In-house Startups

Korean conglomerates are shifting the focus of their startup investment toward corporate venture capital (CVC) establishment from indirect equity investment.
Korean conglomerates are shifting the focus of their startup investment toward corporate venture capital (CVC) establishment from indirect equity investment.

 

It has been found that South Korean conglomerates are shifting the focus of their startup investment toward corporate venture capital (CVC) establishment from indirect equity investment, headhunting and the like. Such CVCs include Samsung Venture Investment, Timewise Investment, Hanmi Ventures and Lotte Accelerator.

Their common purpose is open innovation. The Samsung Group is one of the South Korean conglomerates that started this trend. It is making an aggressive investment in startups via Samsung Accelerator in the Silicon Valley and New York as well as Samsung Venture Investment in South Korea. Many other peers such as the Lotte Group, Hanmi Pharm and CJ are following this trend these days.

This is similar to leading IT firms’ venture growth strategies. Back in 2003, PayPal sold itself to eBay for over two trillion won and the financial resources obtained by the sale led to the establishment of YouTube, Tesla, LinkedIn, etc. K Cube Ventures established by Kakao chairman Kim Beom-soo is a similar example in South Korea.

 “Nowadays, Apple, Amazon and many more global enterprises are working on investment arms for innovative technology like Alphabet’s GV and Microsoft’s MS Ventures,” said a domestic venture capital expert, adding, “Under the circumstances, the ratio of CVC-based investment to total venture capital investment has topped 30% as of late.”



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