Startup entrepreneurs are basically challengers. Starting a business with new ideas is just like a baby taking the first step. He may grow into an innovator who can change the world, but he is still close to a beginner who does not know much about the world and can easily be beat up in the market. Of course, you could have started a business after having worked in the office for 10 or 20 years in one field. But, does he have experience in running a company as a CEO? Well. Probably not. So, startups don’t know where to go when they face crossroads. You have to solve a number of problems, from accounting/finance to managing company funds, hiring the necessary staff, HR work for managing the organization, developing to implement ideas into actual items. But, what is the reality? Tasks as easy as renting an office space might not have been done correctly.
So, startups look for fostering institutions. They seek help from startup incubators operated by public institutions such as the Seoul Startup Hub and G-Hub, as well as private accelerators and investors (VCs). There are cases where startups use their own resources (startup funds, development capabilities, surrounding networks, etc.), but it is extremely rare. Unless the CEO was born with a gold spoon, it’s not easy.
Therefore, in order to create a healthy startup ecosystem, it is necessary to establish a virtuous cycle where startups and their supporting policies, organizations, and members can coexist with each other. This is why various supports like large-amount investment that fosters startups, office space rental for startups who have nowhere to go right away, and network that connects members so that they can demonstrate their capabilities are being performed.
In running a business, what would be necessary for startups to grow? There is no one answer that will satisfy you 100%. Some will say it takes luck, some will say money will solve it. Talented employee? Brilliant ideas? A companion (partner) looking at the same direction walking next to you? In fact, you need all of these. You have to eat well and not be picky about food. Also you need to move around to learn and grow.
No water and sewage system in Bangladesh.
Founded in 2016, Glory & Tech is a start-up that operates water supply business and energy supply business for developing countries. It mainly operates in Cambodia, the Philippines, Myanmar, Mongolia, and Vietnam, and installs and maintains water supply facilities and renewable energy generation facilities in about 30 schools and villages. It is trying to provide water and energy solutions that are suitable for the local area by looking at the sites of developing countries.
Glory & Tech CEO Park Soon-ho said, “In addition to Southeast Asia, we are going expand into Africa such as Ethiopia, Tanzania, and Uganda. We are supplying water, drinking water to be exact, to about 12 countries.” He then said, “Korea is a country that has no problem with drinking water. We are not concerned much about drinking water. However, the situation in third world countries and developing countries is different. They get water from polluted rivers and streams, and use it for washing and drinking. It’s horrendous to see.”
He continued by saying, “Take Bangladesh as an example. There is no water system in Bangladesh. Hotels where tourists visit have their own water tanks, and it supplies water through a water purification facility. The government does not supply water at all. As such, the water supply rate in underdeveloped countries is only 11%. Nine out of 10 people get water from rivers. But the water in the river is not clean. Since there is no sewage system, wastewater from houses and factories flow directly into it. Wastewater goes underground and mixed with river water. Houses can’t afford to have purification facilities… They have no money. It is a vicious cycle.”
We became curious on how you started the business. To supply water, we need support. Glory & Tech cannot provide everything for free. He said, “We started it by winning the project from Green Technology Center (GTC), an affiliate of the United Nations Industrial Development Organization (UNIDO). Bangladesh is damaged by typhoons every year. Every time a typhoon comes, houses collapse. What happens after is running out of drinking water. Broadly speaking, it is about resolving problems caused by climate change.”
Park started speaking faster. He said, “There is CTCN TA, a technical assistance (TA) project promoted by CTC-N (Climate Technology Center & Network), which is a climate technology organization under the United Nations. It resolves problems of salinization caused by climate changes occurring due to climate change. I also participated. We also participated in KOICA project, which is exclusively implemented at the government level for free external cooperation. What we are pursuing is not how to solve the problem quickly, but how to solve the problem from the root.”
How to ensure business continuity?
Glory & Tech and CEO Park have very good purpose. Desertification and salinization caused by climate changes are everywhere, knowingly and unknowingly, and it adversely affects everyday life. It is clearly necessary to step forward and solve this problem. However, no matter how good it is, a one-time event is not enough for startups that have to run businesses. There has to be ways of sustainable growth.
Park said, “That’s right. It costs money to continue the drinking water business. It’s for maintenance. It would be lucky if we can get support from the countries, but because it is not, the UN or the Republic of Korea are providing support. I thought about how to solve this problem. That’s when I met S-OIL. Through SBA, we were able to seize the opportunity at the Seoul Startup Hub, and we were able to find a point of contact between what S-OIL wants and the benefits we can get from pursuing it.”
It was puzzling. S-OIL is an integrated energy company in oil refining, lubrication, and petrochemicals. How does it relate to drinking water supply startups that purify water? Assistant Manager Lee from S-OIL’s new business team took over to answer the question.
Lee said, “We had wanted to cooperate with startups in the past. After many discussions about the method, we chose the form of direct investment. One of them was Glory & Tech. In the past three years, we have also invested in five or six other startups. Accelerating, that is a series of process of training and supporting startups, is done by cooperating with startup support centers or hubs like SBA, and we are making investments after checking the results. Sometimes, we work with private VCs.”
He then said, “S-OIL is an oil refinery company. We had a sense of crisis that this alone was not enough. In a rapidly changing society, traditional businesses that refuse to go forward and do not make progress will be left behind. Companies should be able to join the flow called change. The startup ecosystem in Korea has been established to the level of our expectations, and we thought that S-OIL could also add strength to the growth of startups. You can say that we have open mind. Basically, if we can have a win-win relationship with that partner, we provided help.”
As a result, Glory & Tech and S-OIL can create win-win synergies when they work as partners, so they have chosen to cooperate. SBA came as the mediator. Still, the question remains. Startups are bound to be dominated by large corporates. Startups cannot compete against large companies, no matter how big they are. Imagine a toddler who has just taken first steps working with an adult. It is hardly likely to happen. This means Glory & Tech somehow attracted S-OIL.
Park said, “It’s carbon credit. Glory & Tech’s drinking water and energy business is certified by the United Nations Framework Convention on Climate Change (UNFCCC) to secure carbon credits. We have been certified to reduce carbon emissions by supplying drinking water in an eco-friendly way. It has been recognized as the way to reduce greenhouse gas, and we have acquired carbon credits this way. It is one of the assets Glory & Tech has.”
Carbon Credits: With the right to emit greenhouse gases that cause and aggravate global warming, companies to which emission rights are allocated are obliged to use greenhouse gases within the scope of allocation. And the remaining or insufficient credit can be traded in the market. The concept of carbon credits emerged according to the three mechanisms of the Kyoto Protocol (adopted in December 1997 and officially entered into force on February 16, 2005) adopted to effectively achieve the greenhouse gas reduction goal as a concrete implementation plan of UNFCCC. The world carbon emission market is 126 billion dollars’ worth as of 2008, which is a 12-fold growth in just three years. The growth of the carbon credit market has been accelerating ever since.
[Source: Naver Knowledge Encyclopedia]
He continued, “As carbon credits emerged, the amount of greenhouse gas that can be emitted by each country has been set. The same goes for Korea. We have set a goal to reduce it gradually by 2030, and the amount of greenhouse gas allowed by each company has been set. Here is where carbon credit takes on an important role. The more carbon credits we have, the more greenhouse gas we can emit. It is a system which the world made an agreement to reduce greenhouse gas and trade within the system.”
Carbon credit would be like volume-based garbage bags and carbon credit trading system would be like garbage volume disposal system. In order to prevent reckless disposal of garbage, the law to throw garbage in the designated garbage bag was enforced, and the profit made by selling these garbage bags is used to dispose of the garbage. In this sense, if additional greenhouse gases are emitted, carbon credits would be secured to prevent climate change.
Assistant Manager Lee added. He said, “Not every company can secure carbon credits. It must go through rigorous verification and procedures certified by the UN. In order to secure this, Glory & Tech persuaded the UN, government agencies of countries that supplied drinking water facilities, and local users, and passed. It’s not easy to do that. It has done something that not anyone can do.”
S-Oil, Glory & Tech, and SBA Seoul Startup Hub
When startups and large corporations are doing business together, they are often in competition to take the upper hand. A lot of times, there are in the game of proving who is stronger. It is not easy for startups to refuse large companies’ proposals. But, they can’t just gulp it down without thinking, either. It may be an opportunity that will never come again, but taking it is also as risky.
Seoul Startup Hub Part Head Choi said, “We are trying hard to make the opportunity for the large companies and startups can cooperate fairly. It’s like an insurance and we are an arbitrator. We can help out with things they are lacking. You can think of it as a startup ecosystem in a nutshell. It is an ecosystem where large companies, startups, and startup support centers come in harmony. We are going to cooperate with private companies (large companies), and keep making efforts. We are starting to see results slowly. We ask for great interest in what SBA, large companies, and startups will present in the future.”
On the other hand, the Seoul Metropolitan Government, the operating organization of SBA, supports startup technology commercialization through “open innovation” between large global companies and innovative startups
so that promising companies can grow into unicorns and create a virtuous circle in the startup ecosystem.
As the hub of Asia’s technological innovation, “Seoul” has been gaining distinguished attention as a global start-up city for its high R&D capacity,
high patent applications, active investment of Seoul Metropolitan Government in new industries such as AI, fin-tech, and life sciences, and support for the start-up ecosystem.
Within the promotion of start-ups in the technology sector, Seoul Metropolitan Government, Maekyung Media Group and Seoul Startup Hub joined forces
to organize an on/offline global startup festival for start-ups from all over the world from September 15 through 17 under the name of ‘Try Everything’,
which aims to share scale-up insight and to attract start-ups in the tech sector to make appointments with potentially interested investors.”