German VC firm collects $6 mn directly from Korean individuals

A number of wealthy South Koreans have committed 5.5 million euros ($6.1 million) to Germany’s Earlybird Venture Capital, in the first direct investment by Korean individuals in a European venture capital fund.

They committed between hundreds of thousands of euros and million euros respectively to the technology-focused European investor via Hana Financial Investment Co. Ltd., according to a source of the brokerage firm on August 14.

Hana’s private wealth management division has gathered the money from high net-worth customers since May, without launching a fundraising vehicle.

No additional capital has been raised from Korea for Earlybird Venture’s latest fundraising.

“Over the past few years, the internal rate of return of Earlybird Venture Capital amounted to 30% per year,” the Hana source told the Korean Investors. “Businessmen and high net-worth clients interested in venture capital investment rushed to the fund.”

In comparison, investing in domestic venture firms, if successful, hardly returns over 10% per annum because of their limited growth potential in the home turf.

Further, European venture capital firms seem more attractive than the US counterparts because they provide early-stage investment opportunities to South Korean investors.

The Berlin-based venture capital firm will receive the capital on a capital call basis from September. But it was unknown to which of the company’s funds they committed.

Market speculation is that Earlybird Venture happened to be introduced to Hana Financial’s private wealth management division for the fundraising. It was unclear whether the German VC investor intended to raise capital from Korean retail investors.

Founded in 1997, Earlybird Venture manages more than 1 billion euros and focuses on European technology start-ups.

Hana’s wealth management division, dubbed Club1, is one of South Korea’s biggest private banking service providers. It manages 4.3 trillion won ($3.6 billion) in assets.

Founders and owners of domestic venture and start-up firms are its key clients, and about 1,500 accounts are worth more than $1 million respectively.

By Hyun-il Lee

hiuneal@hankyung.com

(Photo: Getty Images Bank)