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Korea's Venture Capitalists for Start-ups
 

Korea's Venture Capitalists for Start-ups

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We, at beSUCCESS, have received requests, many times and over from our overseas partners and associates in Europe, U.S, and Asia on the information about Korea’s financial systems and services for ...

We, at beSUCCESS, have received requests, many times and over from our overseas partners and associates in Europe, U.S, and Asia on the information about Korea’s financial systems and services for start-up companies, including venture capitalists (“VC”), angel investors (“angels” or “angel”) and government-initiated programs. (YES, we’re very very pleased by your interests in our actions! Thx!)

So, for all of those who are interested, now you have it!

We’ll cover all three segments for the following
weeks, and, of course, we couldn’t find
any better way to start than covering
Korea’s venture capital industry for start-ups.

So, here we go!

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Korea's Venture Capitalists for Start-ups Korea's Venture Capitalists for Start-ups Presentation Transcript

  • beSUCCESS Special Report Koreas Venture Capitalists for Start-ups June, 2012 EUNSE LEEThe contents in this documents are intellectual properties of bsSUCCESS Co. Ltd. of Korea, and the author. Commercial use of thecontents is prohibited. Should you have any requests or inquiries regarding commercial use, copying, and/or distribution of part orall of the contents, or should you have any comments or suggestions regarding the contents included in this document, pleasecontact beSUCCESS via E-mail (info@besuccess.com) or the author via E-mail (eunse.lee@besuccess.com).
  • 1/7We, at beSUCCESS, have received requests, many times and over from our overseaspartners and associates in Europe, U.S, and Asia on the information about Korea’sfinancial systems and services for start-up companies, including venture capitalists(“VC”), angel investors (“angels” or “angel”) and government-initiated programs.(YES, we’re very very pleased by your interests in our actions! Thx!)So, for all of those who are interested, now you have it!We’ll cover all three segments for the followingweeks, and, of course, we couldn’t findany better way to start than coveringKorea’s venture capital industry for start-ups.So, here we go! beSUCCESS Special Report – Korea’s Venture Capitals for Start-ups
  • 2/7Overview – Venture Capitalism in KoreaAccording to Korea Venture Capital Association #Registered VC in Korea(“KVCA”), as of end of 2011, 105 105 registered VC firms in Korea 100 9 New, 7 Closed in 2011 104 101 Operating total number of 417 funds and 95 97 100 103 105 approx. KRW 9,460 Billions. 90 In 2011, 67 new funds of over KRW 2,280 2006 2007 #VC Billions. 2008 2009 2010 2011 Source: Korea Venture Capital Association (“KVCA”) #VC Funds KRW_VC Funds (Billions) 9,459.9 417 366 393 7,618.5 350 332 336 6,579.0 5,659.8 4,892.5 4,927.2 #All Funds KRW_New Fund #New Fund KRW_All Funds 2,281.4 74 1,589.9 48 66 52 67 67 876.7 964.1 1,138.9 1,410.9 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 Source: KVCA Source: KVCA beSUCCESS Special Report – Korea’s Venture Capitals for Start-ups
  • 3/7Overview – Venture Capitalism in Korea, Weak Soil for Start-ups Number of Investments and the volume #New Investment Deals kept growing since 2008, despite the 557 526 497 global economy crisis, 478 442 Reaching up to 497 new investment deals 425 and KRW 1,086 Billion freshly invested by VCs Other Start-up(<1yr) 89 116 60 71 82 82 2006 2007 2008 2009 2010 2011 Source: KVCA Newly Invested Amount  %Start-up (<1yr) investment to 1,086 overall is about 14% in 2011. 941  %Early-stage (<3yrs) is under 28%, which is fairly lower than the 777 759 benchmarks, say U.S (about 33%). 663 614  Majority of investments (about 44%) Start-up(<1yr) is weighed heavily on Late-stage Other (7yrs<) or Mezzanine, while the benchmarks are showing 33-34%. 153 111 150 175  Considering 105 reg. VC firm, 1.1 71 90 start-up investment per firm. 2006 2007 2008 2009 2010 2011 Source: KVCA beSUCCESS Special Report – Korea’s Venture Capitals for Start-ups
  • 4/7Overview –Weak Soil for Start-ups, Why? And How to Enrich? Weak Exit Model for Investors: Exit Method • Majority of exit is done through IPO. Comparison • Reverted is shown in the benchmark. However, the windows of IPO possibilities are very slim in Korea, due to the strict listing regulations to KOSDAQ (the equivalent of U.S NASDAQ). 25.5 %KOSDAQ listed to all venture business is under 2% in 2011. 71 %KOSDAQ_Listed M&A 6.0% Source: KVCA 74.5 IPO 4.0% 2.0% 29 0.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Korea U.S. Source: KVCAHence, in order to enrich and support Korea’s start-up eco-system interms of venture capitalism, we need:• VCs specialized in start-up investment and incentives to promote their activities.• Instead of less feasible exit method of IPO, more focus in exit method on M&A, both domestic AND cross-border• More international or global capital and funds in Korea and having them strategically ally with Korea’s VCs in order to source deals, facilitate and bridge M&A deals between Korea’s Start-ups and overseas buyers.• Korea’s VCs to be more globalized in order to ease out the cultural, societal and/or legal issues and to diversify potential buyers pool. beSUCCESS Special Report – Korea’s Venture Capitals for Start-ups
  • 5/7Korea’s VCs for Start-ups, the Light Who Should I Go Talk To?In 2011, the average number of start-upinvestment per firm is 1.1. Average Portfolio ProfilePay attention to “average” part. Among the 105 100%registered firms, the majority of them is 80%investing exclusively in 3 yrs ++ 60%businesses, and/or in contents (movies, TV Otherdramas, etc.) production projects. 40% Start-up(<1yr)What does it mean? Well, it means if you’re a 20%start-up the first thing to do is to find the right 0%VC who would actually take you 2006 2007 2008 2009 2010 2011seriously, because apparently most of themwould not. So, we have handpicked Korea’s VCs that invest in start-ups.For those who are interested in the business opportunities with Korea’s VCs that take start-upsseriously, we have selected five VC firms that are in fact serious about being a good friend ofstart-ups from their track records, and recent and actual investment and supporting activities.So, Without further ado, these are the ones that you might as well go talk to: beSUCCESS Special Report – Korea’s Venture Capitals for Start-ups
  • 6/7Korea’s VCs for Start-ups SoftBank Ventures Korea (“SBVK”, http://ventures.softbank.co.kr) is part of the global VC arm of SoftBank – a Japanese network operator. SBVK was established in 2000 and has been operating funds worth of KRW 250 billion. Recently, Enswers (http://www.enswer.me), a start-up portfolio company of SBVK, was acquired by KT (Korea Telecom) and it brought the light again to SBVK’s portfolio. Their portfolio includes: Yahoo! Korea, Alibaba.com (the largest online marketplace in China), TNC (Acquired by Google in 2008). • More on Portfolio: http://ventures.softbank.co.kr/entry/portfolio_list • Contact: T. +82-2-3484-9000 // F. +82-2-3484-9010 Stonbridge Capital (“SBC”, http://www.stonebridge.co.kr/index_en.html) was spun off from IMM Investment Inc. as a VC firm in 2008. SBC’s portfolio includes TMON (K’s equivalent of Groupon, acquired by Livingsocial in 2010), Cyworld, and interestingly JYP (K- Pop producer). SBC, that is viewed as one of the VCs best suited for start-up investment in terms of its team configuration, is actively sourcing deals and investing in start-ups , and is also sharing some of its portfolio - Club Venit, Enswers, etc, with SBVK • More on Portfolio: http://www.stonebridge.co.kr/portfolio_en.html • Contact: http://www.stonebridge.co.kr/contact_en.html Coolidge Corner Investment (“CCI”, http://ccvc.co.kr/eng/index.html) is a young VC firm established in 2010 and is focusing heavily on start-up and early-stage investments. CCI is also running its own start-up competition programs for young entrepreneurs, which are open to both Korean nationals and foreign nationals. CCI operates its own incubating programs and invests up to 50% of the alumni. In upcoming July, CCI is scheduled to launch CCVC Incubating Fund, worth of KRW 15 billion (KRW 10B from FoF, and the rest from other LPs). • Contact: http://ccvc.co.kr/index.html?page=/eng/contents/e_1.html beSUCCESS Special Report – Korea’s Venture Capitals for Start-ups
  • 7/7Korea’s VCs for Start-ups One of the hottest firms in the community is K-Cube Ventures (“KCV”, http://kcubeventures.co.kr). The new firm which was kicked-off in 2012, consists of Beomsu Kim, the chair of KaKao (the service provider of KaKao Talk), as the chair, and Jihoon Lim, a rockstar VC from SBVK as the CEO and a partner. KCV is exclusively focusing on early-stage companies (including start-ups) in mobile and IT. The investments range from KRW 0.1 billion to KRW 1 billion. • More on Portfolio: http://kcubeventures.co.kr/family • Contact: External Relations – rosie@kcubeventures.co.kr Strong Ventures (“SV”, http://www.strongvc.com/index_en.php) is a Los-Angeles- based, new VC, established in 2011. SV was also born with the distinctive intent to invest in and incubate early-stage companies including start-ups. The firm was co-founded and co- led by Kihong Bae, a former Microsoft manager and the author of the best-selling “Start-up Bible”, and John Nahm, a former manager at Dialpad (acquired by Yahoo!) and a former VP of international banking at US Bankcorp. This US-based firm strongly focuses on, not only investing in start-ups, but also in supporting their portfolio companies to grow globally, leveraging their international business expertise. • More on Portfolio: http://www.strongvc.com/portfolio_en.php • Contact: http://www.strongvc.com/contact_en.phpThese two firms are new in business, and relatively small, too, but these boutique type of firms have a veryspecific intent to focus on the niche – early-stage and start-up companies. Especially Strong Ventures is aiming atstart-ups and early-stage companies that possess cross-border growth and success potential, and we believethat, as argued earlier in this presentation, it’s what we need to promote and enrich Korea’s start-up eco-systemin the long run. We hope you could find this presentation useful for your interests and should you have anyquestion, suggestion, and/or comment, please contact the author via E-mail at eunse.lee@besuccess.com.Thanks. beSUCCESS Special Report – Korea’s Venture Capitals for Start-ups