About US$200 million (220 billion won) of foreign venture capital from Silicon Valley in the US will be invested in promising domestic venture businesses.
This is the largest amount to ever be directly invested in domestic companies from overseas.
When the fund investment is completed, the money will flow into up to 60 domestic venture companies operating mobile, application, software, health care, and other businesses.
On August 27 (local time), the Small and Medium Business Administration and Korea Venture Investment announced they signed a memorandum of understanding (MOU) to invest US$200 million with US Silicon Valley companies such as BlueRun Ventures, Altos Ventures, and Formation 8. In addition, they agreed to found a Korea Venture Business Starter Investment Center in Menlo Park, Silicon Valley, to maximize foreign capital attraction.
Korea Venture Investment, a fund of funds, will invest an additional 20 billion won (US$17.9 million), leading the total investment amount to be about US$210 million (about 240 billion won), which creates a leverage effect of 11 times. That is much more effective than the average leverage effect of around 4 times.
BlueRun Ventures, which will invest US$160 million as the largest investor, will also invest some money into China to diversify its portfolio. Excluding this, the actual amount of US$140 million (160 billion won), which is 67% of the total funds, will be invested in domestic venture companies.
What’s noteworthy about this large-scale foreign capital investment is that the most advanced capitalists in Silicon Valley are directly administering the funds.
Thus, domestic companies will be eagerly motivated to expand their businesses into the US using the VC’s global abilities.
Startups will be given 1-3 years to settle in the domestic market and set up stepping stones, and then they will move overseas. Competitive businesses will get support to work together with global companies such as Google and Facebook to foster continuous growth.