Forming Funds to Foster and Invest in Social Ventures
Interview with Doh Hyunmyung, CEO of Impact Square
Building a Circular Economy System with Lotte Chemical
Founded in 2010, Impact Square is an accelerator that nurtures and invests in social venture companies. It has fostered the growth of over 300 early-stage social ventures through various methods. From diagnosing the elements necessary for business expansion to pioneering sales channels, entering global markets, and attracting follow-up investments, it provides direction tailored to each company. It also supports quick decision-making for new business initiatives or business transformations.
In the investment sector, Impact Square began direct account investments in 2015, investing between 20 million and 50 million KRW in 25 companies. In 2020, it formed its first venture fund and currently manages assets worth 13 billion KRW, investing in 15 portfolio companies.
Impact Square has a competitive edge in creating collaborative structures by connecting large corporations with social ventures. In 2020, it partnered with Lotte Chemical to establish a circular economy system that produces eco-friendly products such as shoes and clothing using recycled plastic waste. Various social ventures participated in the recycling business, including 'Superbin,' which developed a circular resource collection robot, as well as 'LAR,' 'Beyond,' and 'Revelop.' Last year, when Lotte Group Chairman Shin Dong-bin visited the Gucci store in Hannam-dong, Seoul, the eco-friendly sneakers priced at 97,000 KRW that he wore and attracted attention were products made through this project.
Do Hyun-myung, CEO of Impact Square, said, "Lotte Chemical, which produces more than half of the PET in Korea, had many concerns about eco-friendliness but lacked an ecosystem for collecting, sorting, and spinning PET into yarn." He added, "We gathered mid-sized companies and social ventures to build a chain, and with Lotte Chemical's investment, we succeeded in commercializing the business." CEO Do actually emphasized commercialization over social contribution. Sponsorships tend to be one-off, but so-called 'profitable' businesses can be pursued sustainably by companies.
Eco-friendly sneakers that became a hot topic after being worn by Shin Dong-bin, Chairman of Lotte Group
Impact Square is located in Seongsu-dong, Seoul, where a social venture cluster has been established. As a first-generation social venture leader, CEO Do participated in the government’s social enterprise development project evaluation process and independently developed a model to quantify corporate social value. He said, "Until now, social value has often been regarded as a means to moderately package or promote companies," but he is confident that "from now on, whether social value is created will be an indicator determining a company's success or failure."
CEO Do foresees that the global wave of ESG (Environmental, Social, and Governance) management will change the role of companies and market paradigms. He stated, "The COVID-19 crisis showed that even companies with sound financial conditions and good performance can collapse instantly," adding, "ESG management, a non-financial indicator, will indicate the level of preparedness for future risks." For example, companies making efforts to address climate change will be evaluated differently from those that do not, and they will receive different treatment in terms of fundraising, collaboration, and supply contracts.
He said, "Just as customers cannot be blamed for changing tastes, ESG has become an indispensable factor," and "an era will come when effectively solving social problems becomes a business competitiveness."
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