When South Korea’s fast-growing economy rammed head on into the financial crisis in 1997, many people were stricken with the fear of losing their job. Some, however, saw a business opportunity.

This handful of people started firms with venture capital provided to high-potential and high risk start-up firms. They became known as the first-generation venture entrepreneurs, most of whom had focused on the IT sector that was relatively new to South Korea at the time.

The so-called venture boom was part of the worldwide dot-com bubble that took place roughly from 1997 to 2000. During the bubble, a number of Internet-based companies commonly known as dot-coms sprouted up and investors witnessed the prices of some IT stocks soar.

As all bubbles are destined to pop, the unprecedented heyday of the venture firms came to a crashing end in the early 2000s. Out of 455 companies listed on the KOSDAQ between 1998 and 2001, 217 left the market, according to KOSDAQ Listed Companies Association.

Saerom Technologies, once a high-flying venture, saw the value of its stocks plummet from 300,000 won ($268) to under 4,000 won within two years. The company changed its name to Solborn Inc. in 2004, a year after its former chairman was convicted of accounting fraud.

Gold Bank, another former KOSDAQ prospect, struggled as its stock price dropped in the early 2000s, and the company was eventually delisted from KOSDAQ in 2009. To add insult to injury, its former president Kim Jin-ho was convicted in 2003 of manipulating his company’s stock prices.

There were a small number of venture businesspeople who survived and pulled off the expansion of their companies.

Ahn Cheol-soo founded AhnLab Inc. in 1995, and his company established itself as the main anti-virus software and security solutions company in the country.

Ahn has also been considered one of the most popular role models among youngsters and ran a presidential race last year on the strength of his popularity. Although he did not make it to Cheong Wa Dae, Ahn completed a successful transition to politics by becoming a member of the National Assembly in 2013.

Lee Min-hwa, an honorary chief of Korea Venture Business Association, is among the most vocal patrons of President Park Geun-hye’s signature science and technology-based “creative economy.” The scholar-turned-entrepreneur, who founded medical equipment company Madison in the 1980s, is often referred to as “godfather of venture business,” and still offers advices via books and lectures for people looking to start their own business.

Although his company went bankrupt in 2002 and was sold to Samsung, many of its affiliate firms went on to become major bio-tech firms in South Korea.

The Ministry of Science, ICT and Future Planning announced its plans in June to utilize the expertise of first-generation entrepreneurs. The ministry said it planned to form a “mentor team” made up of 50-60 people who had operated venture firms for more than five years.

The mentors will share their business experiences, including failures, along with know-how of operating a venture firm effectively.

The Science Ministry is set to spend 3 trillion won ($2.68 billion) this year to create a “venture ecosystem,” which will work to help people turn innovative and creative ideas into commercial businesses.

“Korea must abandon its old ways of copying and applying (other technologies) and transform into a country that can lead with creative ideas,” Science Minister Choi Mun-kee said.



By Yoon Min-sik
(minsikyoon@heraldcorp.com)