[In-Depth Look at Major VCs]③18 Years Surviving the Overseas VC Wilderness... Korea Investment Partners’ Global Tenacity

18 Years in China: 700 Billion Won Raised Locally
Global Deal Teams Operate Year-Round
Strategic Presence in Key Markets Worldwide
AUM Approaches 5 Trillion Won Including 3 Trillion Won in VC and 850 Billion Won Offshore

Editor's Note
A record amount of capital is pouring into the venture investment market. The government's major policy funds are now fully operational, resulting in large venture capital (VC) firms rapidly scaling up. However, having more money and managing it well are two different challenges. This series will provide an in-depth analysis of trends in the VC market and the leading domestic VCs over 11 installments. Only the top houses by assets under management (AUM) were selected, excluding those with a high proportion of private equity (PE). After reviewing the overall market, we will examine each firm's growth trajectory, key portfolios, investment philosophies and decision-making structures, as well as the essential people and organizational cultures.

Overseas local subsidiaries and dedicated global deal teams—a differentiated strategy of Korea Investment Partners, which allocates 30% of all investments overseas. In 2008, when it was rare for Korean venture capital (VC) firms to expand globally, the company established a subsidiary in China and has spent nearly two decades experiencing changes in the local ecosystem. The Shanghai subsidiary is now generating profits. Based on this distinctive overseas investment strategy, the firm is making its name in global deals, including those in the U.S. and other markets. Buoyed by the success of its U.S. and China branches, Korea Investment Partners is planning to further focus its capabilities on investment in Southeast Asia, with Singapore as its base.

Achieving KRW 5 Trillion in AUM...Strong Performance in U.S. and China VC Markets

As of last month, Korea Investment Partners’ assets under management (AUM) reached approximately KRW 5 trillion. Of this, VC AUM amounts to about KRW 2.9652 trillion, PE is KRW 1.1780 trillion, and offshore accounts for KRW 850.3 billion. The firm focuses primarily on sectors such as ICT services and bio/healthcare.

According to the Small and Medium Business Corporation Venture Investment Association (DIVA) electronic disclosure, as of the first half of this year, ICT services accounted for 39.9% of total investments by sector, and the bio/medical sector accounted for 22.9%.

One notable aspect of Korea Investment Partners’ investment operation is that it manages funds directly from the U.S. (Silicon Valley), Shanghai and Beijing in China, and Singapore. In particular, its China subsidiary has continued to invest since establishing its presence in 2008. The China branch has established roots in the local market, navigating through periods when China was a venture investment wasteland, the rapid rise of internet companies like WeChat, the increase in U.S.-China tensions under the Trump Administration, and the COVID-19 pandemic. According to Hokyeong-sik, head of Korea Investment Partners China, at NextRise in June, the China subsidiary has formed a total of KRW 700 billion in local funds.

According to last year's audit report, the wholly owned subsidiaries, including Hantoo Peng Huang (Zhangjiagang) Venture Investment Co. and Hanpeng (Zhangjiagang) Equity Investment Partnership (Limited Partnership), recorded equity method losses of KRW 950,000 and KRW 942.75 million respectively. However, Shanghai Youxian Zeren Gongsi (Shanghai subsidiary) posted KRW 7.06062 billion in equity method gains, marking the highest among the subsidiaries in terms of equity-method profit and loss. The China subsidiary is closely monitoring companies in cutting-edge strategic industries such as semiconductors, AI infrastructure, robotics, and biotech.

The company is also demonstrating strong results in global deals based in the United States. Major portfolio companies include SpaceX, xAI, and Anthropic. Mansoon Hwang, CEO of Korea Investment Partners, said, "The overseas investment ratio for the firm is 30%. There have been successful outcomes in the U.S. and China, and while Southeast Asia (Singapore) still requires more energy, we are focused on bolstering our capabilities there."

He added, "Korea Investment Partners not only has a Silicon Valley office, but is also backed by offshore funds, giving us a relative advantage. More importantly, we can leverage the halo effect and synergies of Korea Investment Holdings, which makes it easier to conduct investments. We also have permanently assigned teams dedicated to sourcing global deals, which is a great help."

Recent Disappointing Bio Returns From a Leading Player

Korea Investment Partners has established itself as a key player by investing in diverse medical and bio companies. In the first half of this year alone, it invested about KRW 44.5 billion in eight companies, and also boasts meaningful exits, such as the public listings (IPOs) of firms like EuBiologics, ABL Bio, and HLB Life Science.

Much of the firm’s reputation can be attributed to Mansoon Hwang's career. After starting in the pharmaceutical industry, Hwang transitioned to the VC sector, working for Korea Bio Venture Investment from 2001 before joining Korea Investment Partners in 2009 to lead bio-company investments and associated fund management. He has invested in companies such as ABL Bio and LegoChem Biosciences, while also forming the Global Pharma Industry Growth PEF and the Korea Investment Re-Up Fund.

However, there have recently been some disappointing exits in the bio sector. For instance, in the case of LamediTech, a beauty and medical device company, Korea Investment Re-Up Fund holds at least an 8.89% stake after the company's listing. As of June 2024, upon its listing, the Korea Investment Re-Up Fund (9.04%) and the Bio Global Fund (2.48%) together held a 11.52% stake. While the stock price rose to KRW 56,000 at the time of listing, it has since fallen and now trades at around KRW 2,000 to 3,000.

As for Excel Therapeutics, in which Korea Investment Re-Up Fund held a 6.60% stake at the time of listing, the stake has now dropped to 2.62%. The stock price, which once soared to KRW 11,371 shortly after listing, has plunged and now stands in the KRW 1,000 range. According to the most recent annual audit report disclosed in April, the Korea Investment Re-Up Fund recorded approximately KRW 6.1 billion in equity method losses related to these holdings.

Strong Momentum for GP Selection in the Second Half...Will It Find a Breakthrough?

This year, the firm has been chosen as a general partner (GP) for a series of government-led venture funds, and is expected to actively pursue the discovery of high-growth potential firms by expanding its AUM in the second half.

On the 27th of last month, Korea Investment Partners was finally selected as GP in the biohealth phase 3 clinical trial sector under the “Fund of Funds Ministry of Health and Welfare Investment Program.” Initially, the target fund size was KRW 150 billion, but Korea Investment Partners eventually proposed a total formation amount of KRW 170 billion. Of this, the Fund of Funds will contribute KRW 70 billion, with the Export-Import Bank of Korea and Industrial Bank of Korea each investing KRW 10 billion.

The main investment targets include (1) companies that have completed phase 2 trials and are pushing for phase 3 clinical trials at home or abroad; (2) companies conducting or having obtained conditional regulatory approval for drugs at home or abroad; and (3) companies that have received product approval or completed phase 3 clinical trials domestically and are working on global phase 3 expansion. At least 60% of the total committed capital must be invested in these companies.

CEO Hwang commented, "As we are still in the process of communicating with other limited partners (LPs), it is difficult to confirm the formation date, but we aim to at least complete the first stage of the fund next month.” He added, “Because phase 3 clinical trials inherently require significant capital, we plan to focus investment reviews on treatments targeting rare diseases, anticancer drugs, or therapies for specific diseases with relatively small market sizes." He further noted, “For listed companies, not only the disease area but also the company’s commitment to value-up strategies ranks highest among our investment priorities.”

After beating a competitive ratio of 17:3, Korea Investment Partners further cemented its position by being selected as a GP for the second indirect investment subdivision of the National Growth Fund policy fund. The league to which Korea Investment Partners was assigned is a mid-sized league with a fundraising goal of KRW 200 billion to 400 billion, which must invest a certain portion in small and mid-sized companies in cutting-edge strategic industries. Each fund can ultimately be formed up to 200% of its target amount. CEO Hwang said, “I expect that we can form more than KRW 550 billion before October, and plan to build a balanced portfolio of companies including AI, physical AI, security, and bio.”

<Series continues>

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