‘VENTURE NARA’ cyber shopping mall for start up and venture company
This case was submitted as part of the Call for Innovations, an annual partnership initiative between OPSI and the UAE Mohammed Bin Rashid Center for Government Innovation (MBRCGI)
For ventures and start-ups to overcome Valley of Death (failure to survive within the first 3-7 years from start) and to explore sales channels in the early stage, the Korean Public Procurement Service designed VENTURE NARA. VENTURE NARA is a "stepping stone" where ventures and start-ups can promote and sell their products in the early stage, and prepare for jumping into the broader markets. As a prior stage to the Online Shopping Mall, VENTURE NARA is put in place where any ventures and start-ups can promote in early stage.
VENTURE NARA, dedicated to start-ups and ventures, was established in October, 2018 with an aim of exploring the public procurement market and laying foundation for growth.
Start-ups and ventures have an innate difficulty in registering with Korea On-line E-Procurement System (KONEPS), falling short of required conditions for contracts (i.e. framework contract (K-MAS), designation for the Government Supply Products). Start-ups and ventures with excellent technologies are unlikely to have their manufacturing facilities or records for sales. Tender officials from public organizations have no way of purchasing products unregistered with the KONEPS Online Shopping Mall. Under the circumstance, ventures and start-ups take advantage of VENTURE NARA as a platform where they can promote to and trade their products with public organizations.
VENTURE NARA, an online shopping platform for Ventures and Start-ups
Recruitment is proceeded on a quarterly basis in cooperation with 18 advisory entities (as of Aug. 2018) being comprised of the central government bodies (i.e. Ministry of Trade, Industry and Energy, Ministry of SMEs and Startups, Korea Intellectual Property Office) and public organizations (i.e. Center for Creative Economy and Innovation, Korea Technology Finance Corporation, Korea Institute for Advancement of Technology, Innopolis Foundation, Korea Institute of Energy Technology Evaluation and Planning) and metropolitan local governments (i.e. Deajeon Metropolitan City, Ulsan Metropolitan City, Chungcheongbuk Province, Gyeonggi Province, Daegu Metropolitan City, Gwangju Metropolitan City, Jeollabuk Province, Busan Metropolitan City, Seoul Metropolitan City, Gyeongsangnam Province). Excellent technology and high quality products from ventures and start-ups are promoted and registered with VENTURE NARA.
As exclusive to Ventures and Start-ups, VENTURE NARA is used to promote and trade products in the public sector.
Thanks to VENTURE NARA, ventures and start-ups, whom used to have no way of approaching the public procurement market, are now able to register and promote their excellent technology-based products. Purchase officials from public end-users can proceed with direct contracts using the convenient ordering system of VENTURE NARA. VENTURE NARA products are promoted and the export is supported through setting up the VENTURE NARA booth, and consultations with foreign buyers regarding purchase, at the Korea Public Procurement Expo (KOPPEX). Apart from it, VENTURE NARA itself is introduced to public based on various channels such as SNS product review, and other exhibitions.
Modification and improvement to the corresponding rules and regulations are planned related to VENTURE NARA so that more ventures and start-ups make inroads into the public procurement market.
In the past, the start-ups and ventures recommended by the 18 advisory entities are exclusively entitled for enrollment on VENTURE NARA through the quarterly recruitment announcement, causing a difficulty. However, improvement has been made for ventures and start-ups to directly apply for enrollment without recommendation from the 18 entities. The evaluation for new technology products with a short life cycle has been more frequent (once per month). Plus, training and education opportunities on PPS policies and registration on behalf of those of ventures and start-ups with difficulties is expected to be expanded from 4 to 6 times per year. The venture and start-up dedicated team will be formed to provide an one-stop supporting service covering from enrollment to contracts.
What Makes Your Project Innovative?
VENTURE NARA is a sole platform on behalf of ventures and start-ups with difficulties in meeting contract conditions with PPS to be registered with the KONEPS Online Shopping Mall, potential suppliers required to have previous sales records, operation status, and manufacturing facilities. Such conditions play a role as a laborious obstacle, in many cases, pushing ventures or start-ups to give up entering into the public procurement market. VENTURE NARA does not require to meet conditions regarding previous sales records, operation status, manufacturing facilities. With excellent technology-based products, ventures or start-ups can access the public procurement market through VENTURE NARA at any time.
What is the current status of your innovation?
In cooperation with the 18 advisory entities including Public Procurement Service, Ministry of Trade, Industry and Energy, and metropolitan local governments, excellent technology and quality products are discovered and enrolled through a quarterly recruitment announcement.
From the foundation of VENTURE NARA in Oct. 2016 to Aug. 2018, excellent ventures and start-ups are promoted through the 9 recruitment announcements in total (2 times in 2016, 4 in 2017, 3 in 2018).
VENTURE NARA products are conveniently traded based on the simple ordering system so that purchase officials in the public sector can easily purchase.
VENTURE NARA products can be purchased at any time as long as conditions for a direct contract are met. Ventures and start-ups without previous sales records can proceed with sales. The channel of VENTURE NARA sets up a path for ventures and start-ups to advance into the KONEPS Online Shopping Mall. As of now, 12 of them have finally landed in the Online Shopping Mall.
Collaborations & Partnerships
Central government bodies and metropolitan local governments collaborate to help ventures and start-ups advance into the public procurement market.
As of Aug. 2018, the 18 advisory entities are comprised of three as central government bodies, five as public agencies, and ten as metropolitan local governments. Enrolled firms and products are projected to increase as the number of advisory entities will rise to 25 by the end of 2018.
Users, Stakeholders & Beneficiaries
Ventures or start-ups with difficulties in registering their products with the PPS-run platformcan secure channels for sales through product enrollment with VENTURE NARA.
For example, firm A, as a LED light producer, enrolled its product on VENTURE NARA and promoted it at the booth of KOPPEX, gaining recognition from purchase officials and their excellent technology and quality product ended up being posted on the KONEPS Online Shopping Mall.
Results, Outcomes & Impacts
As of Aug. 2018, 2065 products from 438 firms are enrolled with VENTURE NARA.
For those of whom intend to advance into the public procurement market, VENTURE NARA has grown as a critical platform. totally 12 ventures and start-ups ended up posting their products on the KONEPS Online Shopping Mall.
Starting from 2019, a monthly recruitment (12 per year) is planned with an aim of finding about 1000 ventures or start-ups and of helping them advance into the public procurement market.
In addition to products from ventures and start-ups, products of new-technology, composition, R&D prior to commercialization, and local regions are to be promoted at the dedicated supporting center.
Challenges and Failures
At the beginning of VENTURE NARA in Oct. 2016, merely 4 of advisory entities existed.
Recommendations from the small number of advisory entities were limited in quantity. With such insufficient recommendation, VENTURE NARA enrollment was not easy to be done. The barrier in approaching the new platform made it even harder for ventures and start-ups to enter into the public procurement market.
Decision on a dramatic rise of the number of advisory entities was made and PPS began signing MOU agreements with them starting with local authorities since Mar. 2018.
The number of advisory entities rose from 4 to 13 in 2017 and the quarterly recommended ventures or start-ups skyrocketed from 80 to 130 on average in 2017.
As of Aug. 2018, totally 18 advisory entities appeared to the scene and the increase initiative is scheduled to continue until reaching the number of 25 by the end of this year.
Conditions for Success
For ventures and start-ups to successfully enter into the public procurement market, there is a need to approach the platform for sales promotion like the Online Shopping Mall and as a pathway to it, VENTURE NARA was set up.
Mere discovery of and designation as excellent ventures or start-ups carries innate limitations to successful access to the public procurement market. 5 years back, there were supporting policies for start-ups. The designated group as excellent start-ups was provided with education, consultation, and promotion opportunities to make inroads into the public procurement market. However, without such sales platform like the Online Shopping Mall, sales of ventures or start-ups by the purchase officials from public end-users was not easy to be conducted.
So, VENTURE NARA was designed to help smooth landing of ventures and start-ups into the public procurement market.
VENTURE NARA is set to be transformed into the comprehensive platform where innovative products like composite goods can be nurtured from the online supporting tool for ventures.
Firms with innovative or composite products have as much difficulty as ventures and start-ups in entering into the public procurement market. Classification code is hardly assigned to composite goods and purchase officials from public end-users are reluctant to buy new products without previous sales records. VENTURE NARA will be transformed into the comprehensive platform where innovative products are to be enrolled and promoted. The comprehensive platform will match various innovative products such as those from ventures and start-ups, with technology certificates, and pilot and R&D products with end-users in demand for contracts. Expectation is high about transformation of VENTURE NARA into the comprehensive procurement platform with innovative products enrolled in 2019.
These are the lessons that we share with ventures, start-ups, and firms with innovative products.
First, concentrate on unique technology development to obtain patents or technology certificates. Once manufacturing industry-centric public procurement market is now being transformed into the innovative product-centric market, putting an emphasis on technology. It is believed that firms without manufacturing facilities, but through outsourcing, should be able to enter into the public procurement market. PPS urges firms with excellent technologies to more actively approach the public procurement market.
Second, ventures and start-ups should study about and take advantage of various beneficial supporting policies in the public procurement market.
In addition to using VENTURE NARA, consistent study about beneficial procurement policies and supporting tools for promotion should be accompanied so that they can efficiently promote their products to purchase officials from end-users. Being incorporated into KOPPEX by setting up a booth can be a good way as a marketing strategy.
Lastly, constant research and development for new products should be conducted even if their current products turn out to be not perfectly fitting the public procurement market. The list of products required by public end-users is mostly predetermined. Therefore, studying about purchase environment analysis should be conducted by firms. However, constant product research and development would allow firms to provide public end-users with what they really need. Based on analysis of purchase patterns of about 50,000 public end-users across the nation and active marketing efforts, firms need to promote their products.