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Korean fabless startups take center stage, attracts VCs

Digital transformation gains speed, increasing demand for semiconductors

By Aug 12, 2021 (Gmt+09:00)

Korean fabless startups take center stage, attracts VCs

South Korean fabless startups have taken center stage, attracting venture capital firms and institutional investors thanks to their advanced technologies alongside rising demand for semiconductors driven by the accelerated digital transformation.

The rosy outlook for the country's exit market is another driving force behind the increased investment, given that Korea has adopted a special listing policy that lowers the initial public offering barrier for materials, components and equipment makers.

According to the venture capital industry on Aug. 11, fabless startup Fadu Inc. is looking to raise around 15 billion won ($13 million) in a bridge round, in which existing stakeholders have already expressed the intent to make additional investments.

Fadu is a fabless startup that develops architecture for solid-state drive (SSD) controllers and storage products. SSD stores data using semiconductor chips, which allows for faster read and write speeds compared to hard disk drives (HDDs).

Since its inception in 2015, Fadu has raised funds from investors including Forest Partners, Reverent Partners, Company K Partners, Smilegate Investment and Capstone Partners. 

The company surprised the market when it developed a competitive flash storage solution for NVMe controllers, formerly produced only by tech giants such as Samsung Electronics Co. and Intel Corp. Thanks to its technological prowess, Fadu's valuation is estimated to be in the hundreds of billions of won.

Fadu is jointly led by Nam Eyee-hyun, a former researcher at SK Telecom Co., and Lee Jihyo Lee, a former partner at Bain & Company. At the end of last year, the company was selected as a pre-unicorn by the Ministry of SMEs and Startups (MSS).

Although Fadu has yet to post strong sales, it is deemed a promising startup, which is likely to go public in the next two to three years.

Furiosa AI chief executive, June Paik
Furiosa AI chief executive, June Paik

Meanwhile, artificial intelligence semiconductor startup Furiosa AI is also in the spotlight for its competitive technology. The company recently raised around 80 billion won from investors including Aion Asset Management Co., Naver D2SF and DSC Investment.

In 2019, Furiosa AI became the first Asia-based startup to be verified by MLPerf, the global AI semiconductor benchmark.

Rebellions Inc. founding team (from left): CTO Oh Jin-wook, CEO Park Sung-hyun, co-founder Shin Sung-ho, CPO Kim Hyo-eun
Rebellions Inc. founding team (from left): CTO Oh Jin-wook, CEO Park Sung-hyun, co-founder Shin Sung-ho, CPO Kim Hyo-eun

Also last month, AI startup Rebellions Inc. raised 14.5 billion won from investors including Kakao Ventures and Shinhan Capital. The startup has drawn attention as its founding team members are former veterans from global IT companies such as IBM, Intel and ARM Holdings.


Write to Jong-woo Kim at jongwoo@hankyung.com

Danbee Lee edited this article.

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