Formation 8's Brian Koo launches Asia-focused VC firm

The new entity, Formation Group, is said to have already received $200 million in commitments from LPs towards a target of $400 million. Koo declined to comment on the specifics, but did say there had been a first close. It will follow the original vision for Formation 8's Asia special purpose vehicle (for which a filing was made earlier this year) and leverage connections in Silicon Valley and Asia.

The move comes as Formation 8's founders - Koo, Joe Londsale and Jim Kim - decided against raising a third fund and to go their separate ways. The split is said to be amicable and the team will continue to manage portfolio companies from Funds I and II. A dedicated hardware vehicle, which closed earlier this year, has been renamed Eclipse Ventures Fund I.

Koo describes Formation Group's strategy as "venture capital 2.0." Whereas the first iteration involved creating a broad portfolio of 20-30 early-stage companies, Koo now wants to shepherd a smaller number of investments through multiple stages. He expects there will be no more than six companies in the new fund.

"Given the middle class growth happening in Asia and what I call the new economy wave - industries have to go through a paradigm shift because people are looking for something different, something better, something with mobile internet - it doesn't make sense to work with 20-30 companies at once in the hope that one or two of them will do well," Koo said. "This is the time when we should focus more. You have to find the biggest thesis you believe in and dig into that. If you fail, then fail big."

Koo views are in a large part based on experiences with certain Formation 8 portfolio companies where his involvement was "more than the typical venture model." He cites Korean mobile start-up Yello Mobile, in which Formation 8 invested $100 million last year, as an example.

"I have calls with the CEO and strategy specialist almost every other day; I am almost working at co-founder level. I try to bring them to everyone in my network as a team member or partner, or so they can do some business together," he said. "The impact can be very big."

Formation Group has already identified five companies that will account for the core of its debut fund. They are seen as platforms that address "new economy" opportunities in growth areas globally, with strong management teams and potential for Formation Group to add value.

According to a letter sent to LPs, three of them are existing Formation 8 investments: Seoul-based cosmetics e-commerce business Memebox, smart home platform Eva Automation, and NextVR, a live-streaming virtual reality content platform. While the latter two companies are based in the US, they have strong ties and growth potential in the Asian market.

The two other companies are both at the incubation stage: HonestBee, a last-mile logistics provider headquartered in Singapore, and Yello Financial Group (YFG), a financial technology platform in Korea. YFG has a data-sharing arrangement with Yello Mobile but otherwise is an independent entity.

"If you know the most relevant data points about people's lifestyles - how much they are spending and how much they can afford to spend without going into default - then you can start giving them the right amount of credit, the most personalized insurance program, the best financial products," Koo said. "I think that is the next generation in financial services and Korea is behind the game."

Koo leads Formation Group as CEO. He is joined by Gideon Yu, a senior advisor at Formation 8 and CEO and co-founder of Eva, Joel Sng, CEO and co-founder of HonestBee, and Chee Cheong Gay, formerly of Asia-focused investment group 2G Capital.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Venture
• Fundraising
• Technology
• GPs
• Formation 8
• Fundraising
• Technology
• TMT
• Formation Group
• Venture