[Tried It! Angel Investment] "He Invested"… Overvaluation When Rumors Spread in the Industry

Interview with Kim Hyungseop, SAP Executive Director Active in WBAF
Korean Startups Should Prioritize Global Expansion
Recommend Open Mindset and Joining LinkedIn
Introducing Role Models and Spiritual Pillars in the Startup Industry

Editor's NoteChristopher Columbus, who discovered the New World, had Queen Isabel behind him, and the genius artist Leonardo da Vinci was supported by the Medici family. Spain's greatest architect Gaudi was able to freely create his works thanks to Guell, who supported him throughout his life. These individuals were patrons who quietly supported what might have seemed like reckless challenges from behind the scenes?in today's terms, 'angel investors.' This article contains a reporter's vivid experience of meeting angel investors who invest in early startups and participating in mock investments.

Are you familiar with the World Business Angel Investment Forum (WBAF)? It is a non-profit organization in official partnership with the Group of Twenty (G20) and the world's largest angel investment forum with participation from over 70 countries. There are two Korean senators in this forum: Executive Director Kim Hyung-seop of SAP, Germany's largest company by market capitalization, and Honorary Chairman Kim Dae-jin of the Global Youth Entrepreneur Foundation. Among them, we met with Executive Director Kim Hyung-seop to hear about the current status of our startups in the global market and the latest trends among various angel investors. We explored the investment principles upheld by so-called 'big-name angels' and their affection toward junior entrepreneurs.

Below is a Q&A with Executive Director Kim.

- Please introduce yourself.

▲ I am currently working at SAP, a German software specialist company. SAP started as a startup in 1972 and has grown over 50 years into Germany's largest company by market capitalization (approximately 215 trillion KRW). It is well known among IT industry professionals and has a market cap more than four times that of Hyundai Motor Company. My role involves explaining global trends and digital transformation to domestic corporate executives and discussing how to apply these to their businesses.

- What kind of organization is the World Business Angel Investment Forum (WBAF)?

▲ WBAF is an international non-profit organization that holds a global assembly once a year with participation from over 70 countries. Last October, it was held in Turkey, and this year it is scheduled for November in South Africa. You can think of it as having an atmosphere similar to the United Nations (UN) General Assembly. Its objectives include not only angel investment but also global balanced development and sustainable management. The delegates come from diverse backgrounds including venture capital (VC), accelerators (AC), economic sectors, public institutions, and academia. They attend sessions by field to share and collaborate on economic, political, social, and environmental issues of their countries.

- How is the status of our startups overseas?

▲ The external image of Korea as a country is good, and it is known to have a large national economy. However, unfortunately, the perception of Korean startups abroad is somewhat lacking. At WBAF assemblies, delegates from other countries often ask, 'Are there innovative startups in Korea?' or 'Are there any unicorns (unlisted companies valued over 1 trillion KRW)?'

- What should domestic startups do to make a name for themselves on the international stage?

▲ In the Korean startup industry, there seems to be a conventional belief that 'overseas market entry should be pursued after becoming number one domestically.' However, if you aim to follow the path of a 'second Coupang' that goes public in the U.S. after becoming the top domestic company, the chances of global success inevitably decrease. There are cases like baseball player Choo Shin-soo, who steadily grew abroad through hardships. Sendbird, which was founded in Silicon Valley and became a unicorn, is a good example. The priority for global expansion needs to be raised.

- What preparations should founders make for global expansion?

▲ There still seems to be a language barrier with English. However, Indians do not stand out in the startup industry just because they speak English well. The stereotype that you must be fluent in English can be discarded. Rather than worrying about receiving negative feedback due to poor English skills, it is better to have an open mind and focus on overcoming cultural differences. I recommend 'LinkedIn' as a global communication channel. When WBAF introduced Korean startups to overseas investors, some companies were suspected because they did not have LinkedIn pages. Nowadays, people abroad do not exchange business cards; they exchange LinkedIn accounts. Having about 1,000 followers establishes clear identity. Since LinkedIn is a global SNS, it is better to use English instead of Korean. You can easily translate languages using ChatGPT.

- How much experience do you have with angel investing?

▲ I have invested in more than 30 early-stage startups over the past four years. I have participated as a member of personal investment associations or invested independently. I am active in KOC, a founders' group composed of KAIST alumni, providing advice as a senior and mentor. In the past, I invested stably in fields I knew well, but recently I have been investing in very early-stage startups. Although there is risk, the impact of investment is greater in early companies, which makes it enjoyable. I pursue a sense of accomplishment rather than simply generating profit from investment. The direction and growth of a company can change significantly depending on the investor's capabilities.

- What do you consider when making angel investments?

▲ One angel investor said, 'I decide after having three drinks with the founder.' Another angel set a principle to invest only after meeting the founder for about six months to a year. I focus on the founder's problem-solving ability. Since there is no guarantee that the initial business model will continue, I look at how well they can pivot (business transformation).

- Could you share tips for successful investing?

▲ The valuation of early startups seems to be greatly influenced by 'who invested.' Startups invested in by experienced super angels or serial entrepreneurs are viewed differently. Such investors value their honor and status, so they are more meticulous when investing. For example, Chairman Lee Geum-ryong of Challenge and Sharing, founder of Auction, Chairman Lee Yoon-jae of Zinus, and former CEO Lee Yong-duk of NVIDIA Korea are respected role models in the startup industry due to their active talent donation. They conduct educational programs for founders and serve not only as financial supporters but also as mental pillars.

- What motivates you to continue angel investing?

▲ Recently, I have been mentoring about 30 university student founders once a month on ESG (environment, social, governance) topics. Meeting passionate founders gives me strength. My middle school daughter also aspires to be an entrepreneur. She even attended a startup school in fifth grade. I will never forget how clearly she talked about her own experiences in the metaverse world during class. If my child becomes an entrepreneur, I want to be her first angel investor.