[Why&Next] Korean Entrepreneurs Heading to the U.S. Also Boost Domestic Economy

Trend of Increasing U.S. Startups among Korean Entrepreneurs

Abundant Investment Capital and a Vast Market Base

Cases of Boosting the Domestic Economy with U.S. Success

Recently, an increasing number of Korean entrepreneurs are establishing corporations in the United States right from the early stages of their business ventures. Korean startups choosing to 'launch in the U.S.' signifies that they now see the global market not as a distant goal, but as the starting point for their business. Although these efforts are taking place in the U.S., they also have a direct impact on the domestic economy. There are emerging examples of an economic virtuous cycle where achievements in the U.S. lead to job creation in Korea and stimulate local economies. In line with these trends, government support for overseas startups is also expanding.

According to Startup Alliance as of April 2024, there were 193 Korean-founded startups in the United States. This number includes startups founded by Koreans or Korean Americans based in the U.S. When classified by year of establishment, the number has rapidly increased from 8 in 2021 to 30 in 2024. While the majority of startups expand to the U.S. by establishing new local businesses, some also use the 'flip' method, which involves relocating a domestic headquarters to a U.S. corporation. Of the 193 companies, 161 (83.4%) were founded locally in the U.S., whereas the remaining 32 (16.6%) used the flip method.

Abundant Investment Capital and a Market 100 Times Larger

The primary reason for founding a business in the U.S. is the availability of abundant investment capital and a much broader market compared to Korea. Currently, there are over 3,000 venture capital (VC) firms in the U.S.—more than ten times the number in Korea. With a larger pool of investors, there is also much greater diversity in how company value is assessed compared to Korea. Industry insiders note that as long as competitiveness is proven, even very early-stage startups can secure large-scale funding. The sheer size of the market also makes it easier to scale up.

An example is Sumlabs, an artificial intelligence (AI) video startup established this year in Delaware. Co-founder Chae-won Heo stated, "We wanted to take on the biggest stage, so we decided to start in the U.S. from the beginning," noting, "When looking at the scale of the AI video generation platform market, the U.S. is 50 to 100 times larger than Korea." Although only in its first year, Sumlabs has already attracted initial investment from Founders, a U.S.-based VC. A domestic VC source added, "U.S. investors tend to prefer companies headquartered in the U.S.; therefore, establishing a corporation there is practically essential for raising local capital. After investment, leveraging the investor network for identifying business partners and securing additional funding is also advantageous for establishing an early foothold in the market."

However, launching in the U.S. does not guarantee a startup's growth. The performance of Korean-founded startups in the U.S. depends on a complex combination of factors, including each company's technology, market conditions, and ability to raise investment. Currently, over 66% of Korean-founded startups in the U.S. are at the pre-seed or seed stage, indicating that most are still in their early growth phase. Of the startups that have grown rapidly, six—including Sendbird, Moloco, Noom, and Story Protocol—have achieved unicorn status. Companies such as Amogy, Nitera, and Twelve Labs, which have raised over USD 100 million in investment, are considered "next unicorn" candidates. These companies typically secured large-scale investments within about 5 or 6 years of establishment, representing a faster growth trajectory compared to the average 9 years it takes Korean startups to achieve unicorn status domestically.

Cases Where U.S. Results Boost Domestic Market Vitality

One noteworthy trend is that some startups that have excelled in the U.S. are now contributing to the revitalization of the Korean domestic market. A prime example is Bon AI, a defense tech company that launched in the U.S. and is now engaged in a physical AI business. Bon AI acquired Dmaker, a drone manufacturer based in Sangju, North Gyeongsang Province, last year and subsequently recruited local Meister high school graduates and others from the nearby region. More recently, the company even brought key AI developers from Silicon Valley to work at the Sangju Research & Development (R&D) Center.

Furthermore, Bon AI has transformed the unused site of Gonggeom Middle School in Sangju, which had been closed, into a space for drone demonstration testing and education. This means the company has established its own infrastructure spanning research, manufacturing, and testing in an area facing the risk of depopulation. A Bon AI representative stated, "After acquiring Dmaker, the number of local employees increased by about 45% compared to before the acquisition," adding, "Starting with Sangju, we plan to expand our R&D and production bases to major hubs nationwide."

Drone Integrated Control Room Built by Bon AI inside Gonggeom Middle School

Fixup Health, a digital healthcare startup specializing in remote therapy monitoring (RTM) solutions, is also actively hiring talent in Korea. Seizing the opportunity presented by changes in U.S. insurance reimbursement for RTM services in 2024, Fixup Health moved its headquarters from Korea to Silicon Valley. Since then, it has adopted a "two-track strategy" by retaining core functions such as product development, research, and design in Korea. In addition to core development staff, the company recently hired domestic talent in various roles, including product managers and business development specialists. Fixup Health CEO Sangwon Lim said, "The U.S. is the main market where customers and investors are concentrated, while Korea offers an excellent environment for securing top development talent. That's why we continue to keep our core teams that underpin our product competitiveness in Korea."

Government support policies for overseas startups have become more pronounced. The Ministry of SMEs and Startups' "Global Startup Project for Everyone" supports overseas business ventures by overseas Koreans and international students. In addition, the "K-Founder Fund," which invests in the overseas Korean startup ecosystem, also launched this year with a scale of over KRW 100 billion.

This content was produced with the assistance of AI translation services.