[VC Now]⑧Krit Ventures "Combining New Technology and Content... Pioneering New Export Areas"

Interview with Song Jaejun, CEO of Crit Ventures
"Content Competitiveness Emerges When New Technologies Are Applied"
"Focus on AI, Blockchain, and XR Technologies"

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 grow 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.

"Even within the same content sector, the competition is about 'who can create and implement content optimized for new technologies.'"

These were the words of CEO Song Jae-joon during an interview held on the 9th at the headquarters of Crit Ventures in Gangnam-gu, Seoul, regarding the competitiveness of Korean startups in content. CEO Song explained, "While Korea has strengths in a story-centered approach, it is also very excellent in technology-centered approaches. Accordingly, Crit Ventures is a house that focuses on and invests in the 'intersection where information and communication technology (ICT) and content converge.'"

Song Jae-jun, CEO of Crit Ventures Photo by Younghan Heo younghan@

Com2uS-affiliated VC... "Investing in Games, K-pop, and Media Content"

Crit Ventures is a VC affiliated with the domestic game company Com2uS, established in August 2020. At that time, CEO Song, who was the CEO of Com2uS, contributed most of the capital. The total assets under management (AUM) amount to KRW 224 billion in Korea and KRW 26 billion overseas, including the U.S. It operates six funds funded by major institutional investors (LPs) such as the Korea Fund of Funds, Korea Growth Investment Corporation, Korea Development Bank, IBK Industrial Bank, and Com2uS.

Over the past three years, the main investment areas have been ▲games ▲K-pop ▲media content. In the gaming sector, where synergy with Com2uS is maximized, investments were made in 'GameTales,' a developer of massively multiplayer online role-playing games (MMORPGs) based on the latest engines, and 'VA Games,' which has strengths in motion graphic technology in the subculture genre. CEO Song, who also serves as Com2uS's Global Chief Investment Officer (GCIO), emphasized, "Financial investors (FIs) who do not participate in management have fewer opportunities to invest in large new companies in the gaming industry, but by collaborating with strategic investor (SI) Com2uS, we were able to proceed with investments and gain opportunities as FIs. This is a differentiated strength compared to other VCs."

In the globally spotlighted K-pop sector, Crit Ventures invested in 'Chartmetric Inc.,' which analyzes music big data and provides it as software as a service (SaaS). CEO Song said, "It is a startup founded in Silicon Valley that comprehensively collects and analyzes data scattered across various music platforms. Agencies and artists purchase Chartmetric accounts to receive data and trends, which they use to analyze the market and competitors' music. Its annual sales have reached around KRW 10 billion."

'Muse Live,' gaining attention as a new platform in the market divided between music tracks and albums, is also part of the portfolio. It is a company that provides a service where, by bringing a kit-type album incorporating ultrasonic near-field communication technology (U-NFC) close to a smartphone, users can listen to music through an app. This service aims to replace CDs, which have recently raised environmental pollution concerns. Additionally, investments were made in 'Content Technologies,' which integrated artificial intelligence (AI) technology and finance centered on music intellectual property (IP) to launch the first K-pop exchange-traded fund (ETF) on the New York Stock Exchange.

In the media sector, Crit Ventures invested in 'Galaxy Corporation,' known as the producer of the Netflix variety show 'Physical 100.' The company leads new attempts by applying technologies such as AI and metaverse to variety content. 'Post Creative Party,' which is producing theatrical animations by directors Bong Joon-ho and Park Chan-wook, is also supported by Crit Ventures.

Krit Ventures office and Seonjeongneung are visible, with a sunny window meeting room. Photo by Younghan Heo younghan@

"Focusing on Ecosystems Created by AI, Blockchain, and XR... Supporting Korean Startups' Overseas Expansion"

Despite the investment winter in the VC industry caused by high interest rates and other factors, Crit Ventures executed investments worth KRW 90 billion last year. This amount significantly exceeds the cumulative investment of KRW 70 billion over the past two years. The plan is to continue active investments this year, including creating new funds. CEO Song stated, "VCs typically invest and recover within about eight years, but the economic situation and cycles surrounding us move faster than that. We judged that last year and this year were actually the right time to invest. As others hesitated, competition decreased, allowing us to lead investments at reasonable valuations."

The amount recovered last year was KRW 9 billion, a record performance relative to the firm's age. The first investment portfolio company, game developer 'Velof,' completed its final recovery last year after listing on the KOSDAQ via a SPAC at the end of 2022, becoming Crit Ventures' first exit company. Space startup 'Contec' and online furniture distribution company 'Studio Samik' also entered the KOSDAQ market in November last year and February this year, respectively. Swedish game company 'Snowprint,' invested in 2021, and Silicon Valley-based manufacturing data platform 'Glassdome' also recovered investments in about two years.

CEO Song identified three technology fields to watch in the future: 'AI,' which has recently emerged as a global big trend; 'blockchain,' which has regained attention with the approval of Bitcoin ETFs; and 'extended reality (XR),' where competition has intensified with the launch of Apple Vision Pro and Meta Quest. He added, "In the current mobile ecosystem, there is a leading company in every business sector. Markets and related apps have been established in each sector. A new ecosystem will be created centered on new technologies. This means there are investment opportunities and the possibility of unicorns emerging."

He said, "The technological leadership is likely to be taken by Silicon Valley in the U.S., but Korea can take the lead in content. If Korean startups can expand overseas and export beyond the domestic market, and if foreign capital can enter actively, it will lead to new national wealth creation." It is analyzed that Korea has a competitive edge in media, music, and gaming content, and if these are quickly integrated with new technologies, there is a chance to win in global competition.

Crit Ventures is also actively creating and utilizing new investment methods to increase the overseas expansion potential of Korean startups. A representative example is 'hello82.' Last December, this startup was responsible for local distribution and promotion of boy group ATEEZ, which ranked number one on the U.S. Billboard main album chart 'Billboard 200.' This achievement was made in cooperation with small and medium-sized agencies like KQ Entertainment, rather than the four major entertainment companies HYBE, SM, YG Entertainment, and JYP Entertainment.

He said, "We want to go together with founders who take paths no one has taken before. At the same time, Crit Ventures is also attempting investments in ways no one has tried before. We challenge investment methods and fields that existing VCs have not pursued and introduce new investment techniques."

Song Jae-jun, CEO of Crit Ventures Photo by Younghan Heo younghan@