`Honghap Valley` attracts new venture startups

Venture startups in their early stages have a strong tendency to cluster together at particular areas, as similar locations make it easier for them to gain new information and ideas and find investors.

The Tehran Valley in the Gangnam area, southern Seoul, the venture craze center of the early 2000s, is still the most favored location among startup companies. "The Gangnam area`s biggest advantage is that it has a well-established ecosystem of startups and investors," said Lee Nari, head of D.Camp, a nonprofit organization incubating startup companies. However, the area`s rents are often too high for many startups.

From the late 1990s, many technology startups rushed to the G-Valley in southwestern Seoul for relatively low rents for larger spaces. "With the same rents, we were able to get a space (in the G-Valley) twice as large as one in Gangnam," recalled Lee Sang-im, a department manager at Seoul Venture Incubator, which relocated from Gangnam ward to Guro in 2006. "The rent has gone higher lately but Guro is still an attractive areas for potential startups."

Since the late 2000s, startups have clustered in areas around Hongik University in western Seoul. In January, Honghap Valley, an office space for startups, was opened in Donggyo-dong, Mapo ward. Koh Kyung-hwan, the CEO of Art and Technology Holdings, founded the Honghap Valley to nurture burgeoning entrepreneurs.

Koh said that the advantages of the Honghap Valley include the free and creative business atmosphere and easy access to talents. There are 11 universities around the area, including Yonsei University, Ewha Woman`s University and Sogang University. "University students who are familiar with information technology and sensitively respond to new fashion are also major customers for startups," he noted.

Park Square, which moved from Gangnam to the Honghap Valley, is preparing to launch a service, which allows smartphone users to search parking spaces available nearby on a real-time basis. Before the relocation, the company`s founder, Kim Tae-seong, tested the service near Hongik University in April. "Just three after we promoted our service, holding pickets reading `How to park smart in the Hongdae (short for Hongik University) area,` all of the 30 parking spaces that we had were filled," Kim said. "I realized that people around here are quick to accept new services." He noted that the Honghap Valley is an ideal test place for business startups targeting younger generations.

Choi Jae-seung, the CEO of Spoqa, a new startup that provides mileage point services for small vendors, said that the area is helpful to aspiring entrepreneurs targeting small vendors because there are many shops run by local merchants, rather than large franchise shops.

Entrepreneurs in the Honghap Valley agree that the free and creative atmosphere in the Hongdae area is "helpful" in getting new ideas. "In the Silicon Valley (in the United States), the refined atmosphere near Stanford University and the liberal atmosphere around UC Berkeley are different," said Pyo Cheol-min, the CEO of Wizard Works. "The Tehran Valley is similar to the Stanford University area, while the Honghap Valley is comparable to the UC Berkeley area."

Gwon Do-gyun, head of Primer, a venture incubating company, said, "The Honghap Valley can grow into a real "valley" only when venture capitalists and startup incubators join it."