IT Convergence Companies
About 59 percent of the so-called “unicorn companies” valued at US$647 billion (732 trillion won) are IT converging companies. Only three Korean companies – Coupang, Yello Mobile and CJ Games – were listed on the "Unicorn List,” while firms from the United States and China dominated the list with 76 percent.
The international trade research team at the Korea International Trade Association (KITA) released a report titled “Unicorn Start-up Trend and Implications” on March 20 that there are 186 unicorn companies in the world, including Uber, the world’s largest car sharing service provider, and the total corporate value reached US$647 billion (732 trillion won).
Aileen Lee, the founder of the U.S.-based venture capital firm Cowboy Ventures, coined the term “unicorn company” in 2013. It refers to an unlisted startup valued at more than US$1 billion (1.12 trillion won) with innovative business.
By sector, converging firms, which mixed IT with existing business, took up 59 percent, or 110, of companies on the list. Pure IT companies, on the other hand, comprised 34 percent. The KITA said that the convergence between industries, such as e-commerce (34 percent), fintech (19 percent) and sharing economy (14 percent) proved to be a prevailing trend in start-ups rather than pure IT. A growing number of start-ups in the finance, education, healthcare and media sectors mostly combined with IT with conventional business models.
By country, 99 American companies and 42 Chinese companies made the list, accounting for 75.8 percent, followed by India with 9, England with 7, Germany with 4 and Korea with 3. The three Korean unicorns on the list were Coupang ranked 25th, Yello Mobile ranked 31st and CJ Games, now Netmarble Games, ranked 69th.
The KITA said there are three key factors in making start-ups grown to the unicorn companies – first the “innovation,” which creates new markets based on a business model that hadn’t previously existed like Uber, the “imitation,” which adapts and localizes successful pioneers by imitating like Xiaomi, and finally the “transformation,” which make the best use of the strength of existing business like P2P online loan platform Funding Circle.
The KITA also added that the government needs to make efforts to expand global networks to attract investment and ease regulations in order to foster Korean unicorns. Kim Bo-kyung, researcher at the KITA, said, “The government should not aim to promote unicorns themselves, but rather focus on creating an ecosystem that can help start-ups go global and make steady growth. It needs to lay the groundwork to help start-ups grow with negative regulations which only prohibit exceptions.