[K-INVESTORS] Kim Chang-gyu, CEO of Woori Venture Partners, "Can We See This Company Every Day?"

(16) A Veteran in the VC Industry for 30 Years
The Genius Behind Discovering Unicorns Like Baedal Minjok and Toss
The Conclusion of His 30 Years of Investment Experience

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 endured everything from the Asian Financial Crisis to the dot-com bubble, the global financial crisis, and 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, including the chief investment officers of domestic pension funds who have become global 'big players' through value investing and activism, leaders of private equity and asset management firms, and CEOs of financial companies.

"Mubadala trusted our 40 years of experience."

Kim Chang-gyu, CEO of Woori Venture Partners, recently established an investment cooperation relationship with Mubadala Capital, the sovereign wealth fund of Abu Dhabi, United Arab Emirates (UAE). Through cooperation with Mubadala, a Middle Eastern investment company that gathers global investment information, Woori Venture Partners has gained swift access to investment opportunities. Mubadala, which was seeking an investment cooperation partner in Korea, came to trust Woori Venture Partners due to its long investment history.

"When Mubadala visited our company and we talked about various things, we found many shared values. They respect institutions with long-term histories. When they heard our company has been around for 40 years, they said they didn’t know such a place existed in Korea. We have exited from over 400 companies so far. It’s no exaggeration to say we have experience in every field. Our executives have long tenures, and I myself have worked here for over 30 years."

'Man of Tenacity' Who Has Been Engaged in Venture Investment at One Company for 30 Years

The roots of Woori Venture Partners trace back to Korea Technology Development, a government-led public enterprise established in 1981. It was Korea’s first venture capital (VC) firm. In 1992, it was reorganized as Korea Comprehensive Technology Finance, and in 1999, after being acquired by former chairman Kwon Sung-moon, it was privatized and renamed KTB Network. Later, it changed its name again to Daol Investment before being acquired by Woori Financial Group last year, becoming the financial holding company-affiliated venture capital firm Woori Venture Partners.

CEO Kim joined in 1994 during the Korea Comprehensive Technology Finance era and has been a veteran in the VC industry for 30 years. The assets under management (AUM) of the funds he has led as the chief fund manager approach 600 billion KRW, accounting for about half of Woori Venture Partners’ total AUM of 1.2 trillion KRW.

"I was somewhat lucky. I had good mentors at the start, which allowed me to work on many great projects. I also worked hard and learned along the way, which is how I have run for 30 years."

Kim Chang-gyu, CEO of Woori Venture Partners
[Photo by Woori Venture Partners]

From IMF to COVID-19... Only the Prepared Seize Opportunities

CEO Kim refers to himself as a '1.5 generation' venture capitalist.

"I’m not the first generation but about 1.5 generation. I have experienced a lot. There were painful times during the Asian Financial Crisis. But afterward, the telecommunications boom and the creation of KOSDAQ led to the listing of companies we held like KT Freetel and Hansol M.com, and we bounced back. Then the dot-com bubble burst, and it got tough again. That was also when we started corporate restructuring projects. Although major shareholders changed continuously, we maintained our identity as a VC."

When he first joined, the concept of venture investment was still vague. The culture of employees gathering to study and research together has been a driving force for Woori Venture Partners.

"At first, as a public enterprise, we provided loans to technology companies and did similar work. Over time, we studied venture finance extensively among ourselves. The company had an overall study culture and atmosphere. We studied advanced financial techniques from the U.S. In a way, VC requires very comprehensive skills among financial investment businesses. Intuition is needed, as well as the ability to foresee the future and understand technological trend changes to make comprehensive judgments."

VC investment was very fun and enjoyable for CEO Kim. He witnessed the redistribution of wealth as venture companies and the KOSDAQ market emerged. Young people went public, made money, reinvested, and started a virtuous cycle like in the U.S. VCs grew alongside the industry.

The Moment the World’s Paradigm Changes Is the 'Money-Making Opportunity'

He is a venture capitalist who gained attention by making early investments in numerous unicorns (venture companies valued at over 1 trillion KRW), including Woowa Brothers (Baedal Minjok) and Viva Republica (Toss). Notably, the KTBN 7th Venture Investment Association, which recently liquidated with an IRR of 29.2%, is a legendary fund since its inception. Formed in 2014 with 68.2 billion KRW, it achieved over four times the committed capital in about 10 years. Considering that the average IRR of venture funds liquidated in the VC industry over the past three years is about 10-12%, this is an outstanding achievement.

Companies invested in through this fund include Baedal Minjok (Baemin), Toss, Hugel, Carisgen, Oris Health, and NoBroker. All became unicorns after investment by Woori Venture Partners. Among them, Oris Health (a U.S. surgical robot company), Carisgen (a Chinese immunotherapy company), and NoBroker (an Indian real estate platform) are overseas unicorns.

"Toss yielded about 100 times profit based on the initial investment and about 40-50 times based on the average sale price. We invested when the paradigm was shifting from broadband to mobile platform industries. When technological changes occur significantly and the world changes, large multiples emerge. Nowadays, it’s artificial intelligence (AI)."

CEO Kim, who says there are investment opportunities in technological changes, has a unique eye for companies. "In my mid to late 40s, I diligently attended small-scale investor meetings and open speech events, focusing on just two platforms, which were Baemin and Toss. I did not invest in other platforms."

He also held many meetings with founders to find promising companies.

"Successful founders exhibit certain behaviors. Fundamentally, they have leadership and inclusiveness. Luck must align, and decisiveness in crisis situations is important. They must also know when to quit if it’s not working. Above all, attitude is crucial?attitude toward employees and shareholders. I’ve taken them out drinking heavily, had meals with their families, and observed them from various angles. Founders must be mentally sound. If there are rumors about poor private life or buying a new car immediately after receiving investment, I stop the investment review. Without a proper mindset, one might succeed briefly but not last long. Current successful startup CEOs have maintained rigorous self-management."

"Can I See This Company Every Day?"... Criteria for Investment Decisions

When discovering platform companies, he focused on the essentials of human life?clothing, food, and shelter?and turnover rates.

"When looking at platform companies, I thought: Can I see this every day? Considering clothing, food, and shelter by turnover rate, the order is food, clothing, then shelter. People eat three meals a day. Clothes are changed once or twice a day, less frequently than meals. Then comes housing. That’s why Baemin rose first, and Zigbang came later. I focused on turnover and transaction volume. Although people might think they use many applications daily, it’s usually five to at most ten. The apps I use are fixed. Those become unicorns."

Just as the apps people use daily are fixed, habits once formed are hard to change.

"Account-based services like Toss are games that change habits. From that perspective, once you open an account here, it’s hard to change easily. Toss also benefited from timing as fintech (finance + technology) was blossoming. Open banking, MyData (personal credit information management), and other regulations were changing, and the company moved in step with these changes."

Many investment companies are lined up to continue the success of Baemin and Toss. The most anticipated company is the ad tech firm Moloco. Moloco is an ad tech startup founded in 2013 in Silicon Valley by Korean An Ik-jin, formerly of YouTube and Google. It specializes in machine learning-based mobile app advertising platform services. Amazon, TikTok, and Meta are major clients. Moloco is preparing for a NASDAQ listing. There is also high expectation for the investment performance of Bimomentum, which operates the K-beauty brand d'Alba. Bimomentum is rapidly growing sales with bestsellers like the 'White Truffle Mist,' known as the national mist.

Recently, there has been a global influx of investment funds into the AI sector. Woori Venture Partners is also conducting comprehensive analysis on AI industry investments.

"You have to invest carefully. It’s important to understand the AI ecosystem well. To explain simply with an analogy from another field, consider solar power investment. From the bottom up, polysilicon is made into substrates and modules, then solar power generation services are provided. However, listings and exits happen in reverse order. Services go public and are exited first. Similarly, AI companies with revenue-generating services will list first. Of course, AI core technology companies will do well, but the middle segment is somewhat ambiguous. From an investment perspective, a few companies with technological prowess will dominate. AI services rely on stability, so clients don’t switch easily. We are reorganizing our AI investments. We are looking at everything from AI chip design to service apps. We invested in a company called Lytton Technologies and are reviewing another. The evolution speed of AI companies will be fast because it’s software."

Kim Chang-gyu, CEO of Woori Venture Partners
[Photo by Woori Venture Partners]

"Investment Is Patience"… The Conclusion of 30 Years of Investing: 'Stick to the Basics'

Some people enter the VC industry and succeed quickly, but it takes patience to produce good investment firms.

"It literally requires enduring hardship over time. Some people hit it big after 10 years, others meet good mentors and succeed quickly. Fundamentally, you must endure hardship. You have to let go of what you can’t control and wait."

The one message that stayed with him after 30 years of investing is to 'stick to the basics.'

"Everyone has their own preferences. Some prefer early-stage investments, others prefer late-stage pre-IPO investments. But our company’s tradition is to discover companies earlier than others before they invest. Our mindset is that we are not a company playing games in the capital market. We are early partners who grow value together with companies. We don’t sell immediately after listing."

Since becoming part of Woori Financial Group, they have been able to look further ahead. They dream of becoming a VC with a 100-year history. Recently, they created a club for companies that have gone public.

"We have invested in over 20 companies that have gone public in the last three years. We created a group called Partners Club. We maintain ongoing partnerships and can collaborate with Woori Financial Group when investing in new businesses or technologies. We aim to create synergies with the holding company, banks, and securities firms, and share good returns not only with shareholders but also with employees. We want to become a 100-year VC."