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Startups

Korean unicorns winning talent war against global IBs

Money, freer corporate cultures and better working conditions lure junior bankers from traditional ambitions

By Aug 17, 2021 (Gmt+09:00)

5 Min read

A startup fair in Seoul
A startup fair in Seoul

South Korean unicorn startups are soaking up talent from global investment banks (IBs) and brokerage houses. Junior and senior financial market specialists in the country are pursuing more money with relatively freer corporate culture, abandoning conservative corporates, just as their peers in the United States are leaving Wall Street for Silicon Valley.

Former top investment bankers have already taken key posts at local unicorn companies, privately held startups valued at more than $1 billion. Bae Dong-keun, who previously led JPMorgan's IB unit in Hong Kong, is working as the chief financial officer at Krafton Inc., the developer of PlayerUnknown’s Battlegrounds (PUBG); while Kim Jong-hoon, who worked for Morgan Stanley, is occupying the same position for Kurly Inc., the operator of premium grocery delivery platform Market Kurly. Peter Song, previously responsible for property investment at Merrill Lynch and Blackstone, has also taken a senior role in the Kurly team. And before the country’s largest travel startup Yanolja scouted Choi Chan-seok as its chief investment officer, Choi was an analyst at KTB Investment & Securities Co. and then CFO at Netmarble CFO.

Biotech firms also attract financial market gurus with high salaries and positions, as well as stock options. Shin Jae-hun, a former pharmaceutical and bio industry analyst at Hanwha Investment & Securities, moved to LabGenomics Co. as its CFO. Koo Wan-seong, a former analyst at NH Investment & Securities, became the CFO at Geninus Inc.

“Unicorns are aggressively recruiting capital market experts for listings, investment attraction and asset sales as ample liquidity is flooding into the startup market,” said a brokerage industry source.

That is not only the case in South Korea. Wall Street has been increasing its offering salaries for fresh graduates by up to $160,000 in a move to lure young talent, but the graduates are increasingly choosing tech startups in Silicon Valley and venture capital firms. 

“Korea is also moving into a tech-oriented era rather than finance, given the workforce movement,” said the chief executive of a South Korean brokerage house.

EMPLOYMENT BLACK HOLE

Earlier this year, a global IB branch in South Korea scouted a manager-level employee from a medium-sized local brokerage in a rush, as a manager with four years' experience moved to a startup when it was advising a major mergers and acquisition deal. The brokerage also recruited from a consulting company and an accounting firm to fill empty positions.

“Startups have already settled at the top of the talent pyramid,” the brokerage head said.

In terms of job preference, promising startups take first place, private equity managers and venture capital firms are second tier, followed by consulting firms and IBs, he explained.

Local unicorn startups are alluring young financial market experts with relatively freer corporate cultures, equal decision-making structures, and a sense of accomplishment from rapid growth in addition to high salaries.
Krafton's headquarters 
Krafton's headquarters 

JPMORGAN, MERRILL LYNCH ARE NO EXCEPTIONS

Global IBs such as JPMorgan and Merrill Lynch in South Korea are suffering a workforce shortage as their employees are moving to startups.

Major private equity firms (PEFs) are facing similar issues. A manager-level employee at Bain Capital’s Seoul branch moved to Netflix recently. A two-year experienced employee at a local PEF, which manages a 1 trillion won ($849.1 million) blind fund, moved to a startup. Kim Taeheon, which had worked for Hahn & Co. and Citigroup in New York, established the startup DataHunt.

Startups are absorbing IB professionals as they can immediately use them for listings or investment attraction. In addition, they can show potential investors at home and abroad that they have a pool of talent from IBs.

Mobile marketplace platform Danggeun Market, whose value is estimated at 3 trillion won, and Yanolja -- into which Vision Fund, led by billionaire SoftBank founder Masayoshi Son, has decided to invest around $2 billion -- are contacting people with IB or investment experience.

Viva Republica Inc., the operator of mobile financial platform Toss, recruited from global institutional brokerage and investment group CLSA Ltd., and domestic LB Private Equity Inc. for its M&A and investment attraction unit. It hired a junior banker from JPMorgan last year to attract additional investment and for initial public offerings. Mathpresso, the operator of education learning platform Qanda, appointed Nahm Yeon-soo, which handled the IPOs at Citigroup, as its CFO. The company also brought in people from McKinsey & Company and Bain & Co.

MONEY ISN'T EVERYTHING

Junior bankers are eschewing grueling working conditions and the conservative corporate culture when seeking new opportunities. Global IB branches in South Korea have fewer chances to secure a mega M&A deal, which can generate profit for a whole year, so they usually work for several smaller transactions. And while the recent IPO boom has increased their workload, the IBs have not expanded the workforce in the Korean branches. Junior bankers in South Korea leave their offices around 2 a.m. on average. 

The vertical corporate structure in the local IB and PEF industry is also driving out junior bankers. Requests for performance bonuses, regarded as sensitive in the domestic industry, are also growing. Some junior bankers quit to work with their young startup peers who are pursuing their dreams, rather than suffer from South Korea’s unique sales culture, notably the hierarchical relationships with customers.

Some junior bankers also become disillusioned with the industry and inspired to move on as they see their “role models” taking the plunge. Last month, Ahn Jaehoon, who was a managing director at Morgan Stanley, became the head of SK Bioscience Co.'s Strategic Corporate Development Office. The move came even as the IB market is booming this year, indicating he may have given up millions of dollars in bonuses.

Some senior bankers said the industry needs to accept that it can keep high-end talent only for a short period of time. A medium-sized global IB head in South Korea recently promised young employees that he will help them move to a PEF or a startup if they work for two to three years with good performance. 

“It is meaningless to artificially keep talent when we cannot reverse money flows (to startups),” he said. “We are trying to persuade employees to work as efficiently as possible while they are with us.”

Write to Jae-Yeon Ko, Jun-ho Cha and Eui-Myung Park at yeon@hankyung.com
Jongwoo Cheon edited this article.
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