[K-INVESTORS]⑭ 'Korea's First AC' CEO Kim Ho-min "Every Company Faces Crisis"

Starting a Business is a Life Commitment... A Company is a Group Solving Social and Economic Issues
More Than Founders' Skills, Character is Key to Over 10 Years of Investment Know-How
Secret to Maintaining Investment Sense is Studying Failed Companies and Fallen Empires

Editor's NoteThe Korean capital market is more turbulent than ever, driven by greed and selfishness. Manipulations and foul play are rampant. However, many investors have carved out their own investment worlds and emerged as role models for individual investors, having weathered crises from the foreign exchange crisis, dot-com bubble, global financial crisis, to COVID-19. Through meetings with these investors, we aim to convey the value of money through war-like stories of the capital market, their philosophies, failures, and successes. Starting now, we bring you stories from experts across various fields?from value investing and activism to domestic pension fund chief investment officers who have become global 'big players,' to leaders of private equity and asset management firms, and CEOs of financial companies.

"Do you have dependents? Does your wife know?"

Kim Ho-min, CEO of SparkLabs, Korea's first accelerator (AC, startup incubator), asks this question first when interviewing aspiring entrepreneurs. For Kim, starting a business is not something easy that can be encouraged with a casual "Give it a try, it's cool." Starting a business means staking your life on it, and especially for those with families, it carries even greater responsibility and weight of decisions.

Founded in 2012, SparkLabs is a startup accelerator and venture capital (VC) led by co-CEOs Kim Ho-min, Lee Han-joo, Bernard Moon, and Kim Yoo-jin. It is also Korea's first official member of the Global Accelerator Network (GAN). All four co-CEOs of SparkLabs are former entrepreneurs. They have a 30-year friendship that began playing StarCraft 4v4 in a PC bang during their university days.

At the time SparkLabs was founded, startups in Korea had only VCs to turn to for help. VCs led by finance professionals and consultants alone made it difficult to establish an early-stage startup nurturing system. SparkLabs was Korea's first AC to provide various programs on early startup operations, introduce industry networks, and offer early-stage investments.

The four university friends united with the ambition to create Korea's version of Y Combinator, the Silicon Valley leading AC that nurtured Airbnb, Coinbase, Dropbox, and more, once led by Sam Altman, CEO of OpenAI. Over the past 12 years, SparkLabs has invested in over 270 outstanding startups including Memebox, Ballan, WantedLab, H2O Hospitality, Nthing, and SparkPlus. Their portfolio companies have a 90% survival rate, cumulative investment raised of 1.9 trillion KRW, and a total portfolio valuation of 7.9 trillion KRW.

Kim Ho-min, CEO of SparkLabs [Photo by SparkLabs]

The Mentor Role for Startups: "You Need Perseverance"

"We are people who have run businesses ourselves. We know how lonely it is to be a startup CEO."

Entrepreneurs find early-stage fundraising and overseas expansion the most daunting. Without startup operating experience, it is difficult to provide close support to founders. SparkLabs has activated 'Demo Day,' a stage for entrepreneurs to introduce their companies to attract early investment, and also popularized the 'Batch' program, an 18-week intensive training course. Having played the 'mentor' role for startups for over a decade, they have become the people founders turn to during their toughest times.

"When the phone rings, it's rarely good news. Running out of money, disputes with co-founders, conflicts with customers, shareholder disputes, and so on. Now, it's all on the menu. When giving advice, there is one principle: never be swayed by fleeting emotions. What seems like a huge problem now will seem trivial in hindsight. All problems can be solved with time and money. Don't think too urgently. You have to be persistent. We say this a lot."

Startups Are Problem-Solving Groups... Focus on the Problem, Not Just Technology or Skills

When scouting startups, CEO Kim focuses less on the technology they possess and more on what problems they can solve. Startups are groups created to solve social and economic problems, not just to develop technology.

"We look at how well they understand social and economic problems, whether they have a genuine passion to solve them, and the founder's character."

Technology constantly evolves and changes. It can be replaced by other technologies anytime. The true value of technology lies not in the technology itself but in whether it can solve a problem. Technology is a supporting actor; the problem is the lead role?this is Kim's investment philosophy.

"Many founders talk about the advantages of their technology, saying it can do this and that, then ask investors, 'Which should we choose?' The truly important thing is what problem the founder desperately wants to solve. If that exists, they will eventually solve it. That is the value of a startup."

Looking at a founder's character more than ability is also a know-how accumulated from long experience.

"Every company faces crises. It is inevitable. Startups face them more intensely. When a company is truly struggling, employees stay out of loyalty. What keeps a leader able to maintain the organization is a sense of mission and character. When money runs out, people leave. They start questioning why they are doing this. But leaders of organizations united by a sense of mission are different. They earn genuine respect and overcome hardships. People stay. Later, employees say, 'It was really tough, but because of that person...'"

The Language of Investment Is Numbers... Start with Overseas Expansion in Mind

Of course, loyalty and mission alone do not make a business succeed. Another virtue a startup CEO must have is understanding the language of investors: numbers. As investment size and stages increase, founders must learn to speak in numbers.

"Just as you must speak Japanese when in Japan, to receive investment you ultimately have to speak in plus and minus numbers?profit and loss. Companies start with PowerPoint but end with Excel. How well you can express your business in numbers is crucial. People who handle money speak in numbers. Founders must understand this precisely and show their company's value numerically."

SparkLabs excels at helping startups expand overseas. Of the over 270 companies SparkLabs has invested in, about 40 have successfully entered the U.S. market. Startups like Memebox, DoubleMe, and CLOVA entered the U.S. market with SparkLabs' help, while Urbanbase and H2O Hospitality expanded into Japan. H2O Hospitality, which supports digital transformation in the hotel industry, also entered the Middle East market, attracting overseas capital.

"If a company has true influence or value, it must go overseas. Nexon earns 70% of its revenue abroad. Samsung, LG, Hyundai also have much larger overseas sales. SparkLabs instills the mindset of going overseas from the start when nurturing companies. To expand overseas, the problem the company solves must not be unique to Korea. For example, services solving Korea-specific issues like college entrance exams are not suitable for global business."

Kim Ho-min, CEO of SparkLabs. Photo by So-yeon Park muse@

How to Maintain Investment Sensibility... Study Failed Companies and Fallen Empires

Constantly discovering new companies is similar to predicting the future. It requires creative thinking and maintaining an alert sensibility.

"You might think you need to know new things, but it's the opposite. You must know the past to understand the future. Company A failed because of this, company B failed because of that. Why did Rome fall? Why do large corporations inevitably struggle? Empires, after conquering all, fail to manage and break apart again. I apply past history to current phenomena."

Kim graduated in 1990 from the Department of Biomedical Engineering at Northwestern University in the U.S., dreaming of becoming a scientist inspired by foreign films like 'The Six Million Dollar Man' and 'The Sommers.' After earning a bachelor's degree in biomedical engineering in the U.S., he obtained a master's degree at KAIST.

"I entered biomedical engineering dreaming of superhuman technology, but when I was in college, the technology was lacking. There were no small sensors or low-power chips like today. It wasn't a wrong concept; the technology simply didn't exist then. But now it does. It's the same with business. You need to understand why it didn't work then and why it is possible now. Intuition is partly creative, but it's also important to analyze why something was impossible in the past."

Honest Advice on Youth Entrepreneurship... Average Startup Age in the U.S. Is 40

Before founding SparkLabs, Kim served as CEO of Nexonova, Nexon's game development studio. He later was CEO of CCTV solution developer Innotive and co-founder of N3N, an IoT solution company invested in by Cisco. He understands the psychology of founders and corporate systems better than anyone.

"Startups are Korea's future, and I have no doubt about their growth potential. But I think encouraging youth entrepreneurship in our society is very risky. The average age of startup founders in the U.S. is 40. They start businesses when they deeply understand a problem and can solve it. Can young graduates freshly out of college fully grasp distribution structures? How much do they know about POSCO's blast furnace issues? Problem recognition and solutions come from experience."

He recently evaluated the Korean market as a suitable environment for startups. "The market is bigger in B2B (business-to-business) than B2C (business-to-consumer). Korea has a manufacturing base, a good education system, traditional conglomerates like Samsung and Hyundai, and IT giants like Naver and Kakao. Global companies like Google and Meta are directly present. In this environment, many people who can solve problems well and excellent founders will emerge. The startup environment is brighter here than anywhere else."

The Era of the Genius Programmer Is Over... Must Read and Express Human Inner Thoughts

Korean companies have long been strong in hardware but weak in software, i.e., programming. However, Kim predicts this distinction will disappear.

"Coding is a language. There used to be a difference between those who could use coding languages well and those who couldn't. Korean companies were relatively weak in this language. But productivity will be driven by artificial intelligence (AI). If I want to create a program using ChatGPT, the code comes out. You can create programs even without coding skills. People who can read inner thoughts, understand what people want, organize their thoughts, and express them can make better programs. People who know what users like and understand creative ideas or problems are needed more than developers from Seoul National University or KAIST."

Earlier this year, Microsoft conducted large-scale layoffs of about 1,900 employees across its gaming divisions including Activision Blizzard, Bethesda, and Xbox. Kim said this reflects the harsh reality of the current IT sector.

"They abruptly cut teams that were highly anticipated for their next projects. The era of people making games is over. Large teams of 300-400 people making games are now relics of the past. AI makes movies and games now. The era of creative people like Steven Spielberg making programs is coming. A big era of change is upon us. There are opportunities for us."