Wadiz Partners Transforms into VC... Startup Investment and Development in Full Swing

Restrictions on LP Attraction Due to Financial Authorities' Capital Market Act Amendment
Wadiz Partners Officially Registered as a Venture Capital Company
Synergy with Parent Company Wadiz... Expansion of Small Brand Development Program

[Asia Economy Reporter Kwak Min-jae] Wadiz Partners, a subsidiary of Wadiz, the largest domestic crowdfunding platform that has been conducting investment projects using private equity funds, has transitioned into a venture capital company. This change comes as financial authorities tightened the requirements for unlisted corporations eligible to invest in private equity funds following the Lime and Optimus incidents, creating restrictions on attracting LPs (investors who provide capital to funds). Going forward, Wadiz Partners plans to invest in startups with promising early-stage brands across various categories such as beauty, food, and fashion, and expand support to help them grow rapidly through Wadiz.

According to the venture investment industry on the 15th, Wadiz Partners recently officially registered as a small and medium enterprise venture capital company with the Ministry of SMEs and Startups. A Wadiz Partners representative stated, "Since we have officially registered as a venture capital company, we plan to pursue attracting mother funds while strengthening cooperation with partner large corporations that have needs to nurture small brands together with Wadiz."

The background for Wadiz Partners' transition to a venture capital company lies in the Capital Markets Act amended last year. Until now, Wadiz Partners had been conducting investment activities using private equity funds, but in October last year, financial authorities changed ‘management participation-type’ private equity funds to ‘institution-only’ private equity funds, tightening the requirements for unlisted corporations eligible to invest in private equity funds, which caused difficulties in attracting LP investments. Previously, unlisted corporations could participate as LPs in management participation-type private equity funds by investing at least 300 million KRW, but after the amendment, the requirement for unlisted corporations was limited to those holding at least 50 billion KRW in financial products for more than one year. In a situation where liquidity among institutional investors such as banks, insurance companies, and securities firms is already depleted, the path to attracting investments from most companies was effectively blocked, necessitating the search for new ways to expand the business.

Wadiz Partners plans to use this venture capital registration as an opportunity to actively pursue investment and nurturing of small brands with a wider range of strategic investors. The approach is to invest in promising early-stage startups and support their growth through the parent company Wadiz. A representative example is 21gram, a pet funeral service startup. 21gram grew by receiving investment-type crowdfunding from Wadiz. This is a case where Wadiz Partners provided growth capital to startups discovered by Wadiz, establishing a virtuous cycle. A Wadiz representative explained, "We launched ‘Next Brand,’ Wadiz’s investment and nurturing program, last May, and we plan to actively expand such programs going forward."

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