Alan McGlade runs DEV, a US based VC, and is Principal of DEV Korea, a global-focused startup accelerator in Seoul

[This article was originally published on Forbes]

I was in Asia last week to attend a Demo Day for startups that participated in a two month acceleration program through DEV Korea where I serve as a principal. These companies had split their time between New York and Seoul in order to gain a global perspective that could be applied to their ventures while they were still in a formative stage.

This is easier said than done. It is a given that there are linguistic and cultural barriers that must be overcome. But there is a significant knowledge gap as well. Asian companies seeking distribution in the U.S. are challenged in assessing the competitive landscape, finding a market fit and appealing to American investors. Similarly, I learned from personal experience that absent direct contact, American investors inevitably hold misconceptions about the rapidly emerging Asian tech scene and how to participate in it.

While in Seoul, I got together with Nathan Millard who is the Global Director of beSUCCESS and a valuable information source on Asian startups. Nathan asked Eric Kim, Co-Founder and Managing Partner of Goodwater Capital to identify the myths about Asian venture activity. Eric, who is based in Silicon Valley, is known for his ability to successfully bridge US and Asian interests. He was an early VC board member of messaging giant Kakao, which went public in October and is currently trading at a $6.6 billion market cap, and Coupang which raised over $400 million from rounds led by Sequoia Capital and BlackRock.

Eric Kim is Founder of Goodwater Capital, a US based VC, and was an early investor in both Kakao and Coupang

Myth #1: You have to be Asian to invest in Asian startups.

Eric:  This is certainly not a requirement.  Much more important is having a multi-cultural and diverse perspective. There is a new breed of Asian startups, which are now global from day one and represent enormous upside opportunity. What is required by investors to fully appreciate the nuances of investing in these Asia-based startups (or US-based startups for that matter) is knowledge of what is unfolding on a multi-geo level. In the same way that startups must now consider their global strategy earlier and earlier, US investors must now be fully aware of global trends which can have local consequences. Personally, while I am genuinely proud of my Korean heritage, I also grew up in Missouri and have been an entrepreneur and investor in Silicon Valley. I have also spent significant time working or investing in China, Japan and Korea. A broad geographical experience set and perspective can be developed by investors, regardless of ethnic background.

Myth #2: China is the only Asian country worth investing in.

Eric: There are other countries with great tech talent worth investing in. With companies like NCSoft, DeNa, SundayToz, Com2Us and Gree, Japan and Korea have become leaders in mobile gaming. Talent coming out of gaming companies often spawns the next generation of startups across consumer sectors and we’re currently seeing this phenomenon in those two countries. In addition, while the spotlight recently has been on China, I personally think the next wave of “unicorns” will come out of Southeast Asia. Between Singapore, Philippines, Vietnam and Indonesia alone, there is a population of close to half a billion people that currently has a smartphone penetration rate less than 25%. Something huge is going to happen in Southeast Asia in the next 10 years as the local markets mature and local startups fulfill a growing appetite for new tech. US investors have an opportunity here too, bringing their expertise from the US into the region.

Myth #3: Trends from Asia are only relevant to that region given the wide differences in cultures to the “west”.

Eric: Recent examples have shown that Asian trends can now serve as a peek into the future of what will develop in the US. Consider what companies like Coupang are doing in e-commerce with their own end-to-end logistics systems and same-day delivery, or what Alibaba has done with global payments with their Alipay-Stripe integration. Or how Kakao, Line and WeChat are completely changing how we view the utility of messaging systems and the concepts of groups – Facebook messenger’s David Marcus has been recently cited as drawing inspiration from the Asian messaging players. We’ve also seen it before in social networking, as some successful early concepts and strategies were really honed in the Asian markets by players like Cyworld before coming to the US.

Myth #4: Large US-based tech companies will inevitably enter the Asia market and dominate the local competitors.

Eric: Google vs. Naver. Ebay vs. Alibaba. Facebook vs. Tencent/WeChat. Apple vs. Samsung and Xiaomi. There are many examples of US players entering markets in Asia and finding that local competition is far more resilient than they had expected. Though Asia represents a huge opportunity, achieving true localization has proven to be very difficult for tech powerhouses based in Silicon Valley. That said, the convergence of Moore’s law and Metcalfe’s law, particularly in consumer technology, is breaking down borders as internationalization becomes faster and global networks (such as Facebook) become more powerful. As a result, while local competitors have a huge home turf advantage in Asia, I don’t think anyone is safe from global competition.

Myth #5: Asian startups will never be successful launching their products in the US.

Eric: This has been perhaps the hardest challenge for Asia-based startups. First of all, Asian startups must truly understand why they want to launch products in the US to begin with. Some have good reasons and some are just chasing a mythical pot of gold. In the same way that western companies underestimate the complexities of entering Asian markets, Asia-based startups often don’t plan for the cost of time and money that is required; achieving product-market-fit only gets harder in a larger, more competitive market. That said, there are the exceptions where international companies are exporting a technology or product that is essentially more advanced or has a unique value proposition in the US. Memebox, a recent YCombinator grad, is using technology to better leverage the broad trend of Asian cosmetics being a bellwether for the global makeup industry. More dramatically, we have seen a huge influx of investment coming from Asian companies (startups once upon a time) that have become tech giants in their own right. Tencent, Alibaba, Rakuten, and Baidu have invested hundreds of millions of dollars into US startups in the past year alone.

Related Article List

Korea’s Entrepreneurs Garner Global Validation As Local ‘Startup’ Valuations Soar Into The Billions Korean Startups Are Hot This Year. Here’s a Look at The Top Accelerators Powering Their Success Facts That Make The Korean Startup & Tech Environment One of The Most Interesting in Asia Meet The Ten Billion Dollar Companies That Make Up The Korean Unicorn Club Coupang, Korea’s Top E-Commerce ‘Startup’ Closes $300 Million USD From BlackRock