatives aimed at developing Busan into a startup hotspot. The Busan Center for Creative Economy & Innovation (BCCEI) is Busan’s biggest startup support organization providing funding, a community, and guidance to innovators. The BCCEI regularly shares lectures, acceleration events, and expansion opportunities to equip startups with the tools necessary to make their ideas a reality. The Busan Techno Park plays a similar role, providing space and resources for startups looking to dabble in the tech industry.??

In addition to the Busan Techno Park, other initiatives by the government reveal a greater focus on developing and supporting startups in the tech industry. Busan's EcoDelta Smart City project is transforming a 2.8 square kilometer area into a high-tech urban model, creating ample opportunities for startups. This initiative integrates IoT, AI, and smart healthcare, providing a "Living Lab" for startups to test and refine their innovations, supported by tech giants like KT and Hyundai. It underscores Busan's commitment to fostering a thriving, tech-driven startup ecosystem.?

Using the city’s geographical characteristics and abundant government support to their advantage, innovators in Busan have developed startups in the maritime tech sector. Mapsea Corp., Korean Ocean Tech, and NETSPA, just to name a few, all made use of the city’s proximity to the ocean and built off of recent government infrastructure to build successful and sturdy startups. Even attracting international investors, these startups exemplify how geographical characteristics serve as a means to increase diversity in a nation’s startup ecosystem. For example, it would be difficult to see a startup in Seoul build an idea and provide the same quality of service in maritime tech compared to the aforementioned startups. Perhaps that’s a strategy that South Korea can employ: focusing on drawing out the regional strengths of areas outside of Seoul.?

Busan exemplifies how leveraging unique geographical characteristics can foster robust startup ecosystems outside the capital. Its success in maritime tech, driven by its coastal location, highlights the potential for other regions in South Korea to build specialized, thriving startup hubs. By continuing to support regional innovation tailored to local strengths, South Korea can create a more diverse and resilient national startup landscape.?

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Daegu??

Nestled in a basin surrounded by mountains, Daegu is the third-largest urban agglomeration in South Korea. It offers a unique blend of urban energy and scenic beauty and is often referred to as the “Textile City of South Korea” — though its summer heat is famously intense and is also frequently referred to as “Dae-frica” or ???? (a combination of Daegu and Africa) by South Koreans.??

Daegu is ranked 5th best Startup Ecosystem in South Korea, but similarly to Busan which is ranked 2nd, the disparity between startups and VC investments in Daegu and the capital are astonishing. After all, the Seoul province was home to 81% of all VC investments in 2023. Meanwhile despite being the 5th biggest startup ecosystem in South Korea, Daegu was only responsible for 1%. Acknowledging this disparity, the government has been slowly but actively promoting startup growth.??

By looking at Daegu and Busan’s government initiatives side-by-side, it’s clear that the government has applied the same startup growth strategy. The Daegu Center for Creative Economy & Innovation (DCCEI) provides resources such as lectures, acceleration programs, and expert guidance to support innovation. Daegu also has a smart city initiative creating opportunities for startups in IoT, smart infrastructure, and urban planning. Broadly speaking, government support for regional startup growth is identical across the board.??

It is worth noting, however, that the DCCEI has been making significant progress by focusing on building innovation in deep tech while looking to foreign investors to expand opportunities for its startups. By collaborating with international accelerators, the DCCEI paves the way for startups to escape the Daegu bubble and reach new heights. As a result of these efforts, the Daegu Center for Creative Economy & Innovation has been named the 'Best' center for two consecutive years in the national evaluation of Creative Economy Innovation Centers conducted by the Ministry of SMEs and Startups.??

The effect of the center’s work is tangible by looking at startups such as Dr.Tail, CTCells, U&D, and Zio Robot that have received awards for their performance and have been selected by the DCCEI to participate in their “Super Leap Startup 1000+ Project”. The project aims to expand the selected startups into the U.S. market in hopes of growing the companies into what the DCCEI calls “K-Unicorns”.?

Daegu's progress exemplifies that startups can thrive and make a global impact without being in a major metropolis. By leveraging international collaborations and aiming for global markets, Daegu shows that regional startup ecosystems can grow significantly. Its success story highlights how going international is a powerful strategy for expanding regional startups and disrupting global markets.?

This article has been written by Rancho & Tae Kyeong Hong

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