An increasing number of South Korean startups are relocating their headquarters overseas and turning their organizations in South Korea into subsidiaries. Coupang accelerated this trend last year by going public in New York instead of South Korea, and Riiid is planning to do the same.
In fact, this has been witnessed for years. For example, Sendbird was founded in South Korea in 2013 and relocated to the United States in 2014. MBX moved its main office to the United States in 2014 in order to get more investment from Y Combinator. The examples also include SWIT Technologies and Soundable Health.
“This is because systems and regulations in South Korea are still hindering startups’ business,” said an industry source, adding, “For instance, the bill regarding dual-class voting rights is still pending.”
Some experts point out that HQ relocation is not entirely rosy. “It inevitably entails risks especially on the part of startups without a robust overseas business foundation,” said Primer Sazze Partners, adding, “It is not easy to win an investment in the United States without a proven business model and investors in South Korea have their own limitations in investing in startups abroad.”
The Banks Foundation for Young Entrepreneurs also pointed out that not a few startups have returned to South Korea after HQ relocation related to investment attraction. According to it, the reasons include higher-than-expected business management costs and many more.