Startup Grind Seoul hosted its eighth event at Maru180 with Mr. James Ilhwan Kwon, Director of Qualcomm Ventures, as the guest speaker. As an active venture capitalist in Korea, he was able to give us some insight into the startup world in Korea and specific advice for startups in dealing with VCs.
It was a rather encouraging session for startups. His views on the Korean startups were positive, saying that the current Korean startup culture is very active and changing ever so quickly. However, he repeatedly emphasized the need for a more present startup ecosystem in Korea. There needs to be more success cases for others to follow in their footsteps. The US, in comparison with Korea, may seem to be much more generous in backing early-stage startups. However, it is because they have witnessed the Facebooks and the Googles and they believe there are more to come.
When evaluating an early-stage startup, he said he looks for the following.
1. Potential: What is the problem you are trying to solve, and how big is that problem?
2. Business model: It is preferable to have a business model but the business model will most likely pivot so it is hard to tell from the beginning. If you only have an idea, you will need some kind of credential to back you up, whether it is startup experience or a specific technology.
Here are some tips when dealing with VCs.
1. Find the right VC for you: It is crucial to find the right fit. You can get into trouble if you are just looking for the biggest offer. It’s not just the money you are choosing; it’s also the one who is offering the money. James had a great analogy for this. He said the relationship between the startup and the VC is like marriage. You may hate it but you cannot leave unless you get a divorce, or in another words, pay a lot of money.
2. Settle for a fair contract: There is no one standard template since all deals are different. Neither party may be fully satisfied. The most important thing is to find a middle ground where both parties feel it is fair.
3. Figure out when to raise funds: You should look to raise funds when the company is ready to take the next step. If you were to send a shuttle into space, you would raise funds after each of the following milestones: proving that you have built a working engine, building a proper navigation system, building the actual shuttle, etc. You have to know when and what is the next step?
4. Resolve conflict with your VC: You will run into a difference in opinion regarding management or direction of the company. Be creative in problem solving and try to narrow the difference. In the end, however, it is the startup who is executing the business.
Thank you Mr. James Ilhwan Kwon for the relatable advice and tips. Thank you to our sponsors (The Asan Nanum Foundation, SparkLabs, Samsung OIC, Yuyu Pharma) and to our partners (Whatap, Kiwi Productions, MangoPlate and Limotaxi)!
Our next event will not be at our usual location, Maru180. It will be at Google Campus Korea on April 15th! Mary Grove, Director of Google for Entrepreneurs and Sarah Drinkwater, Head of Campus London, will be speaking to us next month, so please sign up quickly!