Investing in Korean startups can be a tough job for venture capitalists. Despite amazing growth over the last two to three in the Korean venture ecosystem, we will have to wait for a further five years or more to see the fruits of this second push for a creative economy in Korea over the last ten years.
As we know, VCs base their earning potential on few successful investments that can generate enormous returns. While there have been some structural changes in the Korean startup ecosystem lately that have dramatically improved the situation for Korean entrepreneurs, we are still working towards a number of highly successful exits that can power the next wave of entrepreneurs and create a self-perpetuating virtuous circle of entrepreneurship.
For now, startups are still very much in survival mode in Korea’s burgeoning, yet immature, ecosystem. In this difficult environment, K-Cube Ventures, an early stage investor in Korean startups, has adopted a Silicon Valley model for its investment apparatus, and has emerged as one of the key players supporting entrepreneurs.
In the Korean startup world, where money is practically a non-issue (there is so much of it available), the issue is finding great teams that are building amazing products for high-potential markets. K-Cube Ventures is a front-runner in this charge, and here’s a bit more about the company.
K-Cube Ventures was founded by two prominent figures in the Korean startup world. The chairman, Brian Kim, is well-known for his highly successful ventures and executive abilities. As well as being a founding member of Korea’s largest internet company (NHN), which runs the country’s most successful portal site (Naver) and one of the world’s most successful messaging apps (LINE), he is also now also the Chairman of Korea’s multi-billion dollar social media company, Kakao.
Brian Kim met Jimmy Rim, who operates as the co-founder and CEO of K-Cube Ventures, in 2010 when Kakao was still a growing company. With his extensive background in consulting and investing, Rim had already identified and invested in a number of promising startups like Lotiple and SundayToz by 2010. His ability came into Kim’s spotlight when they were discussing the acquisition of Lotiple by Kakao back in 2011.
A year later, Kim decided to establish a VC dedicated to early stage investing in pursuit of his goal of “cultivating 100 CEOs in Korea.” Rim was asked to lead the company, and subsequently became the youngest CEO running a VC firm in Korea.
Over the the last two years, since the inception of K-Cube Ventures in April 2012, the dream team has accomplished quite a lot. Now, the firm has around 22 portfolio companies with over $40 million total assets under management. There is $11 million in the K Cube Venture Fund and $30 million in Kakao Venture Fund. Its total accumulated investment amount since the inception amounts to $10 million.
Some of the noteable companies they’ve invested include Frograms, GreenMonster, Fincon and Kidsnote. Most recently, K-Cube Ventures invested in HealthWave ($470,000), Cherry Bugs ($470,000), and Red Sahara Studio ($370,000) as well. To achieve this the team reviewed more than 1,300 startups in 2013 alone, and currently tracks down 30 to 40 startups every week for initial screening and interviews.
K-Cube Ventures’ investment style is often quick and risky, in a similar way to how SV Angel’s investments play out. Investment decisions are made mostly under Rim’s lead, which makes the process more streamlined and efficient. This can create the risk of having a less diversified portfolio, but the investment strategy is more focused on the qualitative aspects of startups and entrepreneurs, with a massive emphasis on the team and their background. Numbers do matter, but they are not the deal-breakers.
At the core of K-Cube Ventures’ investment thesis is the trust they put in the entrepreneurs. Rim has consistently emphasized that a startup needs to be “solving a problem” that nobody has attempted, and he wants the top talents out there to do so. If an entrepreneur is determined and committed enough, he believes that a startup can truly change the world. Companies that meet these criteria can receive not just financial support, but also managerial advice/coaching and access to extensive network that the firm has. K-Cube Ventures hosts a monthly “CEO day” for the portfolio companies, where both Kim and Rim often share their own experiences as well.
For a startup, having these exclusive networks and mentorship is vitally important. However, K-Cube Ventures does not provide incubating or accelerator programs like other VCs or institutional level investors in Korea. Rim strongly believes that it’s the entrepreneurs’ responsibility to excel in their own areas. Startups need to focus on what they do best, and prove that they can truly change the world.
As Rim mentioned in an interview, 2013 was a difficult year with no major breakouts, and 2014 is even more difficult to predict. However, like any other startup company, K-Cube Ventures will continue to focus on what it’s best at: finding and supporting promising entrepreneurs. As the Korean startup world becomes more diversified and more mature, K-Cube Ventures’ quest to nurture entrepreneurs is becoming more important than ever.
This story originally appeared on BeSUCCESS. Copyright 2014