[VC Now]⑫ ScaleUp Partners "Supporting 'Incubating' to Reduce Early-Stage Startup Failure Rates"

Interview with Lee Taegyu, CEO of ScaleUp Partners
"Operating Korea's First Dedicated Fund Linking TIPS and ScaleUp TIPS"
"Focus on Innovation in AI, Bio, and Materials Industries"

Editor's NoteVenture capital (VC) firms nurture 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.

Lee Taegyu, CEO of Scale-Up Partners, is being interviewed by Asia Economy at the office in Jongno-gu, Seoul. Photo by Younghan Heo younghan@

"Usually, venture capital (VC) firms are concentrated in Gangnam or Yeouido in Seoul, but our house has settled near Hyehwa Station to align with our investment strategy. Within a 5 km radius, there are research institutes or hospitals affiliated with Seoul National University, Yonsei University, and Korea University."

This is what CEO Lee Taegyu said during a recent meeting at Scaleup Partners' office in Jongno-gu, Seoul. Founded in 2020, Scaleup Partners is recognized as a VC that has shown rapid growth over four years through its unique 'incubating system.' Notably, last year it was selected as an operator for the 4th batch of the Ministry of SMEs and Startups' 'Scaleup TIPS' program, leading the growth of early-stage startups and venture companies in Korea. In the Scaleup TIPS program, private operators discover promising companies and make initial investments of over 1 billion KRW, after which the government provides follow-up investments of up to 2 billion KRW. Additionally, up to 1.2 billion KRW in research and development (R&D) funds are supported over three years.

CEO Lee stated, "For early-stage companies, it is extremely important to understand how and when to sell products and how to raise funds. Especially when researchers or professors start a business, they need to meet a good 'strategist' who can surpass their achievements in their own field," adding, "Our role is to connect talented people and help companies improve their shortcomings so they can receive follow-up investments."

He added, "Founders must first acknowledge their weaknesses and either improve on their own or receive support from external experts. Scaleup Partners offers various incubating programs to increase the success potential of startups. We connect founders with leading strategic investors and financial investors to share information and professional commercialization strategies, providing programs that reduce the probability of failure with experts in each field," he explained.

"Formed a fund worth 65 billion KRW... Secured stable investment resources"

CEO Lee graduated from Korea University with a degree in electronic engineering and worked in technology planning and business planning at Samsung Electronics during the 1990s when the IT industry ecosystem was emerging. As VC investment became active in the 2000s centered on IT, he entered the venture startup field as part of Korea's first generation of VCs. Over about 20 years, he served as lead fund manager for funds totaling 200 billion KRW at Korea Ventures and Wonik Investment Partners, and in 2020, he founded Scaleup Partners targeting AI, bio, and materials sectors.

He said, "The characteristic of the industries we focus on is that capital raising is difficult at the early commercialization stage, and structurally, strategy formulation and execution are challenging." He continued, "The core goal of VCs is to invest in good companies and generate high returns, and accelerators (ACs) must discover those good companies early, but the problem was the gap between these stages. I wanted to create a small but strong company builder-type VC to overcome this gap," explaining the reason for founding the firm.

Scaleup Partners focuses on supporting companies transitioning from seed (early) investment to Series A and B stages. In particular, it operates Korea's first dedicated fund linked to the TIPS and Scaleup TIPS programs. This year, it proposed a dedicated fund linked to TIPS and Scaleup TIPS in the first regular rookie league of the Korea Fund of Funds and was finally selected. Hana Ventures, Seoul Metropolitan Government, and others also participated as limited partners (LPs), completing the fund formation at the end of June.

CEO Lee said, "We aim to support companies to sustain growth so that government R&D support does not become a one-time funding. When combining the amounts of follow-up investments made by Scaleup Partners in existing TIPS and Scaleup TIPS selected companies and the amounts disbursed to companies directly invested in or recommended by Scaleup Partners, it accounts for about 85% of Scaleup Partners' total investment, indicating a very high linkage rate with TIPS and Scaleup TIPS programs," he emphasized.

He also said, "We have established a cooperative system with government-funded research institutes, universities, and university hospitals, which are core startup pathways based on deep tech. Major banks such as IBK, Shinhan Financial Group, and Hana Financial Group, along with the Seoul Metropolitan Government, Chungbuk Province, and Jeonbuk Province, participate as major LPs, forming a fund worth approximately 65 billion KRW, thereby securing stable investment resources."

The Scale-Up Partners office is located near Hyehwa Station in Jongno-gu, Seoul, close to university research institutes and hospitals.

"Expect venture investment to activate 1-2 years after interest rate stabilization"

As short-term achievements, he cited investment cases in healthcare companies such as 'HUniverse Global,' a world-class cloud-based next-generation hospital information system developer; 'Microbiotics,' 'Ubix Therapeutics,' and 'VS PharmTech,' which develop innovative new drugs. In the IT sector, companies invested in by Scaleup Partners such as 'Merlo Lab,' 'AI Some,' and 'Qubit Security' are preparing for IPOs within 1-2 years.

Scaleup Partners is also recognized as a VC actively cooperating with local communities, including the Seoul metropolitan area?Seoul, Gyeonggi, Incheon?known for its excellent startup ecosystem, as well as the central region including Chungbuk, Jeonbuk, and Daejeon, which have large industrial facilities and regional specialized projects. CEO Lee advised, "Local governments should not start by worrying about which companies to bring in, but rather first consider which industries to foster." He added, "Once a strategy is established, we prioritize finding competitive companies within the local government and support companies from outside to enter. Through this, we aim to nurture regionally specialized industries and contribute to regional economic revitalization."

Regarding recent trends in the venture investment market, he said, "Venture investment is a long-term investment field spanning over 10 years. More important than short-term industry trends is the overall flow of technological advancement speed and paradigm shifts applied to industries." He predicted, "As the high-interest-rate policy appears to be in its final stage, the investment market will brighten significantly 1-2 years after interest rates stabilize and companies complete asset and liability restructuring."

CEO Lee said, "Even now, investments continue steadily in AI and materials sectors. The bio sector has grown in industrial importance since the COVID-19 pandemic. Investment will activate from early next year when the current sorting process concludes," adding, "Scaleup Partners focuses on medical fields combining AI based on hospital data, bio, and robotics, as well as collaborative robotics. Startups applying AI and robotics technologies in healthcare and medical devices are gaining attention and will show rapid growth as icons of innovation."

He stated, "We have secured stable resources for annual investments of about 50 billion KRW and aim to achieve assets under management (AUM) of 200 billion KRW by 2026. Based on this, we will strengthen the 'full-cycle commercialization support program' that supports startups from early stages to market entry. Furthermore, we will actively support global expansion to discover and nurture unicorn companies competitive in the global market, not just confined to the domestic market," he added.

Scale-Up Partners CEO Lee Taegyu is introducing the company during an interview with Asia Economy at the office in Jongno-gu, Seoul. Photo by Huh Younghan younghan@