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Korea Venture Capital Association Striving to Enhance Global Competitiveness
Korea Venture Capital Association Striving to Enhance Global Competitiveness
  • By lsh
  • June 16, 2016, 04:30
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Lee Yong-sung, chairman of the Korea Venture Capital Association
Lee Yong-sung, chairman of the Korea Venture Capital Association

 

Future entrepreneurs and venture firms do need capital to start and expand their businesses based on brilliant ideas. The Korea Venture Capital Association (KVCA) is one of the organizations striving to help them with various venture capital firms in South Korea. The following is an interview with KVCA chairman Lee Yong-sung.

Please explain about the KVCA’s major projects and their outcomes since your appointment in February last year.

The KVCA is currently focusing on manpower training in order to attain its goal of three trillion won in new venture investment. We ran 14 training programs in total last year to that end and approximately 800 persons completed the courses. We are planning to run more programs this year.

At the same time, we are continuing to make efforts for investment payback improvement. In this context, the KVCA was selected in March this year as a part of the South Korean government’s national M&A promotion project. In addition, we have proposed that startup investors be recognized as institutional investors and the law be revised for the establishment of more secondary funds.

We are concentrating on the attraction of private investment, too. At present, most of venture capital funds in South Korea come from the government, and thus have inherent risks in the form of the lack of flexibility and the like and cannot but fluctuate depending on the government’s policy directions. A solution to this vulnerability is private investment. In this regard, we are continuing to propose tax incentives for financial institutions and corporations investing in venture firms while expanding our global cooperation networks for the same purpose.

What is the KVCA doing in the interest of the M&A promotion you have just mentioned?

As a group of professionals experienced in venture business consulting and having substantial track records, the KVCA is capable of providing venture capital-centered M&A information networks. We are planning to participate in the M&A promotion project with this merit.

Specifically, our goal in that project is to promote the participation of entities in need of M&A, expand M&A intermediation platforms and establish a market-centered management system. The domestic M&A market still has a low level of participation and we are going to deal with this by encouraging venture capitals to take a bigger role and boost M&A deals by attracting more technology users such as enterprises and the Centers for Creative Economy & Innovation across the country. Furthermore, we will provide systematic supports covering all the way from opportunity search to follow-up management while providing more information and guidelines as an intermediary well aware of market situations and corporate conditions.

The KVCA held an investment conference in Gangwon Province last month with venture firms and startups in that region. Are you planning on similar investment roadshows in different regions? 

The venture investment conference in the province was attended by 24 firms. 18 out of them had IR meetings, six consulting sessions were underway and 19 investment evaluators participated in the conference consisting of investment consultations and a number of business meetings they were very satisfied with. The venture capitals that joined the conference expressed their willingness to make more investments and promised to become more interested in the promotion of regional venture markets.

Similar conventions are scheduled for this month in Daejeon City and Chungcheong Provinces, June in Gwangju City and South Jeolla Province, September in Busan City and South Gyeongsang Province, October in North Jeolla Province and November in Daegu City and North Gyeongsang Province. Moreover, a nationwide event is to take place in December.

There are many promising startups and venture firms abroad as well as at home. How will the KVCA work with them?

These days, an increasing number of foreign venture capitals are getting interested in the technological strength and growth potential of South Korean venture firms. Some of them such as Coupang and Memebox have attracted an investment of tens of billions of won to more than one trillion won.

Likewise, more and more South Korean venture capitals are turning their eyes toward promising foreign venture firms. Although their overseas market penetration still has a far way to go, we will help them enhance their capabilities and widen their networks by working on investment guidelines reflecting different local conditions and requirements.

How is the KVCA helping South Korean startups and venture firms to make inroads into global markets?

We are currently trying to introduce more and more domestic venture capitals to foreign ones. Joint funding with them is no walk in the park and involves complex investment and profit distribution structures by nature. However, we can deal with such risks as well as language, cultural and systemic barriers by the participation of investors familiar with local market conditions. In addition, South Korean firms invested by foreign capitals can penetrate overseas markets with greater ease, which means joint funding is a win-win way of business for investors and firms alike. In this vein, the KVCA will keep working on more networking and partnership opportunities between domestic and foreign venture capitals.

Please explain about the KVCA’s collaboration and exchange programs for attracting investment from foreign investors.

We have held strategy seminars with limited partners and general partners both at home and abroad and collected and provided data on foreign venture capitals and venture systems while having council meetings with 20 foreign institutional investors on a regular basis for networking assistance. We will keep promoting and holding international conferences and events with venture capitals and private equities down the road.

What are the number of startup investors in South Korea and the amount of their annual investment? How are venture capitals in the country responding to an increasing demand for venture and startup investment as of late?

As of March this year, a total of 116 startup investors were registered in the Small & Medium Business Administration of South Korea. The number increased by 14 compared to the previous year and is expected to keep increasing this year in proportion to the growth of the domestic venture investment market. The annual investment topped one trillion won in 2010 and reached 2.0858 trillion won last year.

In spite of such a growth, some fledgling firms are still finding it hard to partner with venture capitals. In 2013, the venture investment-to-GDP ratio was only 0.12% in South Korea whereas it reached 0.2% in the United States. This implies that the South Korean venture investment market needs to achieve a 150% or so growth in the short term. The KVCA is going to fulfill its role as a facilitator to that end.