Naver to Launch K-Fund 2 to Expand Investment in Startups
Seven European startups that received equity investment from Naver have grown into unicorns with an enterprise value of more than 1 trillion won. Naver established a European investment fund six years ago to expand its business territory around the world and discover promising venture startups.
Naver invested in 17 startups through K-Fund 1, which is managed by Korelya Capital, an investment platform founded in 2016 by Fleur Pellerin, former French Minister of Digital Economy and Culture.
Of the 17 companies, seven have an enterprise value of more than one trillion won each. As of April 2022, their combined value is close to 20 trillion won.
Naver invested a total of 330 million euros (about 441 billion won) through K-Fund 1. Its return on investment is three times as high as the investment principal. The value of the equities held by Naver exceeds one trillion won. The fund completed all of its investments at the end of 2021. Naver has no plan to withdraw these investments.
Naver, together with Korelya Capital, has established K-Fund 2 worth up to 400 million euros (about 540 billion won) to invest in European information technology (IT) startups, platforms and e-commerce companies.
Naver selected investment targets with the focus on creating synergies rather than making profits. So it chose companies engaged in e-commerce, the metaverse, artificial intelligence (AI) and blockchains.
Naver is planning to expand its business based on commerce, including local resale of used goods. It can achieve technological advancement by introducing Naver technology platform solutions such as searches, advertisements and AI recommendations to startup platforms. Bolt which has grown into the largest mobility company in Europe is well known in the region as it expands its business to all areas including car hailing, food delivery, and electric kickboard rental services. Experts evaluate that Bolt can help Naver advance into business-to-consumer (B2C) transactions between European companies and consumers as it has a contact point with consumers.
BitFury, which possesses Bitcoin mining and AI chip technology and Ledger, which specializes in virtual currency-related security technologies, are open to various business cooperation possibilities in the blockchain field which Naver is focusing on as a future growth driver. Conversely, Naver helps European startups advance into Asian markets including Korea. In fact, it has been confirmed that France’s Vestiaire, Europe’s largest second-hand luxury fashion item trading platform, is preparing not only to expand its local business but to make a foray into Korea with Naver.
As of 2021, Naver’s overseas sales including Line accounted for 35 percent of its sales. A strategy which Naver has chosen to expand its overseas business is global cooperation. In addition to investment returns, Naver is able to secure more allies for overseas expansion by forming a strong alliance with global venture capital firms and startups, thereby catching two birds with one stone. The investment banking (IB) industry analyzes that Naver largely divided the global market into Europe and Asia, with Korelya Capital in Europe and Mirae Asset Securities in Asia as its investment partners.
Korelya Capital, founded by Korelya Capital CEO Fleur Pellerin, who served as a French minister, completed the establishment of K-Fund 2 with Naver. It is known that major institutional investors in France and Korea, as well as Naver, the anchor investor, participated as limited partners (LPs) in this fund. They will bet on startups’ huge growth potential from a mid- to long-term perspective rather than a short-term return.
Mirae Asset Securities is transferring Naver solutions throughout Asia including Southeast Asia while preemptively investing in Grab, the No. 1 mobility platform in Southeast Asia and Carousel, a Singapore resell venture startup together with Naver. It continues to cooperate with Japan’s SoftBank in the Japanese market and the metaverse among others. Naver Z which operates the ZEPETO metaverse attracted investment from SoftBank.
Naver is also speeding up its discovery of very early startups to find the next unicorns in Europe. Recently, five promising French startups joined Naver’s European startup incubator, Space Green. The five startups are engaging in adventurous fields that Naver is paying attention to such as AI-based cartoon platforms, fashion markets for Generation Z, virtual reality game platforms and blockchains. They will grow their companies in Naver Space Green at Station F, the world’s largest startup campus in Paris, France. “we may make equity investments in them in the future,” a Naver official explained.