"Venture Industry Investment Sentiment Shrinks... Government Needs to Play a Catalyst Role"

Yoon Geon-su New Venture Capital Association Chairman
"Mother Fund Budget Size Reflects Government's View"
Reorganizing and Accumulating Venture Investment Data to Propose Policies and Systems

On the morning of the 23rd, at the Grand InterContinental Seoul Parnas on Teheran-ro in Gangnam-gu, Seoul, over 70 people, including executives and employees of member companies of the Korea Venture Capital Association, Woo-Whan Yoo, CEO of Korea Venture Investment Corp., Jung-Wook Lim, Director of the Ministry of SMEs and Startups, and Sung-Moo Heo, CEO of Korea Growth Finance, gathered here one after another. It was the venue for the '1st Expert Invitation Technology Seminar' hosted by the Korea Venture Capital Association. Sunwoo Kim, Semiconductor and Display Research Fellow at Meritz Securities, gave a detailed explanation of semiconductor market trends and prospects to the attendees.

This seminar was arranged as one of the tasks to be promoted during the tenure of Yoon Geon-su, the newly appointed chairman of the Korea Venture Capital Association who took office on the 17th of last month. Chairman Yoon stated that after his inauguration, he would focus on ▲reorganizing venture investment-related data ▲member company education ▲policy and system improvements for venture industry growth. He said, "Although 190 member companies, including private equity funds and new technology business finance companies, each pay an average of 8 million KRW annually as membership fees, there was no particular merit to highlight. From now on, we will invite experts once a month to share the latest trends and information and open a place for exchange where networks can be expanded, so that it will be practically helpful to member companies."

During the process of electing the 15th chairman of the association, there was a twist as multiple candidates appeared for the first time since the association's inception, causing the election to be postponed once. Chairman Yoon laughed, saying, "How many ordinary people would know about the Venture Capital Association? Thanks to the happening, it turned into a blessing in disguise that created excitement." Chairman Yoon is also a veteran venture capitalist with over 20 years of experience. He founded DSC Investment in 2012 and surpassed 1 trillion KRW in assets under management (AUM) in about 10 years. We recently met him at the DSC Investment headquarters in Seongsu-dong, Seoul.

Yoon Geon-su, Chairman of the Venture Capital Association. Photo by Heo Young-han younghan@

- The financial sector is unsettled due to the Silicon Valley Bank (SVB) and Credit Suisse (CS) incidents. Is the domestic venture investment market also affected?

"I don't think there will be any immediate major problems domestically. However, psychology largely governs investment. Although the SVB and CS incidents have passed a critical point, we cannot be confident that it is over. Anxiety and uncertainty remain. Especially in times like these, people tend to flock to safe assets. Investments also tend to favor short-term over long-term. This is an unfavorable condition for venture capital."

Chairman Yoon expresses regret over the government's reduction of the mother fund budget. This year's mother fund budget is about 313.5 billion KRW, down 40% from last year's 520 billion KRW. With high interest rates causing money to circulate poorly and the SVB and CS incidents occurring, the mother fund budget, which played a role as a primer for venture and startup investments, has also decreased, worsening the 'drought' of funds in the venture investment industry.

- You mentioned the need to increase the mother fund budget.

"Risk capital and interest rates move inversely. When interest rates are high, money does not flow into risk capital. I believe the size of the mother fund budget reflects the government's stance. The government needs to drive this forward. They should either increase the mother fund budget or quickly create mechanisms to supply money to the market. Especially, they need to send a signal that 'Ah, money is being supplied to the market' to revive investment sentiment. The government should send messages that encourage venture capitalists to want to use their dry powder (funds raised but not yet invested)."

- Will they increase the budget again after already cutting it?

"Data is important. No one knows exactly how much venture investment occurs in a year. Venture investment-related data is scattered across various ministries and the private sector. Accurate data is necessary to propose policies to the government. When demanding an increase in the mother fund budget, data must support the request. If we can talk with data about how much employment increases when 100 million KRW is invested, or how many new industries have been created and developed through venture investment, negotiations become simpler. This is why reorganizing venture investment-related data is one of the association's tasks."

- Any ideas on how to consolidate venture investment data?

"I believe all data is with startups. We invest in about 2,000 companies a year, and startups can provide core data. According to plan, from 2024, we will be able to aggregate how much investment startups have received over a year. In fact, it becomes cumbersome when the private sector and government each produce statistics. Collecting information solely from startups simplifies the process."

Chairman Yoon graduated from Kyungpook National University with a degree in electronic engineering and started his career at LG Group. While working at LG Electronics, he had the opportunity to study at MIT, where he earned a master's degree in business administration. During his time at MIT, he witnessed prestigious university students competing in startup contests and leading venture capitalists creating added value, which opened his eyes to venture capital. After returning to Korea, he worked at LG Telecom (now LG Uplus) before joining Korea Technology Investment (now SBI Investment) in 1999 to build his venture investment career. He later served as head of corporate investment at LB Investment, a venture capital firm affiliated with the broader LG Group, and founded DSC Investment in 2012, which he listed on KOSDAQ in 2016. DSC Investment is an independent firm without a parent company and has grown into a large venture capital firm with over 1 trillion KRW in AUM. Thanks to this, he received strong support from many member companies and took office as chairman of the association. He also has a strong will for change.

- Why do you want to change the association's name to 'Korea Venture Investment Association'?

"We have used the name Korea Venture Capital Association for over 30 years. In the past, venture investment was centered on venture capital, but that is no longer the case. The spectrum is expanding to include securities companies, insurance companies, banks, and more. Currently, venture capital represents only about 60-70% of the venture investment industry. There is also a consensus that member companies should be increased to expand and improve venture investment-related systems, education, and policies."

- How is the situation for venture capital?

"Due to the economic downturn, assets invested by venture capital are becoming impaired. Many are struggling due to the recession and high interest rates. In the past, startups basically raised funds at zero interest rates, so growth was much more important than profits. This is why platform companies grew rapidly. Now, profits are important, but most startups lack experience in generating profits. It is difficult to expect the same investment returns as before. Large venture capital firms will somehow endure, but smaller ones are in a tough situation. Polarization is a concern."

- What are the recent investment trends?

"Until now, bio, platform, and commerce sectors were popular, but recently, money is flowing into deep tech, artificial intelligence (AI), and mobility sectors. Although the bio market has shrunk significantly, I believe this year or next could be the best vintage (year the fund was raised) for the sector. It is time to invest in bio companies with global growth potential."

*Who is Chairman Yoon Geon-su?

Born in Daegu in 1962, he graduated from Kyungpook National University with a degree in electronic engineering and earned an MBA from MIT. He discovered venture capital during his studies at MIT. He worked at Korea Technology Investment (now SBI Investment) and LB Investment before founding DSC Investment in 2012. He took office as the 15th chairman of the Korea Venture Capital Association last month.

[Interview by Seung-ryul Nam, Head of Securities Capital Markets Department · Edited by Kwang-ho Lee]