FKI Report
Seventeen of the top 100 global unicorns (privately held companies with an enterprise value of more than 1 trillion won) are unable to do business in Korea due to regulations.
The Korea Economic Research Institute of the Federation of Korean Industries said in its report titled “Global 100 Unicorn Companies and Ways to Ease Regulations on New Industries in Korea,” citing data from CB Insights, a U.S. analyst firm, that only 83 of the global top 100 unicorn companies can do business in Korea. Eight companies were found to be unable to do business and nine were found to be limited in doing business due to Korean regulations.
By sector, shared accommodation, car sharing, telemedicine, drones, robotaxis, fintech, and games were found to be the most likely areas where global unicorns would face business restrictions when entering Korea due to the country’s regulations.
The report analyzed that the Korean government should lay the foundation for Korean startups to grow through deregulation in line with the pace of technological development. Despite the Korean government’s efforts to ease regulations, including the introduction of a regulatory sandbox in 2019, tough regulations still apply to the sharing economy, new technologies, and new industries.
The report explained that while the promotion of corporate venture capital (CVC) is essential to facilitating private mergers and acquisitions, Korean conglomerates are restricted from investing in and acquiring startups through their CVC firms. In Korea, CVC firms of general holding companies are limited to 40 percent external investment when forming a fund. Due to these restrictions, Korean CVC investments account for only 23 percent of all VC investments in Korea.