Invest KOREA

Investing in Potential

BlueRun Ventures’ Korea branch backs companies with the potential to go global

If you really want to impress the partners of venture capital firm BlueRun Ventures, try biking. For hours at a time.

This is the sort of thing Yoon Kwan, head of the multinational firm’s Korea branch, looks for. Start-up companies needing investors don’t have much data or experience to show. Sometimes they don’t have much staff either. But must-haves from day one are passion and endurance.

“Passion has to really fight the hurdles and challenges,” said Yoon, one of BlueRun Venture’s four partners.

The company invested in the online electronic payment service PayPal and its co-founder Max Levchin when all they had was a business plan. Levchin bikes six to eight hours straight. Silicon Valley’s entrepreneurs are very fit as well, Yoon mused.

“It’s not really money that drives them, but it’s more passion and business. They like to build and accomplish,” he said. “That’s the kind of thing I’d like to see more of in Korea.”

BlueRun Ventures, headquartered in California and founded in 1998, opened its Korea branch ten years ago. It also backs entrepreneurs in the U.S., China, India, Israel and Europe to help them globalize their businesses. The company operates four funds globally and has about $1.3 billion in total assets under management.

The Korea branch has invested in about 10 companies, including Eazymode, Vantage Holdings, HI-DIS, HK Hi-Tech and Widerthan, its first investee. Today the branch has two investment professionals in addition to Yoon and manages seven companies.

It also has a new office. The branch moved a couple months ago from a bustling business district to an office less near the action and just off the highway - both of which are pluses.

“We’re on the road most of the time,” said Yoon. “Most of our companies are very young, don’t have plenty of cash. So they stay sort of outside the core location.” Yoon, who is responsible for the markets in Korea, the U.S. and China, spends most of his days visiting his investee companies. He often does everything from sales to hiring for these young and sometimes understaffed firms. His is a “labor-intensive” management job that involves much more than just providing funding.

“We’re more like farmers,” Yoon said. “We have to pick the right field and see the right things fit for that field - soil and weather and all that.”

In practical terms, these criteria translate into a company’s potential for globalization, passion, skillset and communication ability. Yoon and his partners evaluate 10,000 business plans a year. They make 10 to 20 investments annually and typically recoup investments in four to six years. The partners invest mainly in companies in the IT industry and are interested especially in Korea’s media/entertainment sector, Internet commerce and core semiconductor technologies.

This wasn’t always the case. When the company was founded in the late 90s, it was called Nokia Ventures and Nokia was its only investor. This brand helped the founders build a reputation and attract entrepreneurs. But when the telecom market experienced a major shift in 2005 and most traditional industries went digital, new media was born. Yoon and his partners decided they could invest in a broader range of industries as an independent brand. Nokia Ventures became BlueRun Ventures - because “the globe is blue and we run globally,” Yoon said - and today Nokia is one of the company’s many investors.

Global potential is especially important for Korean companies because the country’s market is comparatively smaller and entrepreneurs must look beyond Korea. But with plenty of interesting technologies and mobile value-added services that can be exported globally, not to mention a talented and tenacious workforce second to none when it comes to speed, Korea is an interesting market for BlueRun Ventures, Yoon said.

Just look at the success of Widerthan, a company best known for the widely downloaded ring-back tone service, or color-ring. Its products and services were initially tailor made for a Korean carrier, but BlueRun Ventures brought in experts from Nokia and others to make Widerthan’s offerings fit the European and American markets.

“We came up with a pretty interesting Koreanized kind of Western model in terms of product management and sales and marketing,” Yoon said. “So everything turned out great.”

Of course, it wasn’t easy. Globalizing companies never is. Cultural differences in management and business processes can make progress tricky. And business patterns established last year could be wrong for this year. This is where things like biking and the other details of a CEO can make a critical difference.

Being in what Yoon calls the “people business,” BlueRun Ventures looks closely at the capabilities, track record, mindset and personality of a company’s CEO, and how compatible all that is with BlueRun’s values and philosophy. The core tenets are: respect people, innovate and endure.

Innovation is something Yoon tries constantly to achieve with his companies and himself. It’s about continuously refreshing your thinking and what you believe in an environment where the market, the product and consumer demands change with time.

“The funny thing is, almost 80 to 90 percent of the original business plans that we funded - that’s not really the business model they end up with,” said Yoon. “And that’s a good thing.”