Incubator of Baidu, Tencent
The Small & Medium Business Administration (SMBA) signed an MOU with IDG Capital on Feb. 10 to raise a Korea Venture Fund worth 100 billion won (US$91 million). The Korea Venture Fund is the second Korean version of the Yozma Fund, following the 150 billion won (US$136 million) fund raised with DFJ and Walden International in September last year.
IDG Capital, which is the second-largest venture capital firm in China with operating assets of approximately 5 trillion won (US$4.5 billion), has incubated Baidu, Tencent, Xiaomi, C-Trip, Quih360, and many more. C-Trip is the largest online travel agency in China, and Quih360 is the number one software developer in the country. Also, it has invested in more than 300 companies while carrying out IPOs and M&As for about 70.
“The Korea-China FTA is leading to more and more Korean small firms’ increasing interest in the Chinese market,” the SMBA explained, adding, “IDG Capital, which has nurtured more than 10 number one companies in China, will be their best partner for business in the country.”
Forty percent of the Korea Venture Fund is invested in by the fund of funds, and the rest is by IDG Capital and foreign investors. Sixty percent of the fund is invested in Korean companies in such fields as technology, media and telecommunications (TMT), digital content, healthcare, biotechnology, clean tech, and games. IDG Capital co-head Guo Yi Hong will select the targets himself, and the beneficiaries can have business opportunities in connection with Chinese enterprises and be listed in China, the United States, Hong Kong and the like, or acquired by global companies.
“Korea has a high level of competitiveness in digital content, games, biotech, and so on,” Mr. Guo Yi Hong said in the signing ceremony, continuing, “I will find promising Korean firms and help them prosper in the Chinese market.”
In the meantime, the Korean government is planning to accelerate the establishment of a working-level consultative body for venture investment between Korea and China that was agreed on in the bilateral economic ministerial meeting last month, so that Korean startup and venture firms’ business in China can be boosted by a fund worth 500 billion won (US$456 million).