10 Years of Korea Social Investment... Interview with CEO Lee Sun-yeol
Thorough Pre-Screening... Excluding Greenwashing Companies
"ESG is the Investment Standard in Overseas Startup Ecosystems"
"Large corporations are putting their lives on ESG (Environment, Social, Governance). Only companies that can practice ESG management can survive in the market. Soon, a whirlwind will blow through the small and medium-sized enterprises and startup sectors as well."
Lee Soon-yeol, CEO of Korea Social Investment, a private non-profit accelerator (AC) celebrating its 10th anniversary this year (pictured), stated, "We have entered the beginning of an era never before experienced in history, where business and social value are integrated." Korea Social Investment forms funds together with companies and public institutions to invest in or provide acceleration programs for ESG startups that solve social problems with innovative ideas or technologies.
Unlike for-profit ACs that aim to grow companies and recover investment funds, the focus is on how sustainably social problems are solved. They have discovered and nurtured innovative startups in cooperation with IBK Industrial Bank’s IBK Changgong, KOICA CTS program, Korea Electric Power Corporation, National Health Insurance Service, and others. The impact investment funds disbursed so far, including loans and investments, amount to 61 billion KRW, supporting over 430 companies.
CEO Lee said, "If companies do not practice ESG management, they will not receive investments from global pension funds and sovereign wealth funds and will be shunned by general consumers. Small and venture companies supplying to large corporations have naturally come to a situation where they must practice ESG management." He added, "Only by swiftly transitioning to ESG management can businesses and investment opportunities be obtained. In overseas startup ecosystems, ESG has already become the standard for investment."
The smart farm solution company 'Uvalve,' nurtured by Korea Social Investment, recently entered the Vietnamese market and succeeded in cultivating Korean ginseng in collaboration with a local startup.
Korea Social Investment plans to play a directional role amid this ESG whirlwind. They are especially focusing on ‘problem-solving ESG.’ They carefully examine whether the founder’s business model innovatively solves problems that have not been addressed before and whether it contributes substantially to social development. For example, they do not simply invest in and support companies just because they are environmental companies. From the preliminary screening stage, they rigorously assess the company’s capabilities and business objectives. In this process, ‘greenwashing’ companies that are ESG in name only are filtered out.
Selected startups measure social impact through management diagnosis and enter scale-up phases with mentors who are field and practical experts. CEO Lee said, "We must prepare for a future where the boundary between social ventures and non-social ventures becomes blurred," adding, "It is necessary to support the sustainable growth of startups in the investment ecosystem, which has recently been drying up." Before joining Korea Social Investment in 2017, CEO Lee built expertise in international development cooperation at non-profit organizations such as Save the Children and the International Labour Organization (ILO).
Recently, they successfully supported the Vietnamese market entry of ‘AValve,’ an AI-based smart farm solution company. Within six months of business entry, they succeeded in cultivating Korean ginseng in Hanoi, Vietnam, together with a local accelerator and a smart farm hardware specialist company.
Korea Social Investment plans to expand the formation of donation-type funds going forward. They partnered with Hana Financial Group to invest in seven innovative companies through a 2 billion KRW ESG donation-type fund. CEO Lee said, "Through investment, we want to continuously expand social impact as a partner of startups," and added, "We want to expand positive influence together with various partners through donation-type funds and ESG investments."
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