Corporate VC Firms in Korea have grown rapidly over the past decade. Now startups in Korea have a choice in whether to go with an institutional Venture Capital firm or a Corporate Venture Capital (CVC). There are major differences between the two in regards to investment stage, fund objective, control, and exit options. The key for startups in Korea looking to get corporate venture capital has to do with knowing the motivation of the corporations.
Corporate VC Firms in Korea
CVCs are constantly on the lookout to keep up with the latest tech trend through these innovative startups. Therefore, in order to get invested by CVCs, the startup should be able to help grow the CVC’s parent company’s current business in some way. This may include the corporation leveraging the startup’s technology or using their product or service to better run their corporation. The benefits for the startup are not only the investment and possible follow-up investment but the corporation’s vast network. Furthermore, startups in Korea that receive corporate venture capital are instantly more attractive for traditional VCs
One of the main problems for startups in Korea has to do with getting their product or service out to Korean consumers. Customer acquisition in Korea is one of the main areas that new funding often gets funneled. However, even with funding, a strong marketing budget and team are still not enough for the startup to grow at a fast rate. Moreover, by working with corporate venture capital firms, you can quickly gain access to their massive customer base. Better yet there could be a chance to gain access to the CVC’s large marketing team and salespeople. Those interested in the most active Korean venture capital firms can check that article out through the link.
The rankings were comprised by the Seoulz staff and are based on 4 factors:
- Investment activity
- Corporate network
- Corporate collaboration opportunities
- Portfolio
Corporate VC firms in Korea that Startups Should Know
Kakao Investment/Ventures
Kakao Investment or sometimes known as Kakao Ventures was incorporated in 2015. They are the venture arm of Kakao and their focus is on investing and supporting innovative startups. They are by far the most active early-stage corporate VC firms in Korea. Startups they invest in are in innovative sectors such as mobile commerce, O2O, Fintech, IoT, and BoT. In addition, Kakao Ventures is interested in infrastructural and software technology developing startups. Therefore, startups with high growth potential or early-stage startups looking to go global should seek investment from Kakao Ventures.
Kakao Ventures Very Interested in Blockchain Technology
In 2018 Kakao Ventures invested in Israeli blockchain startup Orbs. Orbs is also a partner of Kakao’s blockchain subsidiary Ground X, for developing applications for the network.
Kakao does a great job of identifying key trendsetters and innovators in the blockchain sector. They have been making aggressive inroads into the blockchain sector. They invested in Dunamu, which manages the South Korean cryptocurrency exchange platform Upbit.
In 2018 Kakao Ventures invested around $30 million in 43 startups. They were mainly in seed rounds and Series A rounds.
In 2019 Kakao Ventures focused on AR and blockchain industries. They invested in LetinAR and Spatial in the AR sector and Kodebox and Terra in the Blockchain sector. Their investment in Terra aims to apply Terra’s blockchain-based payment system to Kakao’s blockchain platform Klaytn.
To date, Kakao Ventures currently operates 8 investment associations with a combined asset total of over $3 billion. Therefore, their portfolio includes more than 200 companies, and half of them are in the mobile and service sectors.
POSCO Venture Capital
Korean Venture Capital Firm POSCO Venture Capital is one of the largest corporate VC firms in Korea. They have over 20 years of investment experience and a sound asset base. They provide diverse investment services for promising small and medium-sized venture companies and growing companies that need growth capital. POSCO is South Korea’s largest steelmaker.
POSCO Captial provides competitive capital throughout every industrial area. Therefore, they have a partnership with MSS (The Ministry of SMEs and Startups) and KVCA (Korean Venture Capital Association) for a project that has a budget of over $800 million dollars. Ultimately they hope to establish a sound ecosystem for Korea’s startup communities and create new jobs.
POSCO Venture Platform – $660 Million Venture Fund
The POSCO Venture Platform will focus on Venture Valley and Venture Fund. Venture Valley is a hub where startup entrepreneurs in Korea can collaborate on R&D, draw investment, and share knowledge. Venture Fund is a fund for promising Korean and global startups. Therefore, by 2024, a total investment of over $830 million will go into the project. Over $160 million will go towards Venture Valley and over $660 million will go towards the Venture Fund.
“To lead changes in the future, we must take the maximum initiative to recognize innovation and take action now. POSCO’s 1 trillion won investment is a stepping stone towards creating a virtuous cycle for the venture platform, to revitalize the country’s startup ecosystem, and create more jobs,” said CEO of POSCO, Jeong-woo Choi.
POSCO will also revitalize its current University-Industry Collaboration policy, one such effort being a joint research lab where researchers from both institutes can collaborate. In addition, POSCO aims to make Pohang and Gwangyang an R&D hub for aspiring startups. Furthermore, the businesses include materials, energy, and environment based on third-generation accelerators, development of bio and new medicine based on fourth-generation accelerators, and the formation of smart cities and factories.
The First IMP Fund
POSCO established the first IMP (Idea Market Place) Fund, Korea’s first venture capital to be organized by a startup accelerator. The fund is worth 5.1 billion KRW. It will be operated and managed by POSTECH Holdings, Korea’s top startup accelerator. This fund is the first case under the “Venture Investment Act” which was implemented in August of 2020. It allows startup accelerators to invest in venture companies to increase autonomous investment and expand their ecosystem. Moreover, POSCO’s incubation program has already invested 17.6 billion KRW in a total of 102 companies and is seen as one of the best-incubating programs in Korea.
Partnership with the Ministry of SMEs and Startups
The MSS and POSCO will jointly support startups through venture valleys in Pohang and Gwangyang. The Korean Venture Capital Association will focus on identifying promising startups for potential investors.
POSCO has said they will make strategic investments in prospective sectors and firms with a chance of including them in the group’s portfolio. Furthermore, invested companies will be provided with access to POSCO Group’s international network and consultations on marketing, intellectual property, legal and financial issues.
Samsung Venture Investment Corporation
Samsung Venture Investment is the venture arm of Samsung Electronics. They are one of the oldest corporate VC firms in Korea having been founded in 1999 and since then have been investing in new future technology. They manage investment and investment-related activities for Samsung affiliate companies. Furthermore, their main focus tends to be on investments in semiconductors, displays, telecommunications, and consumer electronics.
Samsung Ventures was created to promote promising startups that are engaged in new growth technologies. Therefore, they hope to create a new innovative environment. One of their more famous investments was in Blocko, a Korean blockchain company that raised $8.9 million in their latest Series B funding round.
More Recently the firm made its first investment into a Southeast Asian HR startup called Swingvy. It was a series A round in which Samsung led with $7 million.
Smilegate Investment
Smilegate Investment is the corporate venturing subsidiary of South Korean-based video game producer Smilegate. The firm was founded in 1999 under its original name MVP Capital (Meridian Venture Partners). Smilegate acquired MVP Capital in 2011 and changed the companies name to Smilegate Investment.
Their first investment fund was formed in 2000 and since then they have created over 50 investment funds. They have over 30 investment managers who have in total invested in over 400 projects. Their main investment focus is on Internet, gaming companies, Bio & Health, Life & Environment, and Entertainment. Some of these companies include Devsisters, R2Beat, Seed Nine, and BGF Retail.
$350 Million Asset Under Management
Currently, they have over 50 funds. In addition, their asset under management is over $350 million. This could get bigger in 2021 as The National Pension Fund plans to invest up to 30 billion won in individual funds.
Korean venture capital firms are always interested in gaming and Smilegate is one of the leaders in investments in the game industry. However, in 2014 they opened Orange Farm, a support center for all early-stage startups. In addition, they also have an Orange Fund ($3.3 million) to invest only in companies incubated by Orange Farm. More than half of the startups in Orange Farm are not related to gaming. Therefore Smilegate is looking to enter new verticals like travel, music, and education.
Mirae Asset Ventures
Korean VC firm Mirae Asset Ventures is the venture capital unit of Mirae Asset Financial Group. They invest in smaller venture firms and have over $250 million in assets under management. In addition, their focus is on investing in companies that can lead the 4th Industrial revolution such as Bio, ICT, Games, and semiconductors. In 2019 they expanded their investment fields to new industries such as eco-friendly food, education, and alternative energy. Furthermore, in 2018 they launched the Mirae Asset Youth Startup Investment Association to help young entrepreneurs in Korea.
Naver (D2SF)
Korea’s largest internet portal is Naver. They not only invest in Korean startups but have also committed $40 million to a European startup investment fund and $65 million to a US Venture capital firm. This comes off of their 200 million euro investment into Europe startup fund Korelya Capital. Naver uses D2 Startup Factory, a startup accelerator in Korea to invest in Korean tech startups. Moreover, they have invested in over 70 startups since 2015 and these startups have a combined valuation of over $1.2 billion. In 2020 alone, Naver invested in 22 startups.
Naver-invested startups have raised over $300 million since Naver’s initial investment. In addition, over 70% of the startups have or are collaborating with Naver. Therefore, Naver’s focus is to invest in mainly B2B startups that can create synergy with Naver’s existing businesses. In addition, over 50% of the startups invested by Naver are involved in artificial intelligence (AI). Moreover, Naver is also creating a whole floor in their second headquarters that is fully dedicated to startups. It will have state-of-the-art technology from self-driving robots to AI-embedded offices.
Lotte Ventures
Lotte Group is a Korean multinational conglomerate corporation and the 5th largest chaebol in South Korea. They have over 90 business units and employ over 60,000 employees. They are involved in everything from candy manufacturing, hotels, retail, beverages, and even fast food. Lotte Ventures is the venture arm of Lotte Group and they focus on supporting startups in Korea to expand to the global market. In 2020, Lotte Ventures helped 13 startups in Korea branch out overseas. In addition, they also run a startup accelerator program called L-CAMP which is a 6-month accelerator program for seed-stage startups.
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