Banks Becoming Major Venture Investors, Expanding Discovery of Innovative Companies

Woori Bank Investment Target Companies Public Offering
About 10 Selected in H1, Each Receiving Around 1 Billion KRW Investment
Shinhan Financial, Investing 33 Billion KRW in About 200 Startups
Industrial Bank Provides Pitch Opportunities on Venture Investment Platform
Market Kurly, Gigbang, etc. Successfully Secure Investments

[Asia Economy Reporter Kangwook Cho] Banks are actively seeking to discover innovative companies. This effort aligns with the government’s ‘Korean New Deal’ and ‘economic growth through innovation’ policies, as well as preparing for the post-COVID-19 era by directly investing in innovative companies and future growth industries to find new sources of revenue. Commercial banks have launched startup incubation initiatives not only through their own investments but also by collaborating with affiliated companies within their groups, while policy banks have established themselves as major supporters of venture companies.

According to the financial sector on the 14th, Woori Bank is conducting the ‘7th Public Offering for Investment Target Companies Supporting SME Innovation Growth’ until the 24th. Woori Bank plans to select about 10 companies in the first half of this year and invest up to 1 billion KRW per company through methods such as Redeemable Convertible Preferred Shares (RCPS). Since establishing a system in June 2018 for direct investment by banks in promising SMEs, Woori Bank has invested approximately 53 billion KRW in 55 companies through six public offerings up to last year.

Shinhan Financial Group has discovered and nurtured a total of 195 startups from 2015 to last year through its startup incubation program ‘Shinhan Future’s Lab.’ The amount invested directly and indirectly during this period exceeds 33 billion KRW. In addition, Shinhan recently renamed Neoplux, a full-fledged venture investment company acquired from Doosan Group for 73 billion KRW in September last year, to ‘Shinhan Venture Investment’ to mark a new beginning. After becoming a subsidiary last month, Shinhan Venture Investment formed two funds totaling 129.9 billion KRW, with affiliates including Shinhan Bank, Shinhan Capital, and Shinhan Financial Investment contributing 39.9 billion KRW.

‘KB Starters,’ a startup supported by KB Financial Group, had a total of 111 companies as of the end of November last year, with cumulative investments exceeding 50 billion KRW. Notably, KB Financial signed a ‘Business Agreement for Supporting Fintech Companies’ with the Seoul Metropolitan Government on the 17th of last month, pledging active cooperation for the overseas expansion of fintech companies.

Responding to Government’s ‘Korean New Deal’ and ‘Economic Growth through Innovation’ Policies
Securing New Revenue Sources through Direct Investment in Future Growth Industries

Hana Bank’s ‘OneQ Agile Lab,’ established in June 2015, has discovered and nurtured about 100 startups up to last year. Recently, it held an online awards ceremony for the ‘Hana-Fintech New Business Idea Contest’ in collaboration with Seoul’s ‘Seoul Fintech Lab.’ Hana Bank CEO Sungkyu Ji announced in 2019 plans to invest 500 billion KRW in SMEs and venture companies and to make equity investments worth 20 billion KRW in promising startups. NH Nonghyup Bank has selected over 120 supported companies through its startup growth support program ‘NH Digital Challenge Plus’ up to last year.

Policy banks such as KDB Industrial Bank and IBK Industrial Bank have already established themselves as major players in the venture capital market.

KDB Industrial Bank’s representative venture investment platform, ‘KDB Next Round,’ has provided IR opportunities to over 1,500 companies in the past four years, with 357 companies including Market Kurly and Zigbang successfully raising about 2.1 trillion KRW in investments. Particularly, KDB’s direct scale-up financing for discovering and nurturing Korean unicorns reached 450 billion KRW as of the end of November last year, more than quadrupling from 107.6 billion KRW in the same period the previous year. Furthermore, KDB plans to establish a venture capital firm in Silicon Valley, USA, within this year.

IBK Industrial Bank recently selected 64 innovative startup companies in the first half of this year through its startup incubation program ‘IBK Changgong (創工).’ Since opening in December 2017, IBK Changgong has nurtured a total of 243 companies over three years until December last year. During this period, it provided 186.7 billion KRW in financial support including loans and investments, and 3,192 instances of non-financial support such as mentoring, consulting, and IR.

A financial sector official said, “Investment in innovative companies by the financial sector will expand further in the future,” adding, “This is not only in response to government policies but also because it strengthens internal capabilities, enhances image, and brings effects such as securing new growth engines.”

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