Sanhae, 100 Billion KRW 'Record-scale' Scale-up Investment in Kakao Enterprise

Chairman Dong-geol Lee Achieves Results One Year After Emphasizing Large Investments in Innovative Companies Through Domestic Capital

[Asia Economy Reporter Kangwook Cho] The Korea Development Bank announced on the 6th that it has invested 100 billion KRW in Kakao Enterprise, a next-generation core affiliate of Kakao, a leading domestic IT innovation company.

Kakao Enterprise is a subsidiary established by Kakao in December 2019 to fully enter the AI-based business-to-business (B2B) platform market. It is entering the B2B IT market through messenger-based work collaboration tool 'Kakao Work' and enterprise cloud service 'Kakao iCloud'.

Despite the continuous expansion of domestic venture investment scale and the increase in corporate value due to the growth of promising startups, the average venture investment per case remains below 3 billion KRW, indicating insufficient large-scale scale-up investments by domestic institutions. According to the Korea Venture Capital Association, venture investment increased from 2.4 trillion KRW in 2017 to 3.4 trillion KRW in 2018 and 4.3 trillion KRW in 2019. However, the average venture investment amount per company in Korea is 2.7 billion KRW, which is one-fifth of the 15.4 billion KRW in the United States.

This investment is an unprecedented case where a domestic institution has independently executed a large-scale scale-up investment, which had previously relied on overseas capital, and the Korea Development Bank expects it to set a new milestone in the domestic venture investment market.

To directly support large-scale investments and financing for promising startups, which are future growth engines and key to job creation, the Korea Development Bank established the Scale-up Finance Office early last year and has executed large investments of over 10 billion KRW in 14 companies, including this 100 billion KRW investment. In particular, through differentiated financial solutions such as combined investment and financing including loans, and various attempts with private investment institutions, it is revitalizing the venture investment market.

For example, the 'Mega Venture Special Fund' launched last year is a product that offers preferential interest rates based on market-recognized corporate value. While startups operating at a loss generally pay interest rates above 10% when borrowing without collateral, some startups are borrowing at an interest rate of 2.74% (as of December 31, 2020) through this product.

Lee Dong-gull, Chairman of the Korea Development Bank, said, "In an era that requires bold financial support for promising startups with high growth potential, we will not hesitate to provide large-scale scale-up investment and financing and differentiated support for innovative companies." He added, "Especially from this year, we plan to continue active support for core companies in key innovative growth sectors through the establishment of the 'Korean New Deal Venture and Scale-up Investment and Financing Program' worth 1 trillion KRW over five years."

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