Offer One Can't Refuse
The so-called PayPal Mafia, a group of former PayPal employees and founders, is seeking to cultivate Korean start-ups.
500 Startups, which was established by former PayPal employees and founders, will create a fund worth 10 billion won (US$9 million) to cultivate local start-ups. The move came after Thiel Capital, an investment firm run by Paypal co-founder Peter Thiel, set up a fund for venture firms in the nation last year, in collaboration with the Korea Development Bank (KDB).
The Small and Medium Business Administration and the Korea Venture Investment Corp signed a Memorandum of Understanding (MOU) with 500 Startups to set up the fund. The MOU signing ceremony was held at the Millennium Seoul Hilton on Feb. 26.
Established by Dave McClure, former Director of Marketing at PayPal, the Silicon Valley-based company is a business incubator that supports promising start-ups with 16 weeks of training and investment.
3D printing company MakerBot and Wildfire, both of which were invested in by 500 Startups, have made 10 to 20 times the profits, and they were eventually acquired by Stratasys and Google, respectively. Local online TV service start-up Viki successfully struck an M&A deal with Japanese electronic commerce and Internet company Rakuten, as the Korean company was recognized to be worth 10 times more than the invested amount.
A fund of funds and foreign investors will each pitch in half of the money for the acceleration fund, which will be created sometime in March. In addition to its investment, 500 Startups is going to nurture Korean start-ups in Silicon Valley for 4 months and help venture capital firms in the area provide after-investment support.
In particular, the PayPal Mafia is showing interest in Korean mobile payment technologies. Dave McClure highly praised the growth potential of startups in the country related to the mobile industry. He said, “I would like to take this opportunity to widen our investment portfolio to the field of consumer goods, enterprise-centered solutions, mobile devices, tablets, and video, and to cultivate promising companies as well.”
Peter Thiel, who visited Korea on Feb. 25, reportedly exchanged opinions with Samsung Electronics with regard to cooperation in mobile payment services. Following its agreement with KDB to create a global partnership fund last year, Thiel Capital is also planning to make an investment worth 100 to 200 billion won (US$90 to $181 million) in mobile start-ups in the nation during the first half of this year.