Korean Entrepreneurship Grows Beyond Traditions of K-town

By Ananya Bhattacharya

Everyone knows Forever 21, the multi-billion dollar retail chain, but how many people know its Korean founder Do Won (Don) Chang?

Generations of immigrants have relied on small family businesses, like grocery stores and nail salons that have little initial investment and capital, in their pursuit of the American dream and the Korean community is no different. Under that model, Korean businesses have been primarily built by and for their own community. Many shop owners in Manhattan’s Koreatown attribute the success of their businesses not only to funding received by relatives but also physical help their cousins and children offer in-store too. However, when you expand beyond the few stores that saturate this touristy stretch of 32nd street between 5th and 6th avenue, a story of Korean entrepreneurs breaking out of the community-driven business models begins to unfold.

Two years after its launch, Korean Startups & Entrepreneurs (KSE), a forum for guidance, is now operating as a fully-fledge non-profit organization that hosts various events such as workshops and startup pitch nights. It is a significant step forward considering that the risk-taking of start-up culture is not often embraced by the traditions of Korean culture, argues Grace Kim, Vice President of KSE.

“While this is changing and will continue to change in Korea, corporate jobs and professions such as doctors and lawyers are highly sought after. If you had a son or daughter that landed a stable job at Samsung, that was like music to the ears of most Korean parents,” she says.

In 2000, Koreans represented 24 percent of people in the U.S. to be self-employed, making them the largest ethnicity in the U.S. to be self-employed. The figure for foreign-raised Koreans was an even higher 27.8 percent, according to the 2000 American Community Survey. By 2007, there were 71,423 Korean-owned employer firms, an increase of 25.1 percent from 2002, as stated in the 2007 American Community Survey.

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In Koreatown, you are still likely to encounter older businesses that are run by families, but it would be a mistake to assume that these shops are representative of the entire Korean business community in today’s date.

 

As the number of Korean entrepreneurs are growing, the traditional methods of bootstrapping, pooling capital from known sources or resorting to bank loans are becoming more and more outdated. A new wave of Korean entrepreneurs are not solely using age-old tactics of gathering seed funding from family and friends. “In the U.S. the angel investor and VC community is available and connected and Silicon Alley is becoming an increasingly powerful hub to raise capital and start new businesses,” Kim says speaking of Korean Americans becoming more savvy with discovering and approaching external funding.
A part of KSE and founder of Darcmatter, an online investment platform that provides investors institutional-level access to private investment opportunities, Sang H. Lee did take seed money from friends and family but as his business took off, he distanced himself from the older model.  Andy Moon, founder of SunFarmer, a non-profit that installs solar energy in hospitals, health clinics, and schools in the developing world, also belongs to the KSE but his journey showed less reliance on his close kin. Still transitioning between the old methods and the newer opportunities, the Korean entrepreneurial scene is not fully independent or dependent of family funding yet, but the shift is definitely occurring.

Not only is their seed money diversifying but their customer base is growing beyond the confines of their community too. While a popular restaurant like BCD, a Tofu House in Koreatown, has a 50 percent Korean and 50 percent non-Korean clientele according to manager Chris Kim, the afternoon bustle comprises of many native Koreans as well as tourists from the Asian subcontinent.

“It is advantageous to be near entertainment like bars and karaoke,” said Jay Park, an employee at the restaurant. “Also we are open 24 hours and through public holidays. New Yorkers know this so a lot of our traffic is post- midnight” Park adds that all restaurants in the area follow this similar model; not necessarily because this is the norm in South Korea, but it is in New York’s K-town, so competition is tough.

However, adapting to the needs of New Yorkers and a wider clientele does not make these businesses shy away from their Korean roots. For instance, Shine 32, a Koreatown accessory store, sells handmade headbands, earmuffs and such tidbits. The store manages to balance its attractiveness to tourists while still providing a homey feel for the Korean customer.

“Even though the owner is a New Yorker, all our designers are based in Seoul, Korea,” says Hyunju Kim, the store manager. “We import the products from there because the local Korean community in New York travel from different parts of the city and state to get their slice of home.”

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