SM Entertainment founder invests $5.2 million in Mindlogic

K-pop pioneer SM Entertainment Co.'s founder and former Chief Producer Lee Soo-man is expected to invest up to 10 billion won ($7.5 million) in Mindlogic Inc., a South Korean startup that is developing large language models (LLMs) and conversational artificial intelligence models.

According to the Korean startup industry, Mindlogic raised 7 billion won from Lee in Series B funding in January. Lee, the sole investor, is said to be in talks with the startup to invest an additional 3 billion won, the sources added.

With Lee’s funding in January, Mindlogic has attracted a total of 12 billion won since its founding in 2019. Other investors include DSC Investment Inc., Strong Ventures, Tekton Ventures and Partech Partners.

Mindlogic focuses on the development of AI agents, which refer to AI tools capable of autonomously performing complex tasks, from prompt to product. It offers such solutions with chatbots.

Its main product is Persona Chatbot, which can converse in a human-like way with a unique personality and knowledge of a certain person based on training. It is powered by OpenAI’s ChatGPT combined with the startup’s unique dialogue engine to generate conversations.

Thanks to Mindlogic’s proprietary long-term memory technology, dubbed Persona Engram, Persona Chatbot can remember not only the names of its conversation partners but also their prior conversations, allowing it to deepen its understanding of human partners’ feelings and moods so it can have more intimate dialogue with them, according to the company.

Lee is said to be placing high hopes on Mindlogic’s technology development and the broader applicability of the chatbot service.

PERSONA CHATBOT TO GO GLOBAL  

Despite its ability to learn people's personalities through training, Persona Chatbot is said to be safe from privacy risk thanks to its personal data and intellectual property (IP) protection technology.

Persona Chatbot’s AI technology detects IP-related information in conversations and stores this information in a separate server to prevent it from being used in machine learning.

It is also enhanced with hallucination inhibition technology, which minimizes the risk of generating false information or unethical dialogue, the company said. Persona Chatbot is also capable of voice conversation.

Mindlogic plans to use the latest funding to advance its technology, as well as expand IP partnerships and its presence at home and abroad.

It also has other types of tailored chatbots that can be used to provide customer service on e-commerce sites to improve shopping experiences and promote product purchases.

It also offers a sales chatbot, which provides product or service information to potential customers and collects information necessary to propose solutions tailored to customers' needs and interests.

Meanwhile, its website chatbot aims to boost engagement among website visitors.

LEE HUNTING FOR GOOD INVESTMENTS

Mindlogic is one of a few promising startups that former SM Entertainment’s Chief Producer Lee has invested in. 

He has ratcheted up his investment activity since leaving Korea’s pioneering entertainment company, home to NCT, Red Velvet and aespa, after selling his 14.8% stake to HYBE Co., the music company behind K-pop sensation BTS, for more than 500 billion won in early 2023.  

With the proceeds, Lee invested in Korean biotech company ProGen, a new-drug developer, and Chinese drone producer EHang last year.

He is also expected to reap a handsome profit from his 1 billion won investment in Pablo Air Co., a Korean drone startup, in 2019.

Pablo Air is said to be seeking to go public this year with a valuation of more than 100 billion won. Lee is the second-largest stakeholder of the startup with 20%.

Lee still holds a more than-3% stake in SM Entertainment.    

Write to Joo-Wan Kim at kjwan@hankyung.com
Sookyung Seo edited this article.