[VC Now](23) EcoPro Partners: "Korea's Industrial Engine Lies in Manufacturing Process Capabilities"

Jaehun Lee, CEO of EcoPro Partners, Interview
"Bridging Venture Companies and EcoPro"

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

"South Korea's greatest strength on the global stage lies in its manufacturing process capabilities. I believe it is risky to dismiss manufacturing as a relic of the past and focus solely on software and platform sectors."

Jaehun Lee, CEO of EcoPro Partners, made this statement regarding South Korea's growth engine during a recent interview at the EcoPro Yangjae Office in Seocho-gu, Seoul. Lee emphasized the importance of manufacturing, saying, "Our society is in such a rush to find new growth engines that we are failing to leverage our unique strengths."

Lee, who previously served as a professor of business administration and as president of Korea Technopark, was appointed as the founding CEO of EcoPro Partners in 2020. As the corporate venture capital (CVC) arm of the EcoPro Group, EcoPro Partners has, in just five years since its establishment, achieved five initial public offerings (IPOs) and three major exits, thereby proving the effectiveness of its manufacturing-focused investment strategy.

Jaehun Lee, CEO of EcoPro Partners, is being interviewed by Asia Economy. Photo by Dongjoo Yoon

"AI Revolution Requires a Manufacturing Foundation"

Lee stressed that the importance of manufacturing has grown even greater amid the global artificial intelligence (AI) boom. He explained, "Even if the AI industry develops, software accounts for only about 30% of a $1 trillion industry. Energy storage systems (ESS) must provide backup, and servers must support them for an AI-driven society to truly take off."

He also cited the success stories of global manufacturing giants such as Foxconn, TSMC, and Xiaomi. Lee said, "Just ten years ago, Foxconn was merely a subcontractor for Apple, but now, by manufacturing AI servers, it is recognized as a leading global AI company. The U.S. government, having realized the risks of declining manufacturing capabilities, is also striving to restore its status as a manufacturing powerhouse."

He added, "AI is important, but it should be seen as a lubricant that enhances the productivity of manufacturing. Even in a fully AI-driven society, manufacturing capabilities will remain essential. We need to continue to deepen what we do best."

Accordingly, EcoPro Partners is securing new growth engines by focusing on manufacturing startups in regional areas. Reflecting the identity of its parent company, EcoPro Group, it has set decarbonization and electrification as its primary investment areas. AI technologies that support these fields are also key targets.

The core of its investment strategy is "full lifecycle investment." Lee explained, "We have structured our investment approach with the goal of serving as the outpost for EcoPro Group's open innovation. We can provide tailored investments for each stage of a company's growth, including startup scale-up TIPS, VC, and private equity funds. Since we have resources to invest from the very early stages of a company's founding, we can support companies throughout their entire lifecycle."

Over the past five years, EcoPro Partners has successfully taken five companies public and achieved three exits, delivering an average return of 4.5 times (approximately 8 billion KRW) per exit. A representative success story is Sungil Hitech, a battery recycling company. Lee explained, "By investing in Sungil Hitech, we connected valuable metals to EcoPro Materials and successfully exited through EcoPro Partners," highlighting the synergy within the group.

This Year’s Goal: Expand AUM by an Additional 100 Billion KRW

Recently, EcoPro Partners invested in Sol Materials, a company producing thermal management materials. The company's valuation grew from 15 billion KRW at the time of investment to about 100 billion KRW today. Subsequent investments from other large VCs also followed. Lee noted, "The network and understanding of manufacturing I built during my time as president of Korea Technopark are proving helpful. Many companies value the fact that a company invested in by EcoPro Partners has already been technically validated, sometimes prioritizing the investment itself over the amount. The brand power of EcoPro is a significant advantage in sourcing investment opportunities."

Jaehun Lee, CEO of EcoPro Partners, is being interviewed by Asia Economy. Photo by Dongjoo Yoon

Above all, Lee identified two essential elements for venture companies: capital and market access. While securing capital is a basic function of a VC, he believes helping companies access markets is even more important. He said, "Unlike some VCs that simply invest without considering value-up, EcoPro Partners focuses on value-up. Accordingly, our investment screening criteria prioritize three factors: the capabilities of the CEO and team, technological prowess, and market potential. We are fundamentally looking for companies with strong technical capabilities."

Currently, EcoPro Partners manages approximately 230 billion KRW in assets under management (AUM) and has accumulated a portfolio of around 60 companies. Investment sizes vary from 100 million KRW to 10 billion KRW depending on the stage of the company. About 25-30% of the total capital comes from EcoPro family companies as anchor LPs, while the remainder is raised from institutional investors such as the Korea Fund of Funds and Korea Development Bank.

Despite the uncertain investment environment, EcoPro Partners plans to establish an additional fund of about 100 billion KRW this year. Lee added, "Our goal is to increase AUM from 230 billion KRW to 300 billion KRW. We originally aimed for three IPOs and have already achieved two. If the market improves in the second half of the year, we expect to see additional exits as well."