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Startups, Venture Capital

Homegrown VCs turn to Korean American startups in search of unicorns

Entrepreneurs of Korean heritage offer more than fiscal investment

By Nov 25, 2021 (Gmt+09:00)

Korean venture capital firms are ramping up their investments in Korean American-owned startups in the United States, mostly in Silicon Valley.

The aim is to build bridges between Korean investors and the US venture capital ecosystem, as well as to detect future unicorns, as privately held startups with valuations topping $1 billion are referred to. 

Primer Sazze Partners, a San Jose-based venture capital firm, is due to finalize its second fund, after raising 150 billion won ($127 million) on Nov. 19. The fund is aimed at investing in startups founded by Korean American entrepreneurs. 

The second fund’s main beneficiaries will be companies in the pre-seed to Series A funding. The initial ticket size will range between 600 million ($500,000) and 3.6 billion won ($3 million).

These CEOs will not only make financial investments but also provide management advice to startups led by fellow American entrepreneurs of Korean heritage.

▲FiscalNote is slated to go public in 1Q, 2022, valued at />.4 billion
▲FiscalNote is slated to go public in 1Q, 2022, valued at $1.4 billion

Tim Hwang launched FiscalNote in the spring of 2013, while finishing his degree at Princeton. He deferred his attendance to Harvard Business School in order to start the company with two of his friends from high school. 

Valued at $1.4 billion as of May, the company is slated to debut on the Nasdaq in the first quarter of next year. Since its beginnings as a state legislative tracking service, its clientele has expanded to include the CIA (The Central Intelligence Agency) and Tesla. 

Corporate messenger platform provider Sendbird and subscription-based healthcare startup Noom have also joined the ranks of unicorns that are stakeholders in the second fund. 

Back in May, Kakao Entertainment Corp. bought Webtoon platform Tapas Media for 600 billion won ($504 million).

Silicon Valley's Sazze Partners and Korea’s first accelerator Primer joined forces in 2018 to emerge as Primer Sazze Partners. The co-founders of Sazze are Kiha Lee and Greg Kwangrog Kim, who put together a $43 million fund and invested in some 50 Korean American startups.

DOMESTIC VCS ALSO BULLISH ON KORAM STARTUPS

Korea's Smilegate Investment is big on investing in startups in the US despite not having an American arm or affiliate. In late August, it participated in Swit Technologies Inc.’s Series A funding, worth $17.8 million. Swit is the provider of its namesake digital team collaboration tool. 

Other notable Korean American-owned startups include ad-tech company MOLOCO, maker of robot server Bear Robotics; AI-based forklift controller Motion2AI; and virtual reality content provider AmazeVR. 

Such investments are also made through locally incorporated companies. Korea Development Bank, Seoul's wholly owned financial institution, recently announced it will launch its own venture capital subsidiary dubbed KDB Silicon Valley in California. It is the first time a state-run Korean bank has set up a VC subsidiary abroad. 
KDB Bank launches Korea's first overseas VC subsidiary in November 2021
KDB Bank launches Korea's first overseas VC subsidiary in November 2021


KDB Silicon Valley, which has been open for a week, begins with total capital of $100 million. In the initial stage, it will invest only with its capital but plans to expand its investments through financial leveraging. 

The country’s biggest VC, Korea Investment Partners, and KTB Network, which is slated to go public this year, is also betting on the US startup scene.

An industry insider told The Korea Economic Daily that with venture capital markets on a growing trend around the globe, investors are taking note of Korean American entrepreneurs looking to support, and often mentor, other entrepreneurs of Korean heritage. 

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

Jee Abbey Lee edited this article.

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