Invest KOREA

Investing in Tomorrow’s Best
IDG Ventures Korea seeks to nurture mobile industry leaders

IDG Ventures is a company that follows the potential.

Back in 1992, when the information technology (IT) industry was fairly new in China, the company became the first foreign venture capital to enter the Chinese market. Some of the companies IDG Ventures invested in then ― Baidu, Tencent, Sohu and Xiaomi ― are now the Internet giants of China.

In the same spirit, IDG Ventures launched IDG Ventures Korea in 2007, seeing the abundant potential in Korea’s then fairly new mobile Internet service industry.

“We saw the potential in developing mobile powerhouses in Korea, as it was a land known for its fast broadband and mobile Internet environment,” said Matthew Lee, Managing Partner of IDG Ventures Korea.

Today, IDG Ventures Korea manages a USD 100 million venture capital fund and is interested in businesses that can become the best in their sector of the mobile industry, focusing on integrated services of local and mobile businesses. A couple notable businesses in IDG Ventures Korea’s portfolio are MycooN, a social charging service developer, and Cardoc, an auto repair app.

In addition to Korea, IDG Ventures has funds in China, India, Vietnam and the United States, where it is based. The company is a global network of venture capital funds with about USD 3.6 billion under management and a portfolio of more than 220 companies developed over the last 15 years. The IDG Ventures network comprises five independent partnerships that manage funds in North America and Asia. Each invests on behalf of its limited partners, which include the International Data Group (IDG), one of the world’s largest IT media companies.

IDG Ventures Korea has a ways to go to catch up with IDG Ventures China, but a couple recent successes show that the company’s investment strategies are working. IDG Ventures Korea invested USD 3 million in ACT Cosmetics, a cosmetic raw materials manufacturer, and the investment amount multiplied threefold with the company’s initial public offering (IPO). The company has also invested in a Japanese mobile game company slated for an IPO next year, said Lee, citing the opportunities to be seized through Korea in its neighboring markets.

“You will find the potential companies once you succeed in penetrating the market," said Lee.

The past few years have proven IDG Ventures’ choice of Korea to be wise. Korea’s KakaoTalk became the first to show how a mobile instant messenger could evolve into a social networking tool. And as KakaoTalk generated profits from its mobile game platform, Tencent invested significantly in it. There is also the success of Baedari-Minjok, a food delivery app created by Woowa Brothers that has written a new chapter in the delivery app market.

This year, Bloomberg ranked Korea the most innovative country in the world among more than 200 countries and sovereign regions on factors including research and development (R&D) intensity and manufacturing capability. Also, the Korean government aims to develop a “creative economy” that fosters convergence between industries and promotes startups. Perhaps this helps explain why Korea is poised to become a global tech startup hub and why more and more foreign venture capitals are interested in backing Korea’s technology-related entrepreneurs, according to a Forbes article earlier this year.

“Let’s put aside the market size and I agree in some part that Korea is like the Silicon Valley of the venture capital industry, especially the startup ecosystem,” said Lee.

The team of IDG Ventures Korea includes technological specialists and experts in business development / management, financial advisory services, corporate finance consulting, fund management and more. In addition to investing in Korean companies, IDG Ventures Korea works to build global companies here through looking for companies outside Korea that want to leverage Korean companies as offshore partners and/or plan to generate revenue in the Korean market.

As for what IDG Ventures Korea looks for in a portfolio company, it all comes down to teamwork.

“Usually, successful results can be achieved when the members of a startup company form a good team and what they are trying to conquer is a huge market where they can reach a product/market fit,” said Lee.

By Chang Young (young.chang@kotra.or.kr)