Why you should care
Because Seoul is hip, rich and wired, and it’s becoming Asia’s Silicon Valley.
Korea: the land of ubiquitous plastic surgery that makes everyone seem forever 21. And yet … an ancient scent still lingers. In business, despite billions of taxpayer dollars showered on startups that numbered 31,189 in 2015, a handful of senile conglomerates — chaebols — like 78-year-old Samsung still dominate the South Korean economy.
Into this landscape parachuted 25-year-old Tim Chae two years ago. Today, he has pithy lines about the Korean startup ecosystem, which is, he declares, “like an oyster. People only see the outer shell, not the pearls inside.” In his office nestled in Google’s ritzy Campus Seoul, Chae spearheads the $15 million 500 Kimchi microfund, an initiative of the renowned venture fund and accelerator 500 Startups, based in Mountain View, California. One of about 120 venture capital firms in Korea, 500 Kimchi has invested in 22 Korean companies and five American startups over two years. While its portfolio is industry-agnostic, Chae is most bullish on financial technology for the next five years, boasting investments in companies like Finda and People Fund.
The New York Times and Bloomberg have echoed Chae’s pro-Korea elevator pitch. The Times crowned Seoul one of Silicon Valley’s “closest rivals” in 2015, and Korea topped the Bloomberg Innovation Index in 2017. But some Koreans see a bubble here: Where are the globally recognizable startups? “I don’t understand why the foreign media is so obsessed with Seoul as a startup hot spot,” says professor Kyungmook Lee, who teaches entrepreneurship at Seoul National University. “There aren’t sufficient investment opportunities, even though government funds abound and tight government regulations hamper innovation in many sectors.”
Meritocratic startups funded by Chae are counterpoints to chaebols often seen as hereditary and exploitative.
Perhaps the story is helped along by the mythology of the founders of Samsung and Hyundai, who may be more revered than the founding father of the republic itself. For the country that saw a surprising economic rejuvenation in the 1950s — “the Miracle on Han River,” as it’s known — entrepreneurship is a tempting aesthetic, reconciling the spirit of the 1960s’ industrialization with the antiauthoritarian 1980s’ democratization. Meritocratic startups funded by Chae are counterpoints to chaebols often seen as hereditary and exploitative.
But history is not on Chae’s tongue. He is present and practical, an entrepreneur himself: Before turning to investing, then 20-year-old Chae was the youngest entrepreneur to be backed by 500 Startups. Two years into his studies in business at Babson College in Boston, Chae dropped out with two friends to pursue his marketing startup. Two Middle Eastern classmates offered them $100,000 to build PostRocket, which helped brands reach their fans via organic Facebook posts. In a heady state, the trio whizzed across the country in 42 hours in a Mazda 3 Hatchback with a single stop in Nebraska for steak. When they arrived in San Francisco, Chae had to call his father in Sacramento to let him into his new apartment as he was too young to sign the lease in 2011. Chae’s mentors had forecast he might raise $150,000 in the seed round. PostRocket raised over four times as much, according to Crunchbase. At its peak in early 2013, PostRocket reached over 200 million Facebook users. But Chae couldn’t keep the momentum, and PostRocket crashed after burning through $700,000. “I didn’t hire the right people and built additional features that no one used,” he says.
At Chae’s nadir, 500 Startups co-founders Dave McClure and Christine Tsai offered him a lifeline. “There’s much more beneath the young surface. He learns very fast, and I’ve always been very proud of him,” says Tsai. They invited him to return to 500 Startups as an entrepreneur-in-residence, and Chae accepted.
Until then, everything he touched had turned to gold. At a summer camp in L.A. a year before his family migrated from Seoul to Sacramento, 8-year-old Chae convinced American kids to exchange their Pokemon cards for his drawings of Pokemon. Marveling at his father ordering a cellphone on eBay, 13-year-old Chae partnered with his artistic brother to sell their custom-designed T-shirts online. Alas, the Chae brothers did not know how to cash out from Paypal … their payout remained trapped in the annals of the internet.
When Chae’s school district banned salacious grinding at dances, 17-year-old Chae, a less-than-serious student averaging a 2.7 GPA, smelled an opportunity. He pulled an all-nighter to crank out a 20-page business plan, which won the 2009 Young Entrepreneur of the Year Award from the National Federation of Independent Business (NFIB). The company: Club NuFlw. He hired his football friends as managers and promoters to host monthly 750-ticket parties at a local community gymnasium. Within six months, he made a tenfold return. Before that, he says, “I was rudderless and going nowhere.” His father, a dentist, had advised him to follow in the family professional footsteps — but that first venture got him hooked.
Nightclubs were also what lured Chae back to Seoul in 2014, for the first time in a decade. Still an entrepreneur-in-residence at 500 Startups and an adviser to his fellow founders, Chae jetted out to the motherland and met with 100 local startups during his 10-day visit. He reported back to McClure on some of Seoul’s most tantalizing trends: the fastest internet in the world, high smartphone penetration, unparalleled STEM workforce and its forte in the beauty and health care industries, all of which boded a regional tech powerhouse like Tel Aviv.
For all the Silicon Valley swag Chae brings, however, he may be too American to pull off Gangnam Style. “The Korean business environment can be conservative and exclusive,” says Hyemin Lee, CEO and co-founder of Kimchi-backed Finda — even for Korean-Americans, who haven’t logged the mandatory military time Korean citizens must serve, and which often foments long-term connections. (When Lee first met Chae at a VIP dinner of a tech conference in Seoul, she thought he was Chinese because of “his hairstyle and reticence.”)
Chae’s getting older and no longer holds the “youngest” title in every room. Yet velocity still matters for the former speed skater and rugby winger. He might also want to keep youth in mind as he accelerates Korea, his home until it gets “respect from Silicon Valley.”