[VC Now] ⑩ Daekyo Inbe "Fund IRR Over 20%... Principle Is 'Selection and Focus'"

Interview with Jin Seongtae, CEO of Daegyo Investment
Focusing on Good Startups and Venture Companies Instead of 'Sector Bias'
Providing at Least 1 Billion KRW Support per Discovered Startup

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.

Jinseongtae, CEO of Daekyo Investment, is being interviewed at Daekyo Investment in Gangnam-gu, Seoul on May 20. Photo by Jinhyung Kang aymsdream@

"Whether the fund is large or small, if the number of investments exceeds 20, it is impossible to achieve good returns, and the profit is only about the bank interest rate, similar to tracking an index. We have structured the team to build expertise through continuous learning so that we can select better startups, and at the same time, we made it possible to invest at least 1 billion KRW (approximately 10 million USD) per investment."

Established in 2011, Daekyo Investment is an affiliate of Daekyo, a leading domestic education company. It operates 12 funds, combining the Tech Venture Fund managed by the 'Venture Investment Headquarters' and the 'Culture & Content Investment Headquarters' fund that collaborates with its affiliate Daekyo. This year, through additional fund formations, it surpassed 300 billion KRW in assets under management (AUM) and aims to reach 500 billion KRW by 2026 to become a mid-to-large scale VC.

On the 20th at Daekyo Investment’s office in Gangnam-gu, Seoul, CEO Jin Sung-tae (57) cited 'selection and concentration' as the key growth strategy. He said, "We fundamentally maintain the identity of investing in early-stage startups. We focus most on the role of venture capital (VC) as a market supplier of so-called 'venture investment,' which quickly discovers the most innovative ventures in the market."

Expanding Investment Areas in Deep Tech and Energy... The Core is 'Human Resources'

"I started from the ground up." CEO Jin, a science and engineering graduate from Seoul National University’s Department of Weapon Materials Engineering, worked in the industrial sector at LG Chem and Samsung Corning before starting his career as an investment analyst and stepping into the VC leadership. He said, "During my MBA program at Manchester Business School, I wrote a master's thesis on 'real option pricing,' a financial topic related to valuing startups that only have technology and usage rights before generating sales and profits, which sparked my interest in the VC industry." He added, "Afterward, I interned at IMM Investment and joined Stick Investment, starting my analyst and investment work in the early 2000s."

Since becoming CEO of Daekyo Investment in 2021, Jin has worked on expanding specialized investment personnel to transform the firm into a large-scale house. To establish cooperation and investment information-sharing processes for various institutional limited partners (LPs), he increased the management team to four people and enhanced operational capabilities.

He said, "While we previously focused on sectors connected to trends such as platform services and bio, we have now secured investment personnel capable of handling all high-tech fields, including IT, bio, new energy, artificial intelligence (AI), and hardware, without bias toward any particular sector." He added, "By learning and investing across multiple sectors, we have developed the ability to do so. As our portfolio and exit cases increase, our goal is to expand existing assets and extend investments to the next 'next' stage."

He also solidified the direction of 'boldly investing in better startups.' The 40 billion KRW 'DKI Growing Star 7th Investment Association,' formed last year, included LPs such as Industrial Bank of Korea, Korea Development Bank, Korea Growth Investment Corporation, Military Mutual Aid Association, Science and Technology Mutual Aid Association, and Seoul City. The main investment targets are youth startups based on 4th industrial revolution innovative technologies. Jin said, "This was the first case where Daekyo Investment’s fund LPs expanded from the Korea Fund of Funds to growth finance and mutual aid associations. The average investment size per startup also increased to over 1 billion KRW."

Among recent representative investment startups, Daekyo Investment cited 'Panecia,' in which it made its first 3 billion KRW investment from the first round. Panecia was recognized for its competitiveness with the world’s first Compute Express Link (CXL) technology and raised a total of 17 billion KRW in funding last September, including from Daekyo Investment.

It also invested 1 billion KRW in the new energy company 'Green Mineral.' This company possesses technology that can recover up to 70% of residual lithium from lithium waste liquid using chlorella, a type of seaweed. Jin explained, "With the activation of electric vehicles ahead, ESG (Environmental, Social, and Governance) issues are emerging. In this process, recycling secondary batteries is a task that must be achieved."

Jinseongtae, CEO of Daekyo Investment, poses before an interview at the Daekyo Investment office in Gangnam-gu, Seoul, on May 20. Photo by Jinhyung Kang aymsdream@

"Returns are the Basics of VC... We Will Be a Stable Long-Term Investment Destination for LPs"

While focusing on early-stage investments, they have not lost sight of high returns. The overall internal rate of return (IRR) of their funds exceeds 20%. Representative early investment and exit cases include the business card and career management platform 'Remember' and in vitro diagnostic device developer Suzentec. Jin said, "We are steadily reaping results from investments made over more than 10 years. Although the IPO market was generally sluggish last year, Daekyo Investment succeeded in two IPOs: GI Innovation, a protein drug R&D company, and Curatis, a vaccine and immune disease treatment company. We achieved excellent returns of 2.5 to 3 times the invested principal."

He added, "The basics of VC are to generate steady returns regardless of market conditions and to share profits with LPs and shareholders. For VC to have meaning as a sustainable industry, it must manage others’ capital and return good profits. Only then can more excellent venture companies be sustainably invested in. This is the social responsibility of VC."

Regarding the recent VC market, Jin said, "In the past 4 to 5 years, the market was flooded with capital, and startup valuations were high. Conversely, although the current market situation is not good, it is positive in that investments can be made at reasonable valuations." However, he noted, "The number of investors is increasing, but LP capital in the market is decreasing, making funding prospects bleak. VCs with less than 500 billion KRW in assets under management may suffer the most, so they must activate investments based on existing funds and build competitiveness." Daekyo Investment was selected for the Korea Fund of Funds’ early startup sector this year and is preparing to form its 8th fund.

Additionally, Jin said, "We will strive to encourage more LPs to participate in the VC market," adding, "We will work to improve the perception that the VC market is a good long-term investment destination and can be safer than stock management. We want it to be considered as one of the alternative investment asset options."