[VC Now] ④ "Challenging a 100-Year Company with Integrity... This Year, 'Just AI' Investment"

The Nation's First VC, Aju IB Investment... Celebrating 50th Anniversary This Year
Plans to Invest 300 Billion Won, 1.5 Times More Than Last Year

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 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.

Investment analysts are working at their desks in the office of Aju IB Investment in Gangnam-gu, Seoul. There are potted plants placed around the desks. Photo by Hyunmin Kim kimhyun81@

"We have run for 50 years and are preparing for another 50 years ahead. The most important thing to become a 100-year venture capital (VC) is 'honest investment.'"

Ajou IB Investment, Korea's first VC, celebrates its 50th anniversary this year. It has led the venture investment industry by discovering and supporting venture and startup companies. Upon entering the office of Kim Ji-won, CEO of Ajou IB Investment, the bookshelf was filled with plaques of appreciation and awards. △Minister of Knowledge Economy Award for IT Investment Network Activities (2011) △Financial Services Commission Chairman Award at the Korea VC Awards (2015, 2020) △Chairman Award of the Korea Exchange for Supporting Overseas Listings (2016) △Minister of SMEs and Startups Award for Best Investment Activation Support at the Korea VC Awards (2018) △Minister of SMEs and Startups Award for Contributions to Venture Startup Promotion (2019), among other distinguished accolades, underpin the industry's trust in Ajou IB. In December last year, it received the Industrial Medal in the investment activation category for contributions to venture startup promotion.

Recently, we met CEO Kim at Ajou Building in Gangnam-gu, Seoul, to review past achievements and discuss future plans and investment strategies.

The Secret: Industry and Stage Balancing... "Preparing for the Next 100 Years"

The history of Ajou IB began with the establishment of Korea Technology Advancement Corporation in 1974. It was created with full funding from the Korea Institute of Science and Technology (KIST). Former President Park Chung-hee, who was contemplating ways to advance science, secured U.S. support on the condition of dispatching troops to Vietnam. National-level research and development (R&D) and investment were conducted at KIST, while Korea Technology Advancement handled commercialization. Ajou IB was incorporated into the Ajou Group in 2008 during the privatization of public enterprises.

Kim Ji-won, CEO of Ajou IB Investment. Photo by Kim Hyun-min kimhyun81@

CEO Kim originally worked at a leasing company (now a capital company). After the 1997 financial crisis, he redesigned his future. He wanted to engage in finance but not in traditional banking, securities, or insurance, rather in new finance. He joined the company in 1999 and entered the VC industry simultaneously. He became head of management in 2012 and CEO in 2015.

He cited 'industry balancing' as the key to the company's long-term growth. CEO Kim said, "We use a very traditional investment method of balancing the portfolio. To reduce risk, we do not increase investment proportions in specific industries. We invest evenly in bio, IT, materials-parts-equipment (SoBuJang), and chemicals." He also emphasized 'stage balancing.' He explained, "Early-stage companies carry high risk but yield high returns upon exit. As companies move into the mid-stage, returns decrease while safety increases. To become a long-lasting company, exit timing must be diversified through balancing across stages. Ultimately, it is a company that achieves sustainable growth through risk management," he proudly stated.

The Ajou IB house has all support systems tailored to the growth cycle of companies within the company. CEO Kim introduced, "We have internal systems to conduct accelerator (AC) business supporting startups, VC business investing in the 'death valley' period (3-5 years after startup when companies face crises such as lack of funds), and private equity (PE) business managing buyouts and mergers & acquisitions (M&A) to expand new businesses." He added, "Even while investing in ventures, we have never posted a loss in 18 years. We think a lot about risk diversification. We must constantly generate profits and return stable earnings so that limited partners (LPs) and investors can trust us with their funds," he explained.

They have not lost innovation in seeking new growth engines. While other VCs expanded into China and Southeast Asia, Ajou IB took on a direct challenge in the U.S., the home of ventures. Eleven years ago, they established a local subsidiary, SolarStar Ventures, and conducted local hiring. CEO Kim said, "Among VCs, we were the first to establish a local subsidiary in the U.S." They set up branches in San Francisco and Silicon Valley and made meaningful investments. They have already listed about 14 to 15 companies on NASDAQ. Currently, they are receiving proposals from overseas LPs." As of the first half of last year, SolarStar Ventures had total assets of $669,000 and a half-year net profit of $421,000.

"We do not imitate others. While operating conservatively, we boldly embrace the identity of a VC when taking on challenges. With our long history, the operational policies, systems, and know-how we have developed have become valuable references for other VCs."

"This Year is 'All-in on AI'... Expanding Investment Scale"

Despite the investment industry's contraction last year, Ajou IB posted solid results. Companies such as NanoTeam, a specialist in thermal management materials for electric vehicle batteries; Nexteel, a steel pipe manufacturer; Coreline Soft, an AI-based medical imaging analysis technology platform; and CGtronics, a gallium nitride (GaN) power semiconductor specialist, went public, recording over 270 billion KRW in returns. This is more than double the returns compared to 2022. Regarding NanoTeam, in which they invested 3 billion KRW in 2019 and achieved an overwhelming multiple of about 30 times, CEO Kim noted, "Last year, when secondary batteries were in the spotlight, the timing was very well matched. Internally, it was the biggest event. It was also a very good experience for the investment officers." Last year, Ajou IB's assets under management (AUM) surpassed 2 trillion KRW.

This year, they plan to invest more aggressively. They aim to invest 320 to 330 billion KRW, 1.5 times more than last year. The most notable area is AI. CEO Kim said, "'All-in on AI' is what we can say. However, designing algorithms for big tech companies can be very costly. There will be great opportunities in 'enterprise AI,' which applies AI in practical ways." Enterprise AI refers to systems where companies use AI to maximize work efficiency and rational decision-making. The focus should be on how companies adopt and develop created AI. He also highlighted autonomous mobile robots (AMR) that will bring innovation in agriculture and industry, stating, "Ultimately, AI and well-designed robotics will be the best investment destinations."

Transparency and ethical management remain core values. Listing on the KOSDAQ market in 2018 was part of this effort. CEO Kim emphasized, "Becoming a listed company was not for raising public funds but to secure transparency and reliability. We always strive to be a company with predictability in management and performance. Only then can both our employees and investors trust each other."

Seoul Gangnam-gu, Aju IB Investment Conference Room. Seating is arranged to accommodate about 50 people. Photo by Hyunmin Kim kimhyun81@

In 2021, Ajou IB became the first domestic VC to support the Task Force on Climate-related Financial Disclosures (TCFD) and strengthen ESG (environmental, social, and governance) management. CEO Kim explained, "Among VCs, we were the first to secure ESG-related ratings. We also invest based on an ESG checklist during the investment process. For example, we invested in companies recycling waste tires and banners. We do not invest in companies with opaque governance." He added, "It may be distant from immediate profitability, but it is undeniable that this is the direction humanity must pursue. Efforts to invest in companies highly rated in ESG are essential."