The ‘10th Korea Grand Sourcing Fair 2017', which will be held until the November 29th, will connect Korean with overseas and regional large distribution corporations, manufacturing companies, and consumer goods import vendors for both on-line and off-line to support the export of domestic products through a large global distribution network.
The event, which will be held for the 10th time since 2008, is sponsored by Korea International Trade Association (KITA), sponsored by Ministry of Industry, Trade and Energy and the Ministry of SMEs and Startups and KB Kookmin Bank. In this event, 140 foreign big buyers, 20 WTC member companies, 900 domestic export companies and 100 PPL companies participate in consultation activities and incidental events.
'2017 Startup Challenge Platform Demo Day', an incidental event of ‘10th Korea Grand Sourcing Fair 2017', is an exhibition as well as demo day of '6-month Challenge Platform' progressed by Seoul Center for Creative Economy and Innovation. It is prepared by Seoul Center for Creative Economy and Innovation to raise the opportunities of investment and business linkage by informing the accomplishments of the startups that were fostered through the project period to private accelerator and investing institutions.
A total of 19 companies selected through the recruitment of participating companies participated in the event. Targeting domestic angel investors, accelerators, and VCs, incidental events including "Company IR", in which six companies conduct their own IR, "Selected prototype exhibition", which discloses the products produced as a result of the performance, "Startup representative lecture", which presents success stories of excellent startup representatives among graduate companies, and "Networking", held for exchanges among attendees such as selected company representatives, accelerators, investors, center employees, and visiting buyers.
At 'Lectures by Representatives of Graduate Companies', Lee Seung-min, CEO of BLUEREO, and Ryu Jun-woo, CEO of Red Velvet Ventures. gave lectures on the main items of the company, the process so far, and advice for other start-ups. BLUEREO is aiming at the niche market between the electric toothbrush and the suction toothbrush through the new concept toothbrush 'Oral Clean' with the suction function. 'Bomapp' of Red Velvet Ventures is a service which allows to see collection of user's insurance information in one view, manages it, and utilizes for the general users and insurance planners.
Lee Seung-min, CEO of BLUEREO Inc., said, BLUEREO 's items is an electric toothbrush that can suck in gargling water that cannot be spit properly with the electric toothbrush function to the socially weak people such as the elderly or the handicapped who can not brush themselves. It is introduced that, during the 6-month challenge program, the company received support for mockup, R&D projects, KIPS, and video production as connected business. This connected support could be done through checking confirmation of the eligibility or condition for priority selection.
BLUEREO also received various proposals such as going on Demo Day and attracting investment by connecting to VC. In these cases, KIPS was chosen, and every company has different forms of investment, but BLUEREO received investment in the form of redeemable convertible preference share. On the other hand, he received advice that "It is expected to be a lot of fund formation next year, and if funds are run out afterward, get your breath back and invest when the funds are created." It is emphasized that starting with good people, making what customers want, and saving money are important during Seed or investment before Pre-A. Especially, he highlighted that 'person' is important.
When passing every step such as seed investment, Pre-A, or Series A, the required IR data is different because the information needed for the review is different, and it is important to emphasize possibilities and verification when seeding. For investment, the team, item, and market aspect are important. In the case of the team, BLUEREO started the business alone, felt thirst for the team members, and scouted people around him. In addition, judges at Demo Day or a contest may be mentors, investors and buyers, and they have become mentors by responding to inquiries about favorable opinions.
BLUEREO had done incorporation transition in March 2016 and founded the company with a person who is from a large company, who could supplement the technical part or who worked for a long time in the venture. Moreover, he pointed out that the subsidiary of the patent corporation is included as a unique point for the shareholder composition, and he commented that it contributed to the legal process, such as patent, in preparation of the product. At the same time, recruiting people also takes a big portion in business for startup, so he recruited experienced personnel, such as designers for ergonomic design and public officials from the Ministry of Health and Welfare according to the characteristics of the B2G business.
On the other hand, the trial and error of development and the problems in production are completely different, and they also suffered from quality problems in early production. The company has introduced more than one revision of all molds and produced products in the third quarter, firstly supplying products to long-standing customers, and most of the current quantities are being exported to France. The company is also developing people's oral healthcare monitoring services, and even global large companies are not working on this.
Currently, there are no products similarly used like BLUEREO's product in markets, but there are two categories of products with similar characteristics. This is impressively accepted to VCs since it has a broad range of accessible market. Also, for this, there is a need to analyze and introduce the whole market, valid market, target market, and the base market that can enter right now. In case of BLUEREO, it is a clear example of strategy to niche market. The competitors for electric toothbrushes and mouthwashers are well-known global companies, and the competitors for suction machine and suction toothbrushes are medical equipment companies, but both sides are not direct competitors.
The results of the IP R&D project showed that about two thousand patents related to patent analysis, R&D roadmap, and patent attack avoidance strategies were confirmed. It is found that most of the patents are about the spray and vibration functions. In addition to the inhalation function, which is now a blank patent, some companies have set up the pattern analysis and remote medial treatment part, which are pioneering new markets, as a future technology development area. He added that there would be a possibility of cooperation with universities, not companies. Meanwhile, at present, the total number of IPRs of BLUEREO is about 52, and SYP Patent Law Office, a stockholder, dispatches and supports patent attorneys with investment costs. The technical support other than financial support is effective at the seed investment stage.
VCs conduct confirmation of technology, patents, and products as well as feedback and market research before investment, and it is emphasized that BLUEREO judged these feedbacks significant from the initial stage. BLUEREO has observed the daily life of people with disabilities through volunteer activities, collected feedback from customers, reflected on the products and responded to the market. Moreover, VCs require data on whether it had relevant effects and feedback when the product went into the market.
On the other hand, BLUEREO's products are classified as assistive technology device and welfare equipment business in Korea from B2G model, and there is a characteristic that government subsidies are offered for product prices. In addition to health insurance, BLUEREO said it is promoting cooperation with Japan to advance into the care insurance market. As a result, cash flow and product sales have risen to a certain level, but before that, consumers and purchasers are less likely to have room to spare. So, the company is increasing line-ups through differentiation strategy. Meanwhile, he added that competitors can become customers through participation in various events.
BLUEREO has been supplying products by receiving orders worth about 1.3 billion won at the time of incorporation transition. This was possible even though the company was start, because when the B2G model enters the government, manufacturers and sellers enter consortium, and the sole distributors and exclusively sale parts are naturally formed. Moreover, selecting partners for each market has a positive impact on initial investment. Also, European market is characterized by not only welfare budgets but also subsidies from private insurers. They are trying to divide the market to do business with key players, and there is a need to invest in product research to expand the market to the general public or infant markets.
As advice related to investment, it is introduced that "take it when you can" most of the time. He also advised, receive investment as much as possible until reaching a stable orbit even for responding to the unexpected problems, but a careful review is required when negotiating, and the investment should be used for a purpose and systematically. VCs seem to want an appropriate stake in their investments, and VCs that initially invest in are likely to take the lead in sequential investment. In addition to this, as for provision of preferred stock in investment, it could be policy for each investment company and there may be some tiresome parts due to the management intervention of VCs. There is no reason not to take the investment, and it could be built as relationship for cooperation by utilizing situation well. Also, he advised that an investment contract must be received and reviewed in advance.
Ryu Jun-woo, CEO of Red Velvet Ventures Co., Ltd., has been servicing "Bomapp" app since February 2017, in which users can check and claim all the insurance information that users registered with only mobile phone authentication. The company secured more than 300,000 users without marketing, and has recently invested 3 billion won with Series A. In addition, he worked in Seoul Guarantee Insurance and decided to start a business. He had a lot of worries about solving his thoughts on insurance, so he accumulated experience by changing his career to a startup and established corporation with co-founders.
The first business model they thought was to transfer the photo of insurance certificate to the data and manage, but this method was not successful since it received bad response. The preparation of a new model had to go through a difficult period like ‘death valley’, but at that time, support from accelerators of large companies was active, so the company could receive various supports. He was worried about the investment a lot. VCs judged by their own experience, and insurance is the area where user experience is clearly divided. He also added that there was a coincidence that the introduction video created by the accelerator appears on SNS and an investor visited him.
He said that which VC you meet is important, and there are VCs that are interested in this business somewhere. It depends on how you prepare for the process until you meet them, but this process is not only just meeting. He personally uses Facebook as PR channel, and he stressed to CEO of startup the need for promoting their services from the most accessible channel, which is SNS. In the early days, a relatively small investment, such as a 6-month challenge platform or accelerator, was used well. After the service was released, it grew rapidly, and the situation became more flexible.
Meanwhile, Red Velvet Ventures has been a structure where CTOs and CFOs have been working together since early on, and this could prevent CEO from losing the essence of the business when doing a lot of related paperwork, investment, and HR. Investors invested after looking at the team, and in the process of negotiating the terms of the contract, the presence of the CFO also raised the value of the team. Even if the CEO can do this, it is recommended to co-found with CFO who is fluent in this area. Likewise, what CEO needs to focus on is attracting investment and recruiting good members.
They went through a 6-month challenge platform, met many good teams, and proceeded collaboration during workshops at CCEI in Seoul. They said that networking within it could be a great help for the future business. In addition, to shape the ideas and to absorb good members, CEO should be free. To do so, gathering good members from the beginning or joining good co-founders will eventually lead to faster growth.
The service was introduced that it scraps and implements insurance companies' homepages in their own way, and moved the process of customers' confirmation of insurance coverage to mobile. In order to organize the field values visible in the app, different interfaces are implemented to each insurer, and a subscription model for insurance planners was introduced as the profit model. Now, it is a difficult situation to collect insurance policies from customers, but it is a subscription model that enables certified designers to check customer information. Also, marketing starts from what insurance planners across the country recommend to their customers.
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