33 Billion KRW Scale, 5-Year Term, IRR 7%
Targeting Promising Startups with Yeongnam Region Entrepreneurs and Co-op Partners LP
[Asia Economy Reporter Kwangho Lee] Venture Capital (VC) Gyeongnam Venture Investment (GNVI) has formed its first project fund. Amid growing uncertainties such as steep interest rate hikes this year leading to tightened capital contributions, it has found a new breakthrough.
According to the investment banking (IB) industry on the 9th, Gyeongnam Venture Investment recently held the inaugural general meeting for the formation of the 'Gyeongnam Unicorn Investment Association No. 1.' The fund size is 3.3 billion KRW. However, it is currently in the process of increasing to 4 billion KRW. The maturity period is 5 years, and the internal rate of return (IRR) is set at 7%. The lead fund manager is Manager Wooseok Hwang.
The anchor limited partners (LPs) differ from previous funds in that they are individuals and corporations rather than the Korea Venture Investment’s mother fund. Regional leaders operating businesses in the Yeongnam area have bet tens of billions of KRW. In addition, the general partner (GP), Gyeongnam Venture Investment, and its subsidiary accelerator Co-op Partners have contributed some funds.
The background for raising capital through entrepreneurs lies in the strategy of expanding the startup ecosystem. It created opportunities for local businesspeople to invest in early-stage companies through a regional venture capital. This established a virtuous cycle where money circulates within the region. Starting with Unicorn Investment Association No. 1, plans are in place to create a series with No. 2, No. 3, and so forth.
Simultaneously with the fund formation, an investment of 3 billion KRW was made. The maiden investment target is Apicell Therapeutics. Apicell Therapeutics, a joint venture between Daewoong Pharmaceutical and UK-based Avacta Life Science, is a developer of next-generation cell and gene therapies.
A representative from Gyeongnam Venture Investment said, “We focused on the development of a new fusion platform that overcomes the technical limitations of existing stem cells and antibody mimetics,” adding, “Following Apicell Therapeutics, we will secure additional portfolios by adding the remaining and increased investment funds.”
Gyeongnam Venture Investment is the only venture capital company in Gyeongsangnam-do. It is a newly established house launched in September 2019. It holds the title of Korea’s first venture capital company established through a public-private-financial sector partnership. Major shareholders include Daehan Steel (59.6%), Nonghyup Bank (10.6%), Gyeongnam Bank (10.6%), and Gyeongnam Creative Economy Innovation Center (8.5%).
Because of this background, it is inherently taking a different path from typical venture capitals. It contributes to channeling venture capital funds concentrated in the metropolitan area into the Gyeongnam region. Investing exclusively in a specific region is an unusual practice in the industry.
The first fund was the ‘Gyeongnam Reverse Innovation Investment Association (20 billion KRW)’ formed in December 2020. At that time, 12 billion KRW was secured through the Korea Venture Investment’s mother fund, and the remaining amount was filled by local financial institutions. Then, in December 2021, it partnered with accelerator Zephyrus Lab to jointly operate the Co-GP fund ‘Smart New Deal Innovation Industry Investment Association (17.6 billion KRW).’
Currently, it operates three funds: Gyeongnam Reverse Innovation Investment Association, Smart New Deal Innovation Industry Investment Association, and Gyeongnam Unicorn Investment Association No. 1. The current assets under management (AUM) total 40.9 billion KRW.
The total fund size is expected to increase further. Earlier in February, it was selected as the general partner (GP) for the Southeast region New Deal Venture Fund (20 billion KRW) of the mother fund, and last month it secured the GP position for the mother fund’s regional angel stepping stone fund (6.1 billion KRW). Unless there are unexpected changes, the AUM is expected to reach 70 billion KRW within the year.
So far, it has invested a total of 15.5 billion KRW and secured 22 portfolio companies. Among them, it has invested more than 12 billion KRW in companies located in the Southeast region, fulfilling its founding purpose. Representative companies include Apicell Therapeutics (bio), People & Story (content), and Giant Chemical (specialty materials).
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