By Dennis Clemente
If you’re a foreigner, how do you start a tech company in the United States? You can look at it in five different ways—from someone who experienced it first hand, another who helps you raise funds, from two other people who know the legal ins and outs of the business and from an organization that helps facilitate it for you.
Last August 16 on Park Avenue, Kotra hosted the Korean entrepreneur and founder series on Park Avenue with startup panelists Saeju Jeong of Noom, which every tech website has praised as one of the best fitness apps out of there, and Sang Lee of Return on Change. Sonny Whang and Sonwha Lee provided legal advice that overwhelmed even Saeju and Sang for their comprehensive scope.
Some people are easily contented with their homegrown success but not Saeju. He had a successful independent music label called BuyHard Productions, chosen as the most promising business in Korea in 2001 but he still went to the States, so he could do more.
That was more than five years ago when he left Korea to make it in the States without knowing anyone. Failure was not even an option for him. In his determination to succeed, he made cold calls and even entrusted $50,000 of his money–cash that he handed out in a brown bag—for the musical “Bye Bye Birdie” to hold an Asian tour.
That’s how Saeju got his start, but later on, he decided to do more, but he was again faced with several rejections. I pitched more than 1,000 times, but I also learned how to pitch better. But in my persistence, I was able to raise $180,000—average of $20,000 to $50,000 each person, from angel investors, doctors, engineers, and “even the founder of LG.”.
Then he met tech developer Artem Petakov who he partnered with to create Noom. What came out of it, he said, was the highest-grossing fitness app on Google Play for nine months now. “Our mobile apps help people live healthier through diet and exercise,” he said. “It’s hard to believe we have not spent a dollar on acquisition marketing, We serve 18 million customers.”
“We earned $10,000 in two weeks—and a million dollars in only a year,” he said, explaining his success came from the growth of the smartphone business.
“Our app is not really about what to eat, but how to build you a better habit. We customize messages and tasks. Also, our no. 1 priority is product quality,” he added.
Saeju took an arduous route to success when there were no crowdfunding sites yet.
The next speaker, Sang offers his crowdfunding site for people who want to succeed like Saeng.. “You got the 3Fs– friends, families and fools.” Today, he is promoting his site called Return on Change, a crowdfunding platform like Kickstarter.
Sang gave us startling data that could douse any startup’s dreams, saying “98% of business plans are rejected by venture capitalists,” adding that “only 1,500 startups get funding from VCs in the US.” He is trying to make a compelling point about how crowdfunding is another way for tech entrepreneurs to get much-needed funding.
In terms of seed deals, Sang said “innovation is being stifled with the 32.9 percent in seed deals.”
With these challenges facing the growing number of startups, it’s more important than ever to have an original idea, according to Sang.
Sang said the good thing about crowdfunding nowadays is that you can openly solicit funds now, because the JOBS ACT has been passed and will take effect on September 23 this year. “It will revitalize the startup industry, lift the ban on general solicitation and permit crowdinvesting.”
What is the big deal about the JOBS act? “Before you could not email people to solicit funds nor could you tweet about it. Now you can use social media and advertise your solicitations.”
Sang didn’t just promote his company but also asked for a change in perspective. “If Americans invested 1/10 of what they gamble per year, they would equate to $55 billion,” he said.
For those who are thinking of putting up a startup in the crowdfunding space, Sang suggests startups have the following in mind;
• Business plan
• Financial model
• Term sheet
• Right platform
He also recommends how people should address the following:
• Define the need (for your business
• How big is this market? Who is your customer?
• How are you going to make $
• Who’s your competition? How are you different?
• How are you going to brand your business?
• Who are your team and advisors?
• How are your investors going to make money?
• How much money do you need to start?
The event was hosted and organized by KOTRA and by the Korean Startups & Entrepreneurs (KSE) with KOTRA IP desk consultant Joseph Juhn moderating.
KOTRA is a Korean government agency focused on facilitating Korea’s economic development through various trade promotion activities such as overseas market surveys and business matchmaking. The KSE meetup group was created to bring together Koreans and those of Korean heritage who are passionate about startups and entrepreneurs.