Anyone with an eye on the Seoul start-up scene will tell you that the city is buzzing with exciting and innovative new ventures.
In May of this year, TechCrunch hosted their first meetup in Seoul, while Google launched its first Korean Google Campus with the aim of nurturing entrepreneurs in the big city. In 2014 alone, KVIC reported $1.4 billion was invested in Korean startups, most notably Coupang, a Seoul-based e-commerce online platform securing more than $300M, and BaeDal Minjok, a food delivery service attracting $36M. According to Korean state-run industry tracker VentureIn, January 2015 saw a total of 30,052 new ‘venture firms’ registered across the nation, up from just 15,409 in 2009.
An increasing number of young Koreans are set on creating the next start-up success story. However, there is one thing largely missing in the mass of exciting new business on the peninsula: women entrepreneurs.
Gender Inequality in New Business: A Global Issue
It’s not only Korea’s new tech industry that suffers from a lack of gender diversity.
Silicon Valley has come under scrutiny for its handling of women in the workplace, most recently during the now-infamous Pao vs. KP trial. The valley’s reputation for being a progressive safe-house for innovative startups to flourish has been somewhat tainted, as tales of workplace harassment, unequal pay, and gender discrimination were hauled into the spotlight.
According to a recent study by Babson College, the percentage of female venture capitalists (VCs) in the US dropped from 10 percent in 1999 to just 6 percent in 2014. Meanwhile, despite the fact that, for the first time in history, graduate and post-graduate degrees acquired by women are outnumbering those acquired by men, the percentage of women starting technology companies is still hovering dismally low, at around 3 percent. According to the study, only 6.5 percent of privately held businesses have a female CEO, while those with a female founder stand at 1.3 percent. The study also states that 77 percent of VC firms have never hired a female investor.
And yet there is a significant amount of research highlighting the positive effects of diversity in the workplace. Companies with women on their board of directors consistently outperform those with all-male teams — in equity, return on sales, and return on invested capital. Recent data has also shown that women-led technology companies are more capital-efficient — achieving a 35 percent higher return on investment than their male-run counterparts.
We also know that women bring different approaches to problem-solving, helping provide more diverse and creative solutions to the challenges of running a business. Perhaps Joseph Keefe and Sallie Krawcheck of Pax Ellevate Management LLC put it best when they said:
It’s not that women or men are “better” but that diverse groups — where both men and women are at the table — make better decisions than non-diverse groups. Women bring diverse perspectives to the table, their leadership style can drive more innovation and collaboration, they are more likely to ask tough questions, and they often take a different approach to risk.
It’s not all doom-and-gloom — female-led businesses are slowly but surely on the rise. Over the past 10 years, the growth in the number of women-owned firms with $10 million or more in revenues has increased by 56.6 percent, a rate 47 percent faster than the average rate of growth of $10 million-plus firms.
Companies founded by women also represented a record 13 percent of venture capital deals through the first half of 2013, up from only 4 percent in 2004. These companies are also growing at higher rate than their traditional, male-led counterparts.
The fact remains, however, that women are still sorely underrepresented in this new generation of start-ups.
Why Korea’s lack of female entrepreneurs?
Korea is a deeply patriarchal society, where traditional societal values still place a woman’s main responsibilities in the home. Many Korean female graduates say they attended college not because it would open doors in the pursuit of a professional career, but because a college degree represented a valuable qualification on the resume of a bride-to-be, and campus life provided ample opportunity to meet a potential husband.
During the job application process, it is not uncommon for women to be asked questions about their future marriage and family plans. Unlike in America, Korean labor law does not prevent a potential employer from asking about your personal or family life during interviews.
The system also sometimes stacks the deck against the favor of women entrepreneurs.
When Ji Young Park founded her first company in 1998, her bank not only required her to personally guarantee the company’s loans — a typical request for a male founder — but also demanded guarantees from her husband, her parents, and her parents in-law. Despite these obstructions, Park led her company, Com2uS, a mobile game publisher, to a successful IPO in 2007, and then sold to Gamevil in 2013.
What can Korea do to accelerate the development of a more diverse generation of young entrepreneurs?
In a June 2014 conference entitled, ‘‘Taking action: achieving gender equality and tapping the talent of women’’, the Korean Chamber of Commerce and Industry and the Ministry of Gender Equality and Family launched a dedicated Task Force, committed to evening out gender imbalance in the workplace and nurturing female CEOs. The conference was attended by high-profile government figures, as well as executives from some of the country’s largest conglomerates, who together pledged to shatter the nation’s thick glass ceiling, and make business in Korea more accessible for women.
With such a long way to go before achieving balance between the number of male and female executives, however, it is going to take a large and communal effort before progress is made, especially when it comes to fostering female start-up CEOs.
So what can Korea do?
First, Korea can start by identifying and highlighting female success stories. Positive role models can have a powerful impact in changing perception among and instilling confidence in aspiring female entrepreneurs, and women in business in Seoul are certainly not without their success. JiYoung Park, Co-Founder and CEO of Com2us, Ji Yun Moon, former Co-Founder and CEO of Viki, acquired by Rukuten in 2013, and current CEO ofVingle, and SooInn Lee, Co-Founder of Locomotive Labs, have all battled the odds to establish booming new businesses.
Second, Korea can foster the progress of women entrepreneurs by creating further networking platforms for aspiring, current, and experienced female entrepreneurs to share knowledge and experience, and build a mutual mentoring and support system. The Women Entrepreneur (WE) Network atStartup Alliance, founded by Hyo-Eun Moon, Professor of Ehwa University and former executive at Daum Communications, has gone some way toward providing such a platform, by hosting monthly meetups specifically for women entrepreneurs.
Last but not least, woman entrepreneurs and professionals alike need to come together to address current needs — most pressing being the shortage of dependable public childcare, arguably to blame for the derailing of the careers of thousands of women in South Korea. Perhaps there’s even a win-win startup opportunity there: a woman entrepreneur-founded collaborative economy marketplace for working mothers requiring childcare.
As President Park Gun-Hye said in a video message broadcast at the launch of the workplace gender equality Task Force last year: “We are living in an age where the power of women determines a nation’s competitiveness. Establishing an environment where women can realize their full potential is not only in their best interest, but also beneficial for national development.”
Korean start-ups have shown huge promise in their potential to be global game changers. It is up to female entrepreneurs to bring further diversity — and thus competitiveness — to the industry, and it is up to the nation to dismantle the hurdles currently standing in their way.
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