Cyber hacking (illustrative).
(photo credit: INGIMAGE)
The Economy Ministry and Israel Advanced Technology Industries (IATI) recently held an investment seminar that was the first of its kind in Israel. It included business meetings between South Korean venture-capital (VC) funds and Israeli companies.
For the first time, a large contingency with representation from all South Korean VC funds came to Israel for direct meetings with Israeli companies. The seminar provided a rare opportunity to learn about investment opportunities and financing in South Korea.
The delegation arrived in Israel at the invitation of the Israeli Economy Ministry’s economic attaché in Seoul. The first conference was the result of a cooperation agreement signed two months ago, led by IATI and South Korea’s Korean Venture Capital Association (KVCA).
Most Israeli companies are familiar with South Korea in the context of large technology companies, such as Samsung, Hyundai and LG. But not many know that the country also has a strong and diverse VC industry. This industry in South Korea is growing steadily each year and receives substantial support from government budgets, institutional investors and banks, which view the funds as a platform for diversifying investments and taking more risky positions.
The main areas of investment of VC funds in South Korea are communications, software and semiconductors. The fields of pharma and biotechnology are also significant investment areas.
South Korea is interested in pharma mainly due to the unique structure of the capital market in the country and the possibility of raising funds in a convenient manner for companies.
KVCA is a venture-capital fund that consists of 110 VC funds that together manage about $18 billion. The association acts as a supervisory body and promotes legislation and regulation in the field of venture capital.
According to the association, in 2017 South Korean VC funds invested a total of $2.2b. and raised $4.1b.
The new government in Seoul is reviewing regulations to create a friendlier environment for VC funds and startup companies. The move is part of an economic policy of support for small businesses and start-ups.
The current delegation will include a range of VC funds, including small and new funds, as well as the largest and strongest funds in South Korea. Among the participating funds: Korea Investment Partners, established in 1986, is among the largest and oldest funds in Korea. In 2017, it invested about $154 million, some of which made its way to Israeli companies Eloxx Pharmaceuticals and Kahr Medical.
Softbank Ventures, established in 2000, is an investment fund in Korea that is a subsidiary of the giant SoftBank Group. Since its inception, Softbank has managed 13 subsidiaries and investments in more than 200 start-ups.
Thirty percent of the investments are outside of Korea, and 45% of the investments are in early-stage start-ups. It recently invested in Innoviz Technologies together with Samsung Catalyst.
KTB Networks is the first fund that was established in Korea, and it is still active. KTB focuses on the fields of media, mobile, life sciences and communications. In 2017, it invested about $130m., and last May it set up a dedicated investment fund together with Korean Internet giant Naver. The fund operates in the field of audio content.
The Israeli Economy Ministry’s economic attaché in Seoul is working hard to bring foreign investment to Israel, and the current delegation is part of activities undertaken in the past two years in the field of investments with KVCA.
The visit of the Korean delegation comes at a time when great strides are being made, and cooperation between the two countries is strengthening. In 2017, total trade in goods between South Korea and Israel exceeded $2b., with total exports reaching $883m.
If you run a young start-up, have developed an interesting app or have a question, please feel free to contact firstname.lastname@example.org.Translated by Hannah Hochner.