À̹ÌÁö È®´ë Employees making soap at social startup Donggubat. The company employs about 15 workers with developmental disabilities. [Photo by Han Joo-hyung]
Social entrepreneurship is rapidly gaining ground in South Korea, driven by socially-aware younger generations looking for business solutions to some of society¡¯s biggest challenges.
Korea is now home to 1,000 social enterprises employing more than 10,000 people, with Seongdong-gu in eastern Seoul rising as the hotbed of innovation, according to the Ministry of SMEs and Startups and social venture circles on Monday.
A social startup, at its most basic level, is an enterprise that works for a social cause but by employing entrepreneurial principles. It can be structured as for-profit, non-profit or hybrid.
Seongdong-gu district now houses 250 to 300 related companies, including accelerators Sopoong and Impact Square, investors D3 Jubilee Partners, Yellow Dog and MYSC, and co-working communities for social startups such as Heyground and Cow&Dog.
A company that has played a pivotal role in spreading the novel concept of social entrepreneurship in Korea is Root Impact. Founded in 2012 by Chung Kyung-sun, who now holds the title as the company¡¯s chief imagination officer, Root Impact has been a prominent backer of social entrepreneurs, providing co-living communities and co-working spaces for its so-called ¡°Changemakers¡± as well as consulting and educational services.
Woozoo is a co-housing platform that was created in 2012 with a mission to provide affordable housing for young adults. It is now the No. 1 shared housing company in Korea, with 120 shared houses in Seoul and over 530 residents.
À̹ÌÁö È®´ë Donggubat is a soap company that primarily employs people with mental disabilities. With a total manufacturing workforce of 21, including 15 with developmental disabilities, it has not lost a single worker during its five years of operation and produces up to 100,000 bars of handmade soap a month, according to its founder and chief executive Noh Soon-ho.
The movement got a significant boost when the government in 2017 enacted a law to support young social entrepreneurs with an aim to build a more vibrant social venture ecosystem.
A major outcome of the new act has been the rise of social investment vehicles. According to the ministry of SMEs and startups, seven venture capital firms including D3 Jubilee Partners and Yellow Dog raised 80 billion won ($68.7 million) last year for their impact fund, bringing the total assets under management to 103.2 billion won. As of June, the fund has deployed 27.6 billion won into 29 social enterprises. Another 70 billion won is expected to be raised for this year¡¯s impact fund for a total of 100 billion won.
But experts say more attention is needed to grow the country`s social startups to a meaningful scale. Reports show that more than half of all social enterprises in Korea bring in an annual revenue of less than 300 million won. They are also heavily concentrated in Seoul, with about 40 percent based in the capital and the greater metropolitan area.
By Shin Soo-hyun and Kim Hyo-jin
[¨Ï Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]