KB Financial launches $193 million fund to invest in global startups

South Korea’s second-largest financial institution KB Financial Group will launch a 250 billion won ($193 million) fund to invest in startups at home and abroad, a move that should partially quench startups’ thirst for capital at a time of dwindling investment from venture capital firms amid growing recession fears.

KB Financial Group announced on Friday that its financial affiliates, including KB Kookmin Bank, KB Securities Co. and KB Insurance Co., will jointly invest 200 billion won in a new 250 billion won worth startup fund, dubbed KB Global Platform Fund II.

The remaining 50 billion won will be pooled from five companies under Korea’s biggest cosmetics contract manufacturing group Kolmar Korea, which supplies its products to global cosmetics brands such as Estee Lauder.

The fund to be managed by KB Financial’s venture capital arm KB Investment Co. will invest in both domestic and overseas startups with promising technologies and ideas to nurture them into unicorns with an enterprise value of over $1 billion.

The fund manager plans to earmark up to 30% of the fund for local startups while investing the rest mostly in startups in Southeast Asia and India, as well as American bio and healthcare startups.

The new startup fund comes at a time when novice companies in their early development stages are grappling with a funding winter as the global VC market has remained subdued since last year with a fizzled tech boom.

Startup investor sentiment has turned sourer after Santa Clara, California-based Silicon Valley Bank, a main coffer for startups and VCs, went bankrupt early this month.

KB Financial’s new startup fund is the second of its kind. The Korean financial group formed the 220 billion won KB Global Platform Fund I in 2019.

The first fund has enjoyed handsome returns from its investments in Grab Holdings Inc., the so-called Southeast Asian Uber operator, and other Southeast Asian startups in the used car dealing platform, buy now, pay later (BNPL) short-term financing and insurtech sectors.

Write to Bo-Hyung Kim at kph21c@hankyung.com

Sookyung Seo edited this article.