To­ward a ‘technopia’

JoongAng Daily - - Views - Ahn Choong-yong

It is de­sir­able that ven­ture

cap­i­tal in­vest­ment be gen­er­ated more from the pri­vate and cor­po­rate sec­tor.

We must cre­ate a cor­po­rate habi­tat and a cul­ture of in­no­va­tion where start-up en­ter­prises can ex­per­i­ment, in­no­vate and flour­ish with­out the fear of risk and fail­ure in or­der to ad­vance and strengthen our econ­omy. This is the only way we can keep ahead of the Chi­nese and com­pete on equal foot­ing with Ja­pan on the in­dus­trial front. This is also the only way to keep de­cent jobs flow­ing for young peo­ple fresh out of school. The man­u­fac­tur­ing sec­tor makes money with­out gen­er­at­ing new jobs. Ven­ture start-ups that bring forth new ideas and turn them into com­modi­ties hold the key to durable growth in the new cre­ative econ­omy. To trans­form the start-up sec­tor into a part of main­stream econ­omy, the fi­nan­cial role will be es­sen­tial. We need an­gel or ven­ture cap­i­tal in­vestors who are will­ing to place bets on bright tal­ent and minds, and share their risks and fail­ures through stake in­vest­ments.

In 1999, I vis­ited Stan­ford Univer­sity and Sil­i­con Val­ley as a part of a gov­ern­ment-spon­sored road show to as­sure for­eign in­vestors that South Korea com­plies fully with its com­mit­ments to the in­ter­na­tional bailout and draws new in­vest­ment. At the time, the fi­nan­cial sec­tor had been the key driver be­hind growth and an in­dus­try pipe­line for new in­tel­li­gence for pro­duc­tiv­ity. I ac­com­pa­nied a team of an­gel in­vestors in their search for bright young minds in Sil­i­con Val­ley.

A pro­fes­sor who had been teach­ing elec­tronic en­gi­neer­ing at Stan­ford for 30 years found a re­ward­ing new path in his life through help­ing to com­mer­cial­ize in­no­va­tive ideas. The chief ex­ec­u­tive of a mid­size en­ter­prise and an ac­coun­tant joined him on his dream project to help young peo­ple start ven­ture en­ter­prises. They vis­ited the tech­nol­ogy hot­bed in the San Francisco Bay area in search of new ideas and park­ing places for stake in­vest­ment as well as to con­sult. The odds of suc­cess were less than 5 per­cent, but they could hit a jack­pot if any one of their stake-in­vested com­pa­nies went pub­lic or were merged with or ac­quired by larger com­pa­nies.

The Sil­i­con Val­ley fad caught up with Korea in the late 1990s. Many who were left out of work amid mas­sive lay­offs and cor­po­rate re­struc­tur­ing in the wake of the fi­nan­cial cri­sis were en­cour­aged to start new busi­nesses. Var­i­ous govern­mentspon­sored ven­ture funds and pri­vate cap­i­tal com­pa­nies joined the band­wagon. But most were ill-de­signed or had du­bi­ous mo­ti­va­tions. Fi­nan­cial losses were heavy.

Start-up and ven­ture com­pa­nies can get fi­nanc­ing from pri­vate ven­ture cap­i­tal com­pa­nies or banks upon win­ning tech­nol­ogy cer­ti­fi­ca­tion from the state-funded Korea Tech­nol­ogy Fi­nance Cor­po­ra­tion. Re­cently, large com­pa­nies joined in to of­fer fund­ing to promis­ing ven­ture en­ter­prises. The Korean Com­mis­sion for Cor­po­rate Part­ner­ship has been ar­rang­ing projects where large com­pa­nies pro­vide fund­ing and tech­nol­ogy to smaller en­ter­prises for parts and ma­te­rial de­vel­op­ment to share the re­sults. It is de­sir­able that ven­ture-cap­i­tal in­vest­ment be gen­er­ated more from the pri­vate and cor­po­rate sec­tor, with less de­pen­dence on gov­ern­ment spon­sor­ship. What is ideal is self-suf­fi­cient ven­ture cap­i­tal. Re­cently, an 11mem­ber an­gel in­vestor body won a business li­cense from the Small and Medium Business Ad­min­is­tra­tion. The com­pa­nies in which it in­vests can earn cer­ti­fi­ca­tion as ven­ture en­ter­prises and be­come el­i­gi­ble for gov­ern­ment fund­ing. The key to the suc­cess of the ex­per­i­ment is its abil­ity to iden­tify promis­ing and fea­si­ble tech­nol­ogy. In­no­va­tion and tech­nol­ogy must be scru­ti­nized for its ap­pli­ca­tions and global com­pet­i­tive­ness. Th­ese ven­ture in­cu­ba­tors must be able to grow in or­der to power the ven­ture in­dus­try.

There are many qual­i­fied an­gel in­vestor can­di­dates in our coun­try who are re­tired from their fields with good judg­ment and the re­sources to eval­u­ate and guide in­no­va­tion. If they con­trib­ute their ca­pa­bil­i­ties to the an­gel cap­i­tal in­dus­try or get jobs in banks as tech­nol­ogy spe­cial­ists, they could make a big dif­fer­ence in tech­nol­ogy-based lend­ing.

A hu­man re­source pool also is also es­sen­tial to the sus­tain­able growth in the ven­ture in­dus­try. Univer­si­ties must be able to pro­duce young minds who have mas­tered both en­gi­neer­ing and sci­ence, and eco­nomics and business man­age­ment. Korean so­ci­ety must fo­cus on new tech­nol­ogy, biotech and re­new­able en­ergy. This “technopia,” or tech­ni­cal utopia, should not be led by the gov­ern­ment but the pri­vate sec­tor. An­gel in­vestors in Sil­i­con Val­ley prize de­vo­tion, pas­sion and hon­esty as much as tech­ni­cal acu­men in start-up founders and en­trepreneurs. We hope ven­ture start-up and tech­nol­ogy cap­i­tal com­pa­nies will be able to lead the way to a technopia.

Trans­la­tion by the Korea JoongAng Daily staff

JoongAng Ilbo, Oct. 17, Page 35 The au­thor is the chair­man of the Na­tional Com­mis­sion for Cor­po­rate Part­ner­ship.

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