SK Networks to expand investment in tech firms for future growth

SK Networks Co., the general trading and rental arm of South Korea’s third-largest conglomerate SK Group, will expand direct funding for tech startups at home and abroad to utilize their innovations in nurturing its own growth engines under the founding family’s third-generation leadership.

“SK Networks’ global investment business will play a critical role in building a bridge between existing businesses and future opportunities and enriching the company’s value,” SK Networks’ President Lee Ho-jeong said at the company’s first-ever global general investment meeting held on Tuesday in Seoul. “Investment is a must to sustain business in general.”

Since SK Networks started its first early stage startup investment in 2018, it has so far injected about 210 billion won ($161.9 million) in 20 local and overseas startups, including Kurly Corp., the operator of Korea’s next-morning grocery delivery pioneer Market Kurly; Standard Cognition Corp., an artificial intelligence-based autonomous payment system developer; and Sabanto Inc., developer of self-driving software for tractors.

It boasted more than a 30% internal rate of return (IRR) as of the end of 2022.

SK Networks started its early stage investment in foreign companies through global top-tier funds, and then gradually increased direct investment in foreign startups after setting up Hico Capital LLC in Silicon Valley, California in 2020.

The company actively uses its global investment network dubbed Hico System, which consists of some 220 investors, entrepreneurs, legal experts and finance specialists, for direct investment, according to SK Networks.

The company ramped up its direct investment after its investment management system had stabilized, said Jung Han-jong, head of SK Networks’ Global Investment Center. The company will also introduce its investment targets to other investors interested in early stage startups in the US, added Jung.

SK Networks is seeking to invest more in future technologies especially in the digital transformation, Web3 and sustainability sectors as part of its efforts to find new growth engines.

THIRD-GEN LEADER CHOI SUNG-HWAN TAKES THE WHEEL

SK Networks’ transition into an investment company from a general trading and rental company has picked up speed after Choi Sung-hwan, the eldest son of SK Networks’ former Chief Executive Choi Shin-won and a nephew of SK Group Chairman Chey Tae-won, joined the firm in 2019.

Choi, the third-generation leader of the founding family, successfully led SK Group’s first startup investment when he was with SK Inc., the group’s holding company. He is now SK Networks' president and chief operating officer (COO).

The company in April 2022 unveiled a plan to buy an outside company with its 1.4 trillion won cash reserves to accelerate its shift from trading and rental services. Earlier that year, it invested several tens of millions of dollars in two US startups to diversify its business portfolio.

At SK Networks’ first annual global investment meeting on Tuesday, he vowed to contribute to global innovation by diversifying the company’s business portfolio with its investment network and management system.

“SK Networks will use expertise built with its previous investments in Silicon Valley to play a gatekeeper role in global innovation,” SK Networks’ President Choi said in his opening remarks at SK Networks’ global general investment meeting.

SK Networks Global Annual General Meeting was attended by about 150 professionals from the investment industry and startup CEOs.   

Write to Jae-fu Kim at hu@hankyung.com

Sookyung Seo edited this article.