When you start dreaming about launching a company, you run into concepts like patents, investment, and entrepreneurship—things you've heard of but struggle to actually pin down. Based on what I learned from Kihwan, who runs the Kim Kihwan TV channel, I've put together the practical stuff worth knowing, from the patent system all the way to IP-based startups.
Know the Patent System and You'll Spend Less#
Let's start by clearing up a common myth. People say "patent filing is free for college students," but that's not true. Here's the accurate breakdown:
- Elementary, middle, and high school students: official fees (the fees paid to the patent office) are free
- People aged 19 to under 30: an 85% subsidy on the patent office's official fees
In other words, the benefit college students get isn't "because they're college students"—it's because they meet the age requirement (19 to under 30). On top of that, you can also get a pro bono patent attorney once a year through the Korea Patent Attorneys Association.
Patent practice is divided into 11 technical fields, so it's best to hand the specialized knowledge for your field to a patent attorney who knows that area well. And when you talk to a patent attorney, make sure to record the conversation. It helps a lot if a dispute or misunderstanding comes up later.
Filing and Registration Are Not the Same#
Lots of people use "filing" and "registration" interchangeably, but think of it this way:
- Filing: you've applied for the interview
- Registration: you've passed the interview
Korea follows a first-to-file system, so once you file first, your filing date is recognized. That means if you have an idea, it's fine to file first. (It's worth checking separately whether support programs like IP Stepping Stone also cover patents that have already been filed.)
Once a patent is registered, you may end up signing licensing agreements for technology transfer at home or abroad. The key here is to carefully handle terms like the scope of rights and the price. More on that later.
Things Worth Knowing Before You Raise Money#
Investment came up too. Quite a few domestic ACs (accelerators) may not actually have anyone who has run a business themselves. So among ACs and VCs, prioritize raising money from people who have actually run a business.
- It's best not to think about doing anything through a broker.
- It's smarter to raise money once you understand the flow—tracking the size and use of so-called "idle money" set aside in fund allocations.
What Entrepreneurship Means#
Entrepreneurship refers to the attitude or spirit an entrepreneur ought to have in order to pursue profit and fulfill social responsibility, which are the very essence of a company. It sounds grand, but in reality there are plenty of people who abuse this spirit. Knowing the patterns of these "fraudsters" first will help you protect yourself.
Common Startup Fraudsters#
- Resume-padding startups: parents have their kids win startup competitions to build a resume, then use it to get into elite schools or good universities. This kind of thing comes at a cost, so it's better to prepare properly.
- Faking metrics: some dress up their pitch decks by paying for numbers like user counts or MAU (a behavior-based metric, like streaming plays on a music service).
- False documentation: some provide proof using fake receipts or tax invoices. They issue fake tax invoices and take kickbacks without any real transactions actually happening. Lists of such companies circulate, so if a transaction record remains, it can raise suspicion.
For reference, VCs tend to shy away from investing when the founding team has no professional developer. Also, when a failed founder gives lectures, it's worth questioning at least once whether there were kickbacks or anything illegal in their past.
The biggest pools of "idle money" are cited as K-Startup, the One-Person Creative Enterprise program, social enterprise grants, startup support center funding, and other startup grants from various agencies.
Fraudsters in Local Storefronts#
There's a similar trap when buying out a small business. It's a strategy to make things look like a boom on the surface.
By offering cheap, generous portions and running all sorts of marketing, sales can look high—but the business may actually be operating at a loss. After making it look like a thriving business, someone gets you to pay a huge premium (key money) and take it over. Retirees in particular fall for this a lot.
Since these aren't publicly listed companies, there's little for an accountant to audit, which makes the risk higher. So before taking over, you need to watch it consistently for several months, both online and offline.
Before paying any key money, always check the actual transaction ledgers, including cost of goods sold.
There's also something to watch out for in partnerships. One partner buys from a supplier at a price higher than the real cost of goods, issues a tax invoice, and then pockets the difference. In the end, when the business goes bankrupt, someone takes a huge loss while someone else walks away with a tidy sum.
Entrepreneurship According to Kwon Do-kyun#
So why do we need entrepreneurship? Here's a summary of the messages Kwon Do-kyun emphasized:
- Tear down the current logic and systems
- Hold an altruistic mission of your own
- Optimism, initiative, responsibility, and results-oriented thinking
- Execution and speed are the lifeblood of a startup
- Work on the ground like a junior staffer
- Put value into the product
He added that the larger an organization is, the more its decisions can go astray. For example, there was a point that when executives' children sit in important positions, decision-making mistakes can increase accordingly.
The Virtuous Cycle of a Company#
A company creates new value by following a virtuous cycle like this:
- Founding — establishing a corporate entity, creating jobs, satisfying customer needs, pioneering new markets
- Starting business operations — corporate tax arising in proportion to revenue
- Reaching the break-even point (BEP) — income distribution
- Expansion and reinvestment — more job creation and corporate tax, reinvesting in cutting-edge technology development
Where this flow puts its weight shifts depending on the environment.
| Category | Stable environment | Rapidly changing environment |
|---|---|---|
| Focus | Operation | Innovation |
| Driver | Businessman (manager/administrator) | Entrepreneurs |
| Traits | Cutting costs and headcount, simple systems | New attempts, complex systems |
What Is Innovation?#
In a word, innovation is evolutionary adaptation to environmental change.
- Among many attempts, only some succeed and get reflected in evolution (the rate of ideas becoming actual businesses is about 0.7%)
- If you fail to adapt to environmental change, you get weeded out by the competition
- That said, over-investing in innovation exposes you to short-term risk
- Innovation is a short-term risk; avoiding innovation is a long-term risk
In the end, the failure of the parts underpins the success of the whole. Many people wish the world would change while doing nothing—but it's those who take on the challenge who remain in the evolutionary picture.
You can also approach this from an ROI perspective in two ways:
- Focusing on raising revenue (innovation): costs rise, but you push revenue higher to grow operating profit alongside it
- Focusing on cutting costs (stability): keeping existing revenue as is while reducing costs
Securing opportunities and resources, equipping yourself with entrepreneurship, and continuing to challenge—failing until you succeed. The starting point is creative challenge: finding opportunities in niche markets and understanding your own core competencies.
Understanding IP-Based Startups#
An IP-based startup is a way of doing business based on the IP (intellectual property) you've secured, without the massive investment of building production facilities or a sales network. You can license just your idea (patent), or build Pre-MKT (pre-market) experience through crowdfunding and then license based on the results of that market-viability test.
The intangible assets a person can own fall broadly into goodwill, copyright, and industrial property rights. By type, they break down like this:
- Brand → trademark
- Display, MP3 technology → patent
- Product design → design patent
- OS, SW → copyright
On top of these, new types of intellectual property include rights to trade secrets and copyrights for things like databases and computer programs. A trade secret is information that is not publicly known, holds independent economic value, and is kept secret through considerable effort.
How Do Trade Secrets and Patents Differ?#
Both are specified in the TRIPS Agreement, but their objects of protection differ.
| Category | Object of protection |
|---|---|
| Trade secret | Commercially useful value (customer lists, financial information, know-how, manufacturing recipes, etc.) |
| Patent | Products or methods with novelty, an inventive step, and industrial applicability |
The substance of a patent right concerns the invention stated in the scope of the claims, and it can prohibit production, use, transfer, import, and so on. For reference, Korea has roughly 350 patent examiners.
The need for intellectual property rights is clear. They protect the rights of authors, inventors, scientists, engineers, and artists, and safeguard the right to enjoy freedom of scholarship and the arts. They create a virtuous cycle: granting exclusive rights as a reward for creation → generating profit → inducing potential creative activity.
Monetizing Through IP Licensing#
The IP you've secured connects to revenue through licensing. The flow goes like this:
- Secure the IP
- License agreement — you can grant an exclusive license or a non-exclusive license (one-to-many). For the inventor, a non-exclusive license is more advantageous since you can grant it to multiple parties.
- Fixed-fee licensing — contracting for a set amount regardless of business performance
- Royalty agreement — receiving payments continuously in proportion to business performance
Typically, deals are structured as a down payment plus a running royalty. For patent searches, people usually use KIPRIS, while companies also use tools like Keywert.
Considerations When Signing a Licensing Agreement#
When drafting the contract, be sure to cover these five points:
- Scope of the license — specify the term, region, and scope of practice for which the license is granted, so you don't suffer unexpected losses.
- Compensation (performance-based vs. non-performance-based royalty) — a performance-based royalty changes with sales prices and inflation, while a non-performance-based royalty should be designed so you can recover the costs you've invested (R&D, minimum expenses, etc.).
- Technical guidance clause — a clause requiring you to support proper implementation and commercialization of the licensed technology. You could end up being worked like a slave, so clearly define where, how, and how many times guidance will be given—for example, no charge up to a certain number of sessions and extra fees after that.
- Improvement technology clause — if an improvement patent is obtained, the licensee acquires a free, exclusive right to the intellectual property during the contract period under the terms of the agreement.
- No-contest clause — a clause imposing an obligation on the licensee not to dispute the validity of the intellectual property.
From Idea to Commercialization#
Problem-solving and turning ideas into intellectual property follow this process:
Discovering the problem → identifying the root cause → generating ideas → fleshing out the idea → noting the idea down → turning it into intellectual property → commercialization
Finally, there were tips on manufacturing and purchasing. Manufacturing always has a defect rate, so part of your profit has to cover defect costs. That's why there was advice that it's safer to buy a car more than six months after its release. Also, buying LG Electronics products online is advantageous, because distribution channels like Lotte or Hi-Mart carry a distribution cost of around 35%, so the same product can have a different cost structure.
Finding a good patent attorney is simple too. Look up the firm that the top-tier companies in your field (like Karrot, Kakao, or Toss) use as their agent when they file patents.
Wrapping Up#
We've looked at everything from the fine print of patent benefits, to the right mindset for raising money, to spotting fraudsters, to turning IP into revenue through licensing. It all comes down to one thing: whether you're filing, taking over a business, or signing a contract, the habit of personally verifying the actual transactions and the scope of rights before you start is what ends up protecting you.
Things that were hard to bear are sweet to remember.
— Seneca
