[VC Now] ② "Do You Know Why the Tomato Cultivation Trend Is Blowing in the Middle East?"

1st Generation VC IMM Investment That Nurtured Celltrion, Musinsa, Krafton, etc.
Plans to Establish a Corporation in Singapore, Invest in Local Middle Eastern Companies
CEO Jiseongbae: "New Industries and Startups Attracting Talent... Expecting Growth"

Editor's NoteVenture capital (VC) nurtures early-stage companies that will become the pillars of future industries at the forefront of the capital market. Although the VC industry is experiencing a downturn due to the global economic recession and high interest rates, efforts to identify and cultivate promising companies continue unabated. Asia Economy meets with a variety of investment firms, from large-scale VCs with accumulated experience and know-how to emerging VCs, to hear about their investment strategies and stories.

Smart farm company 'PureHarvest' invested by IMM Investment. Photo by IMM Investment

"We are growing tomatoes in a building made of glass greenhouses in the Middle East, where sandstorms are common (laughs)."

At a recent meeting at the Seoul Gangnam Finance Center office, Ji Seong-bae, CEO of IMM Investment, responded this way when asked to share fresh investment opportunities from a venture capital perspective. Since 2021, IMM Investment has been paying close attention to and investing in 'PureHarvest,' a smart farm company based in Abu Dhabi, United Arab Emirates (UAE). The company designs and operates vertical greenhouse systems that can cultivate fruits and vegetables regardless of weather conditions. IMM plans to transplant the vertical farming technology of Farm8, a domestic smart farm company it previously invested in, and establish a joint venture locally in Abu Dhabi.

"Middle Eastern people surprisingly consume a lot of tomatoes. Until now, most tomatoes were imported from Europe, such as the Netherlands, bearing high transportation costs. By cultivating tomatoes directly in Abu Dhabi, we are generating sales not only in the UAE but also in neighboring countries like Kuwait, Saudi Arabia, and Egypt. We believe this is an industry with great growth potential and are watching it closely."

Startup investment looks toward an exit point five to six years down the line, regardless of the current economic situation. IMM Investment, which will celebrate its 25th anniversary next year, continues active activities such as investing in new industries and establishing overseas subsidiaries despite this year's challenging investment environment.

Founded in 1999, IMM Investment is considered a first-generation domestic VC. CEO Ji Seong-bae graduated from Seoul National University’s Business Administration department in 1990 and joined Samil Accounting Corporation before entering the venture investment industry as an analyst at CKD Venture Capital. He co-founded IMM Investment with his senior at university, Song In-jun, CEO of IMM Private Equity (PE), and Jang Dong-woo, CEO of IMM Investment and Song’s brother-in-law. Since then, the company has nurtured companies such as Musinsa, WEMAKEPRICE, and Krafton, becoming the largest VC in Korea. Currently, it manages approximately KRW 7 trillion in assets across VC, private equity funds (PEF), growth equity, and infrastructure investment sectors.

Jiseong Bae, CEO of IMM Investment.

"No Significant Change in Startup Investment Scale"

This year, the investment industry faced difficulties in fundraising due to the sharp interest rate hikes in the United States. CEO Ji said, "Overall investment in the private equity sector has somewhat slowed compared to last year, and companies seem hesitant to engage in business activities aimed at investment. Ultimately, investment will become more active only when there is confidence that 'U.S. interest rates are entering a stabilization phase.'"

However, he added, "There is no significant change in the scale of investment in the startup sector. The reduction in investment pertains to companies beyond the mid-stage, not startups." He explained, "Startup investments are generally made with a view toward an exit five to six years later, so investments proceed regardless of the current economic conditions. This is true not only in Korea but also in the U.S. market."

Regarding next year’s outlook, he said, "Many expect U.S. interest rates to peak around June next year and then gradually decline, so there is no possibility of further deterioration." He also noted, "The Korean government’s side funds and private mother funds continue to be established," viewing this positively as it means an increase in investment inflows into the venture ecosystem.

IMM Investment has actually delivered significant results through steadfast investments. Bio venture 'Orom Therapeutics' is a representative success story. Orom Therapeutics licensed its leukemia treatment candidate 'ORM-6151' at the clinical phase 1 stage to global pharmaceutical company Bristol-Myers Squibb (BMS) for a contract amount of KRW 130 billion, the largest contract amount received by a domestic pharmaceutical and bio company for candidate substance licensing. 'MangoBoost' successfully raised KRW 70 billion in Series A funding led by IMM Investment. MangoBoost, a startup specializing in data processing unit (DPU) design, is the only DPU developer in Korea and develops chips that enable efficient data center server operation in cooperation with Samsung Electronics.

Overseas investment is also active. IMM is currently undergoing licensing procedures with local financial authorities to establish a Singapore subsidiary. Once the license is obtained around March to April next year, they plan to intensify investment, funding activities, and local hiring. This will be their third overseas subsidiary after Japan in 2017 and Hong Kong in 2019. CEO Ji explained, "Due to its geographical characteristics, Singapore is seeing a large influx of Middle Eastern funds, and its investment sentiment is closer to that of the Middle East. With issues such as Hong Kong becoming 'more China-oriented,' Singapore has the potential to become a new financial hub."

In August, IMM Asset Management, an affiliate, was also established. CEO Ji said, "With the 2021 revision of the Capital Markets Act, PEFs had to choose whether to be institution-only or general private funds. Operating both within one house involves complex regulations, so IMM Investment decided to become an institution-only PEF operator. Instead, IMM Asset Management conducts general private funds for limited partners (LPs) who cannot enter institution-only funds." IMM Asset Management raises funds from general corporations and high-net-worth individuals for investment.

"Investing to the End in Companies with Growth Potential"

One of IMM Investment’s investment philosophies is to "continue follow-up investments in companies with growth potential." They expand investments according to the company’s growth stage. The organization is broadly divided into the venture investment division, growth equity and PE investment division, and infrastructure investment division.

"From A to Z, even if a company we invested in from the cradle moves to the next stage, additional investments continue. For example, after investing through the venture division, when the company needs to scale up, support worth several hundred billion won is provided through the PE investment division. Such cases include Celltrion, Musinsa, and Krafton. While typical PE houses might hesitate to invest in loss-making companies, IMM Investment’s DNA is different."

CEO Ji emphasized the importance of "discovering new industries" and "securing talent." He said, "Semiconductors have sustained Korea so far, but new sources of growth must emerge. Fortunately, Korea has strengths such as original technologies in new industries including bio, new drugs, and healthcare." This is why they maintain a steady investment ratio despite the difficult market conditions. He added, "As capital accumulates, blockbuster new drugs are expected to emerge in Korea, and talent is flocking to related fields." Regarding the startup ecosystem, he analyzed, "Many business school graduates at major universities used to choose law school or employment at large corporations, but in the past two to three years, more students have started their own startups. This is evidence that the venture ecosystem is moving healthily."

Additionally, CEO Ji expressed hope for an increase in domestic mergers and acquisitions (M&A). He said, "Recently, Hyundai Motor Group has shown leadership by acquiring autonomous driving startup '42dot' and others. Our exit market is too focused on initial public offerings (IPOs), so the fact that large corporations are leading M&A is encouraging." He added, "The government should provide more approvals and support for such industry transitions, and companies should attempt industry shifts and M&A based on future forecasts."

Currently, IMM Investment is undergoing a gradual generational transition to build a foundation for sustainable growth. On the 29th of last month, the company announced an executive reshuffle, moving from the previous co-CEO system of Ji Seong-bae and Jang Dong-woo to a three-person CEO system including Byun Jae-cheol. Newly appointed CEO Byun is a certified public accountant who worked at Samil Accounting Corporation and joined IMM Investment, serving as head (CIO) of the growth equity investment division. He has played a key role in major investments such as Krafton, Celltrion, Gangdong Refrigeration, and GS ITM. Jung Il-bu, the new CEO of the parent company IMM and Chief Investment Officer (CIO) of IMM Investment’s venture investment division, joined after working in Samsung Electronics’ semiconductor technology planning team and has discovered and invested in numerous companies including 42dot, FuriosaAI, Ecopro, and Gentle Monster. He concurrently serves as CIO of IMM Investment while acting as IMM CEO.