[VC Now](22) LB Investment: "In the AI Era, Global Competitiveness Is the Key to Survival"

Kiho Park, CEO of LB Investment, Interview
"Global Competitiveness in the AI Era"
"VC Industry in a 'Correction Phase'... Differentiation Is Essential"

Editor's NoteVenture capital (VC) firms are nurturing early-stage companies that will become the backbone of future industries at the forefront of the capital market. Although the VC industry is also experiencing a downturn due to the global economic recession and high interest rates, efforts to identify and foster promising companies continue unabated. Asia Economy meets with a variety of investment firms, ranging from large, established VCs with years of experience and know-how to new VC entrants, to hear about their investment strategies and stories.

"The defining feature of the artificial intelligence (AI) era is the disappearance of language barriers. Whether you start in Korea or the United States, I believe you have no choice but to target the global market."

This is according to Kiho Park (61), CEO of LB Investment, whom we met on May 7 at the LB Investment office in Gangnam-gu, Seoul. Park joined LB Investment in 2003 and was appointed CEO in 2016. Since then, he has led the company's bold early-stage investments based on a strategy of "selection and concentration."

Kiho Park CEO of LB Investment

Given the current situation in which the Korean economy and industrial structure have entered a low-growth phase and the venture investment market remains sluggish, we asked Park about global industry trends, overseas expansion strategies, and market outlook.

Extensive Global Networking... "In the AI Era, the U.S. Market Is Key"

First, Park emphasized the importance of securing competitiveness through "entry into the global ecosystem." He has consistently expanded global VC and startup networking, including making several overseas business trips last year.

Park said, "We have entered the early stage of the AI and deep tech era. The AI era is more powerful, concentrated, and globally oriented than the mobile and web eras, and the United States is leading this trend," adding, "Accordingly, we are looking not only in Korea but also in overseas markets such as the U.S. for companies possessing 'core technologies.'"

He further explained, "In any industry, as you move from the early to the later stages, the importance shifts in order from infrastructure installation to device replacement and then to service competition. When a new industry cycle begins, companies with technological capabilities receive more attention, and over time, companies with strong service models emerge."

Park stated, "In the past, the Korean language was a barrier to overseas expansion, but now, AI services we use, including ChatGPT, have completely eliminated this. Foreign companies can enter Korea, and conversely, Korean companies can go abroad. For companies aiming to grow in Korea, we help them succeed domestically, and for those targeting global markets, we support them accordingly."

The Current VC Market Is in a 'Correction Phase'... "Expecting a New Leap in Five Years"

Regarding the current venture investment market, Park described it as being in a "correction phase." He said, "After a sharp increase in liquidity led to a surge in VC investments from 2020 to 2022, we are now in a kind of correction period. This is not unique to Korea; the U.S., China, and others are all experiencing the same phenomenon. The higher the mountain, the deeper the valley," he explained. He predicted, "After about five years of adjustment, a better period for the industry will come."

He also stressed that each VC must have a differentiated investment strategy. He said, "Every VC must be different. Each VC has its own investment strategy, and it is important to focus and develop specialized capabilities. Startups, too, should look for VCs that can build good partnerships, not just those that provide investment."

In fact, LB Investment has become a top-tier Korean VC, managing 1.5 trillion won in assets under management (AUM) and 500 billion won in undrawn commitments (dry powder), through its "selection and concentration" strategy. Over the past 29 years, the firm has invested in 550 companies, with 120 of them successfully completing initial public offerings (IPOs). Park said, "The total number of portfolio companies is much lower than that of other top-tier VCs," adding, "We do not invest in many startups hoping to make a big return from just one. Once we invest, we continue to support the startup through two to three rounds, aiming to help them achieve sufficient results."

More than 10 of LB Investment's early-stage portfolio companies have become unicorns (unlisted companies valued at over 1 trillion won), including Big Hit Entertainment (HYBE), the agency of BTS, Pearl Abyss, known for the popular game Black Desert, Kakao Games, and LX Semicon. This year, the company has already achieved IPOs for four companies, including Organoid Science, which began trading on May 9, and is also pursuing listings for Livesmed, Semifive, and Nota in the second half of the year.

Among LB Investment's notable recent portfolio companies, Park highlighted the fashion platform Ably. He said, "We invested a total of 20 billion won in Ably over three rounds. In the second half of last year, Ably received investment from China's Alibaba and was recognized with a corporate value of 3 trillion won," adding, "In addition, we continue to invest in startups in AI, robotics, content, and healthcare, and this year, we expect a more stable year in terms of fund formation, investment, and exit."

Park also shared his management philosophy centered on investors. He said, "LB Investment has successfully attracted investments from most domestic pension funds and financial institutions, and is evaluated as the most successful VC among limited partners (LPs) in terms of stability, profitability, and transparency. To ensure transparent fund management, we only make fund commitments with our own capital and do not make direct investments. Since everything is through fund investments, the performance of our managed funds is everything to us."