"Big Banks Expand Discovery of Innovative Companies... Securing Growth Engines Through Direct Investment (Comprehensive)"

Woori Bank Investment Target Companies Public Offering
About 10 Selected in First Half, Each Receiving Around 1 Billion KRW Investment
Shinhan Financial, Investing 33 Billion KRW in About 200 Startups
Korea Development Bank Provides Pitch Opportunities on Venture Investment Platform
Market Kurly, Gigbang, and Others Successfully Secure Investment

[Asia Economy Reporter Kangwook Cho] Banks are actively engaging in discovering innovative companies. This aligns with the government’s ‘Korean New Deal’ and ‘economic growth through innovation’ policies, as well as aims to find new growth engines through direct investment in innovative companies and future growth industries in preparation for the post-COVID-19 era. Commercial banks have launched startup incubation efforts not only through their own investments but also by linking with affiliates within their groups, while policy banks have established themselves as major supporters of venture companies.

Commercial Banks Discover and Invest in Innovative Companies through Startup Incubation Programs

According to the financial sector on the 14th, Woori Bank is conducting the ‘7th Public Offering for Investment Target Companies Supporting SME Innovation Growth’ until the 24th. Since establishing a system in June 2018 to directly invest in promising SMEs, Woori Bank has invested approximately 53 billion KRW in 55 companies through six public offerings up to last year.

Woori Bank plans to select about 10 investment target companies in the first half of this year through internal evaluations such as technology and business feasibility assessments, and invest up to 1 billion KRW per company using methods such as Redeemable Convertible Preferred Shares (RCPS). Additionally, selected companies will receive support including ▲professional consulting ▲follow-up investment attraction ▲Biz-Model partnerships.

A Woori Bank official stated, "Woori Bank actively participates in the group’s declaration of the first year of ESG management on the 11th and is preparing various projects to support the startup and growth of SMEs to fulfill social responsibility. In particular, we plan to continuously provide direct investment to innovative companies with excellent technologies related to the Korean New Deal to help them grow into core companies of our economy."

Shinhan Financial Group launched the country’s first financial sector startup incubation program, ‘Shinhan Future’s Lab,’ in 2015 and has discovered and nurtured a total of 195 innovative startups up to last year. The amount invested directly and indirectly during this period exceeds 33 billion KRW.

Recently, Shinhan Financial Group renamed its 17th subsidiary, Neoplux, acquired from Doosan Group for 73 billion KRW in September last year, to ‘Shinhan Venture Investment’ and announced a new start. As a dedicated venture investment company, Shinhan Venture Investment plans to focus on supporting and nurturing companies in key industries related to the Korean New Deal, such as bio and healthcare, and eco-friendly industries. It is actively collaborating with group companies; for example, two funds totaling 129.9 billion KRW formed last month after becoming a subsidiary included 39.9 billion KRW in contributions from affiliates such as Shinhan Bank, Shinhan Capital, and Shinhan Financial Investment.

‘KB Starters,’ a startup supported by KB Financial Group, reached a total of 111 companies as of the end of November last year. The cumulative business partnerships with KB Financial Group total 167, and cumulative investments exceed 50 billion KRW. Notably, on the 17th of last month, KB Financial Group signed a ‘Business Agreement to Support Fintech Companies’ with Seoul City and agreed to actively cooperate to revitalize the fintech ecosystem, including participating in overseas expansion programs.

Hana Bank signed a startup support agreement with Seoul City in July last year and supports startup discovery, growth, and investment attraction through ‘Hana Bank 1Q Agile Lab.’ Since its establishment in June 2015, the ‘1Q Agile Lab’ has discovered and nurtured about 100 startups up to last year. Recently, it held an online awards ceremony for the ‘Hana-Fintech New Business Idea Contest’ together with ‘Seoul Fintech Lab.’ Hana Bank CEO Sungkyu Ji announced in 2019 that the bank would invest 500 billion KRW in SMEs and venture companies and make equity investments worth about 20 billion KRW in promising startups.

NH Nonghyup Bank has selected over 120 supported companies through its startup growth support program, ‘NH Digital Challenge Plus,’ up to last year.

NH Digital Challenge Plus is a specialized incubation program that provides consulting in investment, legal, marketing, and finance fields, as well as business partnership opportunities with Nonghyup group affiliates, to help digital innovation companies concretize their business models and accelerate growth. The 4th batch of companies selected in October last year have been participating in the program for six months since November.

Policy Banks Become Major Players in Venture Investment Industry... Responding to ‘Korean New Deal’ Government Policies

Policy banks such as KDB Industrial Bank and IBK Industrial Bank have already established themselves as major players in the venture capital market.

KDB Industrial Bank’s representative venture investment platform, ‘KDB Next Round,’ has held about 400 investment rounds and approximately 1,500 investor relations (IR) sessions over four years since its launch on August 16, 2016. Among these, 357 companies including Market Kurly and Zigbang successfully raised about 2.1 trillion KRW in investments. Notably, the scale-up (growth stage) direct investment by KDB Industrial Bank to discover and nurture Korean-style unicorns reached 450 billion KRW as of the end of November last year, more than four times the 107.6 billion KRW recorded in the same period the previous year. Additionally, KDB Industrial Bank plans to establish a venture capital firm in Silicon Valley, USA, within this year.

IBK Industrial Bank recently selected 64 innovative startup companies in the first half of this year through its startup incubation program ‘IBK Changgong (創工).’ Since opening in December 2017, IBK Changgong has nurtured a total of 243 companies over three years until December last year. During this period, it provided 186.7 billion KRW in financial support such as loans and investments, and 3,192 non-financial support services including mentoring, consulting, and IR.

A commercial bank official said, "Investment in innovative companies by the financial sector will expand further in the future," adding, "This is not only in response to government policies but also because it can strengthen internal capabilities, enhance image, and have the effect of expanding new growth engines."