[VC Now] ⑭ Eolmeos Invest: "Achieving Investment Success by Capturing Both 'Trust' and 'Speed'"

'25 Years of Experience' Interview with Son Yang-cheol, CEO of Eolmus Investment
Standing Out in the Secondary Fund Market... "Related Market Will Continue to Expand"
"For Quick Decision-Making, Doing Our Best in Industry Research and Preparation"

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.

"Most of the key personnel are shareholders of the company, allowing for free and independent management. This is the secret to operating the company through trust among limited partners (LPs), investee companies, and employees. Thanks to this, we were also able to make quick investments. We complete investments within two years of fund formation, and we do not leave any dry powder (unspent capital)."

Founded in 2018, Ulmus Investment is a mid-sized venture capital (VC) firm that has distinguished itself in the secondary (purchase of existing shares), growth capital, and mergers & acquisitions (M&A) markets, growing to manage assets (AUM) worth approximately 320 billion KRW in about six years. Son Yang-cheol, CEO, whom we met recently at Ulmus Investment’s headquarters in Gangnam-gu, Seoul, cited 'trust' and 'speed' as the core philosophies of the house.

CEO Son said, "Ultimately, investment is a 'decision-making' process. Through intensive internal discussions, we comprehensively assess the risks of the company, teamwork, and business growth potential," adding, "Whether we invest or not, dragging out the decision causes losses for the investee company, so quick decisions are important."

Son Yang-cheol, CEO of Ulmus Investment, posed for a photo in front of the company logo before an interview at the headquarters in Gangnam-gu, Seoul. Photo by Heo Young-han

"Established VC with direct capital investment... Strength in Secondary Funds"

CEO Son began his career in 1997 at the Korea Credit Guarantee Fund (KODIT). Meeting small and medium-sized enterprise (SME) representatives directly, he performed credit evaluation, analysis, and loan guarantee tasks. He first stepped into the VC industry in 2000. Son said, "I volunteered to move to KODIT Startup Investment, a subsidiary of KODIT. My superior tried to dissuade me, but I did not waver," adding, "I was attracted to active investment activities that invest in companies with growth potential and share profits upon success. I also had a goal to establish a VC myself someday."

After handling VC investments at Hwatech Investment, Aju IB Investment, and E& Investment, CEO Son and four partners contributed 10.1 billion KRW in capital to establish Ulmus Investment, an independent new technology business finance company (Shingisa). The company name is derived from the Latin name of the elm tree, Ulmus, which symbolizes 'trust.'

The core of the investment is the 'secondary fund.' This is a field in which CEO Son has expertise to the extent that he lectures on secondary investments in the Korea Venture Capital Association training program for new personnel. Ulmus Investment formed secondary funds in 2019, 2022, and this year, with the Korea Fund of Funds as the anchor LP. Notably, three investments from the fund formed in December 2022 were immediately exited, and 25% of the invested principal was distributed to LPs in the first half of this year. The multiples for Angel Robotics and Kosem, which went public this year, reached 4x and 3x, respectively.

CEO Son explained, "Venture investments take a long time to exit, so demands for 'early exits' inevitably arise due to fund maturity, delayed exits, or financial market tightening," adding, "The core of secondary deals is that it is an 'early exit' market requiring faster recovery compared to initial investments, and there is a concept of 'discounted purchase,' where sellers attempting to liquidate portfolio assets receive a discount."

He said, "Ultimately, the more funds created in the market, the more secondary deals will be activated regardless of the KOSDAQ market downturn," noting, "The secondary fund formed in February this year is worth 50 billion KRW, and so far, 30 billion KRW has been invested. The secondary fund market is gaining attention as planned exit periods are disrupted and the market remains rigid."

Eolmeos Investment office in Gangnam-gu, Seoul. Just like its name, Eolmeos (Aralia elata), tall potted trees stand throughout the office. Photo by Huh Younghan

"Speed-Focused Investment... Supported by Thorough Preliminary Research and Internal Discussions"

Ulmus Investment basically focuses on industries with high growth potential. CEO Son said, "Recently, we have been paying close attention to artificial intelligence (AI) robots, aerospace, and biotech sectors," adding, "We also continue to monitor the materials, parts, and equipment (SoBuJang) sector, which will have sustained demand regardless of which fields develop."

One recent investment, Autocrypt, develops automotive security technology to prevent software hacking risks. CEO Son said, "Just as phones have become computers, cars now contain various software. There are hacking risks in internal security, vehicle-to-vehicle communication, and vehicle-to-traffic system communication," adding, "Autocrypt supplies its proprietary software to major automobile manufacturers and was also selected as the only automotive software certification body in Asia." Ulmus Investment has invested about 8 billion KRW cumulatively in Autocrypt and plans to file for preliminary listing review this month.

They also invested about 6 billion KRW in PMGrow, which provides battery condition certification services. CEO Son explained, "When the efficiency of automotive batteries drops to about 75%, they are repurposed for energy storage systems (ESS)," adding, "Due to recent electric vehicle fires causing anxiety, PMGrow was selected as the first battery condition certification body among private companies in Korea. They plan to file for preliminary listing review in November."

Ulmus Investment also invested about 2 billion KRW in AITRICS, founded by specialists from Yonsei University Severance Hospital. CEO Son said, "They provide AI-based diagnostic services that predict when ICU patients might die by signaling risk indicators," adding, "Monthly sales have grown rapidly since the initial investment. Currently, 33 hospitals use AITRICS’ services. We expect a multiple of over 5x."

CEO Son added, "The reason we can achieve both quick decision-making and investment/exit performance is that we devote ourselves to industry research and thorough preparation. As an independent new technology business finance company with operating personnel as shareholders, we are creating a unique model and aim to earn the trust of LPs by delivering continuous and stable results."

Son Yang-cheol, CEO of Ulmus Investment, is speaking during an interview at the headquarters in Gangnam-gu, Seoul. Photo by Heo Young-han