Large Corporations Increasing Investments in Startups

Investment firms and foundations associated with large corporations such as Hyundai, POSCO, and LG are continuing with their investments in startups to foster the growth of the venture industry.

One of the examples is the Asan Nanum Foundation, established in 2011 by the founders of Hyundai Heavy Industries. Its starting capital of 500 billion won (US$454 million) has gone to a number of startups, and its Chung Joo-yeong Startup Competition celebrates its fourth anniversary this year. Novato, which won the top prize in the second competition, was acquired by Pandora TV last year.

POSCO raised a fund of 20 billion won (US$18 million) four years ago and has created the POSCO Venture Partners program since then. The program is characterized by providing 1 billion won (US$909,000) or so, along with mentoring for young firms with brilliant ideas. More than 50 startups have benefited from the program so far. The developer of the Jikbang mobile application for real estate searches is one of the beneficiaries.

LB Investment, which was LG Venture Investment, has invested billions of won in each of its beneficiaries. For example, it invested 9 billion won (US$8 million) in 4:33, a game application developer, with Korea Investment Partners two years ago. It also invested more than 2.5 billion won (US$2.2 million) in Yellow Mobile, an association of 60 or so venture firms, and the mobile fashion platform of Style Share.

“In the past, big businesses’ investment in venture firms was more about corporate social responsibility and public relations,” said an industry expert, adding, “These days, however, they seem to be focusing on the growth of the venture sector, and startups have high expectations for their investment on their part.”