2 Years of Investment Held in Half… Returning to South Korea, ‘Reverse Flip’ Companies also said, “Trump’s 2nd Policy, Obstacles to K-Startup’s U.S. Advancement.”
Company A, an artificial intelligence (AI) software company established in Teheran-ro, Gangnam-gu, Seoul in 2019, moved its headquarters to California in 2022. It was because the U.S. judged that the U.S. would be better to attract investment and secure talent properly. However, contrary to expectations, investors have closed their wallets, saying the economy is difficult, and they have no longer attracted it since they were invested 1 billion won in 2023. Company A’s representative said, “Sales have halved in a year, and the number of employees with more than 30 has decreased to 10.”
Although money from around the world is pouring into global innovation startups, many Korean startups in the U.S., which are “start-up heaven,” are having difficulty attracting investment.
According to the global investment analysis platform PitchBook on the 13th, global startups’ investment attraction was $462 billion in 2022 and slowed to $294 billion in the aftermath of the global economic downturn in 2023, but last year, it rebounded to $337 billion due to money flocking to AI startups.
However, the situation is different for Korean startups in the U.S. According to the venture investment information platform The VC, the investment attraction of 131 U.S.-based Korean startups plunged from 810.9 billion won (212) in 2022 to 435.1 billion won (94 cases) in 2023 and 381.5 billion won (94 cases) last year.
In particular, 51 out of 63 U.S.-based Korean startups established between 2016 and 2020 have not received any investment since 2023.
Considering that many Korean startups based in the U.S. have moved their headquarters from Korea to the U.S. for better opportunities, there is even a “flip useless theory” in the investment industry. A local venture capital (VC) official said, “As I went to the U.S. and encountered many successful stories, the eyes of startup representatives became too high,” adding, “Since it is a company founded by a foreigner, local investors often question its credibility or innovation.”
Kim Sung-hoon, a representative lawyer at Mission, a law firm that has supported domestic startups’ U.S. flips, said, “We have provided a lot of legal advice for startups to advance overseas, but startups entering the U.S. are always burdened by high labor costs,” and stressed, “We should abandon the idea that it will be easier to attract investment and recruit talent than Korea just because we are headquartered in the U.S.”
Due to the situation in the United States, some start-ups are doing reverse (逆) flips in Korea. Founded in 2014, Huino is a digital healthcare company that develops AI medical devices, and has moved its headquarters to the United States and returned to Korea. Fortunately, Huino strengthened its business base by expanding cooperation with domestic medical institutions after returning to Korea, and succeeded in enhancing its competitiveness with AI-based electrocardiogram analysis technology.
Meanwhile, some predict that barriers to entry into the U.S. will be higher under the second Donald Trump administration. Analysts say that protectionism, such as retaliatory tariffs announced by the Trump administration, will adversely affect domestic startups’ entry into the U.S.
In particular, President Trump removed the “start-up visa” introduced by the Obama administration during his first term in office. The startup visa is a system that allows foreign founders to stay temporarily to encourage U.S. startups, allowing founders to stay in the U.S. for up to five years and do business if they meet certain conditions, but the Trump administration abolished it in a surprise move, saying it was “unworkable and unnecessary.”
Choi Byung-ho, a professor of mechanical engineering at Korea University, emphasized, “In the end, it is a prerequisite to have innovative technologies that are not affected by recessions or external risks.”