GS Launches 130 Billion KRW Venture Fund... "Aiming for a Healthy Business Ecosystem through Venture Collaboration"

Chairman Heo Tae-soo: "Let's Create a Venture Investment and Open Innovation Business Ecosystem"
Plans to Invest 10 Trillion Won in New Businesses and Ventures Over the Next 5 Years

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[Asia Economy Reporter Donghoon Jeong] GS Group's CVC (corporate venture capital) GS Ventures has completed registration as a new technology business finance company and finalized the formation of its first fund worth 130 billion KRW, marking the full-scale launch of venture investments at the GS Group level. This is the first concrete step toward realizing the plan to invest 21 trillion KRW over the next five years, focusing on new business and venture investments.

GS Ventures' first venture fund will include major GS affiliates as investors (LPs). Under current law, CVCs under holding companies can attract up to 40% external funds, but this first fund is composed solely of GS Group affiliates.

The contributors include key affiliates such as GS Corporation (30 billion KRW), GS Energy (20 billion KRW), GS Retail (20 billion KRW), GS Engineering & Construction (20 billion KRW), GS EPS (20 billion KRW), GS Power (10 billion KRW), GSE&R (5 billion KRW), and GS Global (5 billion KRW). Each affiliate made decisions sequentially through board resolutions. The total fund size is 130 billion KRW, more than double the initially planned 50 billion KRW at the time of the company's establishment in January.

The fund being established is named "GS Assemble New Technology Investment Association." It signifies the consolidation of the core competencies of affiliates centered on new technology ventures for GS Group's future growth. Also, since "Assemble" starts with the first letter 'A' of the English alphabet, it signals continuous investment through subsequent funds starting with letters 'B', 'C', 'D', and so on.

Accordingly, GS Ventures plans to focus investments on new growth areas identified by GS Group, including ▲Bio ▲Climate Change Response ▲Resource Circulation ▲Future Commerce ▲Deep Tech ▲Smart Architecture. Especially, it will concentrate on early-stage (Seed to Series B) domestic startups, which is expected to contribute to revitalizing the venture industry that urgently needs early-stage funding despite excellent technology.

Creating Synergy in Investment Capabilities Across GS Group and Effective Role Sharing

The launch of this venture fund is expected to create synergy in investment capabilities across the entire GS Group. Until now, startup investments were dispersed among affiliates, but now they can achieve economies of scale centered on GS Ventures. This enables a more unified investment strategy.

Under the leadership of GS Corporation, a consultative body among domestic GS Ventures, GS Futures established in San Francisco, and investment organizations scattered across major affiliates is operating, and plans to expand continuous exchanges between investment organizations and startups are also being discussed.

Meanwhile, startup investments directly executed by GS affiliates will continue separately from GS Ventures. GS affiliates will invest in adjacent fields related to their existing businesses to expand their core operations, while investment companies GS Ventures and GS Futures will focus on investing in "Beyond" fields that have less direct relevance to existing businesses but have high future growth potential and can be nurtured as new business portfolios for GS.

First Large-Scale Fund Formation Since Holding Company CVC Establishment Allowed, Expected to Revitalize Venture Industry

The formation of GS Ventures' first fund is significant as it is the first large-scale fund formed after the amendment of the Fair Trade Act allowed the establishment of CVCs under holding companies. Since GS Group established GS Ventures as a 100% subsidiary under GS Corporation on January 7, it has swiftly organized related systems, registered as a new technology business finance company in May, and formed the first fund in July.

The venture industry expresses high expectations for the active moves of large corporate CVCs led by GS Ventures. CVCs, which source funds internally from group companies, tend to have longer fund duration periods compared to general VCs (venture capitalists) and focus more on strategic objectives as well as financial performance, enabling long-term investments less affected by short-term economic fluctuations.

Moreover, large corporate CVCs not only invest but also run various startup nurturing programs and support startups by applying their technologies to affiliates' businesses for practical validation. Given the recent domestic and international economic downturn affecting the venture investment sector, the proactive investment activities of holding company CVCs are expected to invigorate the overall venture industry.

Chairman Heo Tae-soo: "We Will Create a Healthy Business Ecosystem Through Venture Investment and Open Innovation"

GS Group has announced a strategy to expand its business ecosystem by actively collaborating and exchanging with startups in an era of rapid business environment changes and high uncertainty. Additionally, through investment activities in startups by each affiliate, it has understood market changes and implemented business innovations. Recently, it disclosed an investment plan of approximately 21 trillion KRW over the next five years, with 10 trillion KRW, accounting for 48% of the total investment, allocated to new business and ventures.

With the swift establishment of GS Ventures, registration as a new technology business finance company, and formation of the first fund, the system to execute GS's strategy of "future growth with startups" is now in place.

Specifically, GS established GS Futures in San Francisco in August 2020, investing in new technology startups in North America and spreading cutting-edge technologies in areas such as Climate Tech, Energy Transition, Future Commerce, and Construction Tech throughout the GS Group. Furthermore, with GS Ventures beginning to actively invest in startups primarily in the domestic Asian market, it has become possible to implement an investment strategy encompassing both domestic and overseas markets.

Chairman Heo Tae-soo stated, "In a rapidly changing business environment, startup investment is an essential tool for future growth," adding, "Through active venture investment and open innovation, we will create a healthy business ecosystem where GS and venture partners grow together."

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