Qunesty Reinvests Returns from 'Good Company' Investments into More Good Companies [VC Now]

Interview with Qunesty CEO Lee Sunyeol on Impact Investing
Portfolio's Average IRR Reaches 15.6%
Hybrid Operation Combining Loans, Project Financing, and Equity Investment

"A company that does not make money cannot continue to grow and solve social problems. If an investment does not yield financial returns, it cannot be considered a sustainable impact investment."

Lee Sunyeol, CEO of Qunesty, recently met with The Asia Business Daily at the SVC Seoul office, emphasizing, "We should not view impact investing as simply funding 'good companies.'" He explained that as companies grow, the range of social problems they can address widens, and recovered investment capital can be reinvested into new companies.

From ‘Korea Social Investment’ to ‘Qunesty’...Expanding Investment into Innovative Companies

Lee Sunyeol, CEO of Qunesti, is giving an interview with The Asia Business Daily. Photo by Yoon Dongjoo

Qunesty is a public interest impact investment firm now in its 14th year. Formerly operating under the name Korea Social Investment, the company rebranded as Qunesty this year. The name combines the Latin word "Cunae" (meaning cradle) and "Social Transformation.” The intent is to move beyond being recognized solely as an institution supporting social enterprises or village businesses, and to expand investments to innovative technology ventures and new business models addressing societal challenges.

CEO Lee began his professional career at an international development NGO. As he worked to address poverty in developing countries, he recognized the limitations of a structure reliant solely on donations and aid. After encountering microfinance models that alleviated poverty by recycling capital through microloans, he became deeply involved in impact investing. He joined Korea Social Investment in 2016 and has served as CEO since 2022.

Qunesty’s most notable feature is its use of donations as investment capital. Donations received from corporations and individuals are invested in early-stage impact companies; recovered principal and returns are then used to invest in new ventures. Unlike typical venture funds that distribute profits to investors after fund liquidation, Qunesty’s model recycles capital repeatedly for public interest purposes.

Lee explained, "Even when investment funds are recovered, there is absolutely no structure where internal personal profit is taken. The advantage of a public interest investment fund is that capital can be cycled to achieve even greater social impact through repeated investments and recoveries."

In addition to traditional equity investment common in the accelerator (AC) and venture capital (VC) industries, Qunesty employs various financial instruments. Lee said, "For high-growth companies expected to show a J-curve, we invest via equity; for those with steady sales, we provide support through loans. For startups and small business owners needing funds for specific seasons or projects, we apply project financing (PF) to validate their business models, then link to equity investment."

102 Equity Investments, 15.6% IRR...Connecting Regional Ventures to TIPS

To date, Qunesty has supplied approximately 77 billion won to the business ecosystem through a combination of equity investments, loans, and project financing. The total number of companies supported via investment and acceleration programs has reached about 1,500. Their main investment focus areas are climate tech, social services, agri-food, impact AI, and impact mobility.

Qunesty’s financial performance is also notable. The accumulated portfolio includes equity investments in 102 companies, with over 90% of them still in business. The average internal rate of return (IRR) stands at 15.6%.

Concrete exit achievements have also accumulated. For example, after investing in Seedn, a building energy-saving solutions company, Qunesty recovered three times its invested capital within two years. It is also set to recover 4.25 times its investment from a water-based battery company that reduces fire risk.

One of the most representative recent cases is PhysioRobotics, a rehabilitation robot company for scoliosis. Having struggled for years to attract investment, PhysioRobotics raised 900 million won with Qunesty’s support and a TIPS recommendation. Other businesses, like the natural language-based trade platform SourcingRoute for small businesses and BioNutrion, a post-obesity drug management company, have also established foundations for commercialization via TIPS connections.

This year, Qunesty completed TIPS recommendations for a total of 17 companies, 16 of which are regional social ventures. Qunesty’s staff visited local communities to discover firms, consulted on business models and technical development plans, and provided TIPS recommendations. In both the first and second quarters of this year, all companies recommended by Qunesty were selected for TIPS.

As a future area of focus, Lee highlighted ‘vertical artificial intelligence (AI)’ specialized for specific industries. He emphasized, “While Korea is widely considered to lag behind the US and China in the large language model (LLM) development race, the country’s high technological receptivity and understanding of industrial sites enable rapid application of AI to specific sectors such as healthcare, manufacturing, and care services.”

"Urgent Need for Early-Stage Investment Track...Plan to Expand 'Fund of Funds' Role"

He pointed out that the early-stage investment market requires more finely tuned policy design. Even if substantial public funding is raised, as fund size increases, fund managers are compelled to make larger investments per company—resulting in seed-stage companies being overlooked.

Lee stated, "If a fund exceeds 20 billion won, the number of companies an operator can invest in from a single fund is limited. When looking for investments of about 2 billion won per company, early-stage businesses naturally get pushed out." He added, "We should create dedicated early-stage investment tracks for every field, including climate, care services, and agri-food. Only 5.6% of the total mother fund is currently managed by accelerators; this needs to be raised to 20–30%."

Lee Sunyeol, CEO of QNEST, is giving an interview with The Asia Business Daily. Photo by Dongju Yoon

Going forward, Qunesty plans to expand its role as a fund of funds, supplying capital to external early-stage investors as well as investing directly. The company currently has investments in four domestic and overseas funds and aims to attract additional donated capital to empower capable accelerators to invest in regional and impact-driven companies.

Lee said, "If just 1–2% of the corporate social responsibility funds spent by companies each year were redirected to early-stage and impact companies, the investment ecosystem could change dramatically. Qunesty will both directly discover promising companies and focus on supporting early-stage investors to plant the seeds for more businesses through the supply of capital."

This content was produced with the assistance of AI translation services.