[Exclusive] VC 'Y Alliance Inve' Founded by Minister of SMEs Merges with Vector Technology Investment

Subsidiary of 'Melcon' operated by former SME Chairman Park Seong-taek
Kim Sang-yong, former Y-Alliance Investment CEO, and Vector Technology Investment CEO
form consortium to resume investment activities

[Asia Economy Reporter Kwangho Lee] It has been confirmed that Y Alliance Investment, a venture capital (VC) established by Lee Young, Minister of SMEs and Startups, has merged with Vector Technology Investment, a new technology finance company (Shingisa). Although it is known that the company will not engage in investment activities after returning its startup investment company (Changtu) license, existing personnel are expected to continue investments at Vector Technology Investment.

According to the investment banking (IB) industry on the 27th, Y Alliance Investment merged into Vector Technology Investment. After Minister Lee began his public service career, Kim Sang-yong, who led Y Alliance Investment, became the CEO of Vector Technology Investment. Some junior investment personnel, aside from some existing senior staff, did not join Vector Technology Investment and left the company.

Minister Lee established the management consulting firm Y Alliance around 2017. At that time, Minister Lee, former Chairman of the Korea Federation of SMEs Park Sung-taek, and CEO Kim Sang-yong were registered as inside directors. Subsequently, in 2019, Y Alliance launched Y Alliance Investment as a subsidiary. The following year, they formed the Y Alliance No. 1 Investment Association with a scale of 2 billion KRW. Most of the major limited partners (LPs) were angel investors, including former Chairman Park, former Samsung Electronics Vice Chairman Lee Yun-woo, former SK Telecom Vice Chairman Lim Hyung-kyu, former CJ OliveNetworks CEO Lee Kyung-bae, former AhnLab CEO Oh Seok-joo, and Kim Jeong-tae, CEO of Coapharm Bio. The company, which was actively investing, saw a leadership change to CEO Kim Sang-yong within a year of its launch when Minister Lee was elected to the 21st National Assembly in 2020. At that time, the departure of key personnel such as the lead fund manager caused difficulties.

Afterward, the company took a different path from general VCs. Through its first fund, it purchased 25% of Melcon’s shares in 2020 for about 18.2 billion KRW and additionally acquired 15.3%, becoming Melcon’s largest shareholder with a 40.3% stake. Subsequently, Y Alliance Investment transferred its largest shareholder status in Melcon to former Chairman Park by disposing of its treasury shares. As a result, former Chairman Park secured Melcon as a subsidiary under Sanha Industry. Vector Technology Investment became a 100% subsidiary of Melcon.

Then, in January, Y Alliance sold all shares of its subsidiary Y Alliance Investment to Sanha Industry, a ready-mixed concrete company. Y Alliance Investment transferred all its shares to former Chairman Park, the largest shareholder of Sanha Industry, and decided to dissolve the corporation in February, a month later, being absorbed into Vector Technology Investment. It appears that former Chairman Park, CEO Kim, and other members who participated in the initial angel investment have reunited. Although the startup investment company named Y Alliance Investment disappeared, they are newly engaging in investments through Vector Technology Investment, a new technology finance company.

The reason for resuming investments through a new technology finance company is interpreted as an effort to utilize the advantages of Shingisa. Fundamentally, both startup investment companies and Shingisa are classified as venture capitals, but there are differences in their “investment targets.” Startup investment companies must invest at least 40% in ventures and SMEs established within seven years. They are also prohibited from investing in financial services, insurance, real estate, lodging, and restaurant businesses. On the other hand, Shingisa faces restrictions on investments in real estate and financial services but is not subject to separate investment ratio limits, allowing for a relatively broader investment scope.

An IB industry insider added, “Y Alliance Investment was practically dormant after Minister Lee took office, and it is understood that they focused on Vector Technology Investment, a Shingisa, to overcome difficulties.”

Meanwhile, the predecessor of Vector Technology Investment was MC Investment, established in March 2019. After its launch, it formed funds named after the house, such as MC New Technology, MC Seoul &, MC Honeybee, and MC Dawon. Later, after changing its name to Vector Technology Investment, it created series funds like Vector Bros and Asite. Recently, it has continued with the ‘Vector New Technology Investment Association.’

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