First CVC Fund by Ministry of Industry Sparks Competition Among 6 Mid-sized and Large Enterprise VC Units

CJ Inbe, Prologue Ventures, Hyosung Ventures, and 3 Others Submit Investment Proposals
Evaluated on Investment Capability and 'Commercialization Network'

CVC Concept Diagram (Source: Korea Fair Trade Commission)

[Asia Economy Reporter Kwangho Lee] The Ministry of Trade, Industry and Energy has launched its first-ever corporate venture capital (CVC) investment project. As a result of recruiting general partners (GPs) to manage the ‘CVC Innovation Enterprise Support Scale-up Fund (CVC Fund),’ a total of six CVCs submitted investment proposals. Given that this is the inaugural investment project, attention is focused on the direction of the GP selection.

Unlike general funds that solely pursue investment returns, the CVC Fund is characterized by being managed by venture capital (VC) firms established by mid-sized and large companies aiming to create future growth engines and advance their core industries. It pursues co-growth by not only making simple investments but also collaborating with investee companies to jointly develop technologies or create new business models.

The Ministry began recruiting GPs for the CVC Fund on the 14th of last month. The goal is to invest a total of 40 billion KRW to form an 80 billion KRW fund. The investment ratio is 50%. Two GPs will be selected, each receiving 20 billion KRW in investment. Although the investment amount and ratio are not high, the fact that this is the first project draws attention.

As a result of the GP recruitment, the firms that submitted investment proposals are Lighthouse Combine Invest, CJ Investment (formerly Timewise Investment), SNS Investment, POSCO Technology Investment, Prologue Ventures, and Hyosung Ventures. The competition ratio is 3 to 1. Most of these submitted letters of commitment (LOC) from their parent companies.

Among the large conglomerate affiliates, CJ Investment (CJ Group), POSCO Technology Investment (POSCO), and Hyosung Ventures (Hyosung Group) have thrown their hats in the ring. Among mid-sized companies, Lighthouse Combine Invest was jointly established by shipbuilding equipment and machinery companies such as Sunbo Unitech, Autonics, and Hyundai Industry.

Additionally, SNS Investment was established by semiconductor and display materials company SNS Tech, and Prologue Ventures was established by comprehensive trading company Hyundai Corporation.

Among these, Lighthouse Combine Invest, CJ Investment, and POSCO Technology Investment have considerable venture capital experience. They have been steadily investing and building track records. Although classified as CVCs, they differ from Prologue Ventures and Hyosung Ventures.

Prologue Ventures and Hyosung Ventures are relatively new firms, each established less than a year ago. If selected as GPs this time, they will be able to form their first blind funds. For this reason, the industry is paying more attention to the performance of these ‘new faces’ beyond the existing operators.

Prologue Ventures is focusing on discovering promising companies under the leadership of CEO Shin Kwan-ho, a veteran investment officer with extensive experience in the investment industry. Hyosung Ventures is led by CEO Kim Cheol-ho, who was formerly a vice president in the Strategy Headquarters of Hyosung Corporation. They are currently concentrating on recruiting personnel.

Although their investment experience is short, they are considered capable. The Ministry plans to evaluate not only investment capabilities but also the ability to support the scale-up of investee companies through strategic cooperation among companies, including technology development, commercialization networks, and demand linkage. Ultimately, this is a competition for resources between Hyundai Corporation and Hyosung Group.

A CVC official said, “Even before the CVC Fund application submission, Prologue Ventures and Hyosung Ventures were mentioned,” adding, “Since this investment project does not simply evaluate investment capabilities, the outcome will depend on how the synergy effects with the parent companies are presented.”

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